Sagar Cements sells entire stake in Vicat JV for `435 cr

Makes a windfall gain of five times on its `86-crore investment in the joint venture

Hyderabad: In a significant development, city-based Sagar Cements Limited is selling its entire 47 per cent stake in the joint venture, Vicat Sagar Cement Private Limited, to the French partner for a total consideration of Rs 435 crore. In the process, the company made a windfall gain of over five times on its Rs 86 crore investment.

Sagar Cements and Vicat Group of France had entered into this joint venture in June 2008, with the objective of setting up a 5.5 million tonne plant in Gulbarga, Karnataka. The first phase of this facility, which is capable of producing 2.75 million tonnes, was completed in December 2012 and production commenced in January 2013. Sagar invested Rs 86 crore in the first phase development towards its 47 per cent stake in the JV.

The board of directors of Sagar Cements on Thursday approved the sale of its entire stake of 6.52 crore equity shares held in the joint venture to Parficim SAS, France, an affiliate of Vicat Group, for Rs 435 crore, which works out at Rs 66.68 per equity share, the company said in a filing with bourses.

The board’s nod is subject to further approval of shareholders of Sagar Cements and other approvals, if any, from the regulatory bodies. The deal is said to be the result of a strategic decision taken by both entities to enable each one focus on its own strengths and capabilities to create value and drive growth.

“This transaction will enable both Vicat and Sagar to better focus on their own strengths and strategies. We wish Vicat the best in all its endeavours,” said Sreekanth Reddy, Executive Director, Sagar Cements.

On our part, we will continue to leverage on our strengths and explore opportunities to expand our scale and presence and create value for our stakeholders, he added.

The cement maker is looking to utilize the some proceeds from this stake sale towards purchase of some capital equipment for its existing plant in Nalgonda district. It will deploy the remaining sum for funding organic and inorganic growth with the objective of playing a larger role in the cement industry in south India.

Established in 1985, Sagar Cements began its operations with a clinker unit of 60,000 tonnes per annum (TPA) capacity. It expanded the clinker capacity to 2.3 million TPA and its cement capacity to 2.75 million TPA in the past thirty years.

The company manufactures various varieties of cement and all of them are sold under the Sagar brand. The cement plant is located at Matampally in Nalgonda district. Limestone requirement of the plant is met from its captive mine located adjacent to the plant.