Sagar Cements scouts for acquisition to ramp up capacity.

Sagar Cements Ltd. is scouting for acquisitions as part of its plan to ramp up production capacity to 10 million tonnes by FY25. With the commissioning of its Jajpur plant last month, the Hyderabad-based company has reached a production capacity of 8.25 million tonnes per annum.

The company is exploring both the organic and inorganic routes to ramp upcapacity. “It would be organic or inorganic. We are working on a couple of options,’‘ Joint Managing Director, Sreekanth Reddy, Stold B usinessLine adding that “we are not very far from closing in on an option.’‘

The expansion of the production capacity may happen even before FY25,’‘ Reddy said. The 41-year-old company’s stated objective is to double capacity every 10 years.

On competition in the market, where other players are also ramping up production, he said the strategy was to double capacity every 10 years, which remains irrespective of how others come up with their plans. ”Big is beautiful, but even small is sometimes very, very beautiful,’‘ he said.

The company, however, is in a steady expansion mode as it has grown from a 200 tonne per day player 41 years ago to almost 20,000 tonnes per day today. 

The cement maker is steadily expanding its market reach. Until recently, it primarily focussed on Andhra Pradesh, Telangana, Tamil Nadu, Karnataka, Maharashtra and South Odisha. However, with the recent commissioning of plants in Jeerabad and Jajpur, Sagar will now reach out to the Malwa region, besides the coastal region and the northern part of Odisha.

On the market scenario during the third quarter, Reddy said demand and pricing were “exceptionally soft” during the quarter owing to external factors. Unseasonal rains, non-availability of sand in the East and a paucity of labour due to the festive season resulted in lower offtake during the quarter.

On a long-term basis, Sagar remains “positive” on the business. “We believe greater government allocation to infrastructure and low-cost housing projects would provide the requisite fillip for demand growth,’’ Reddy observed.

HBL