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The National Company Law Tribunal had directed initiation of insolvency proceedings against Andhra Cements in April last year.
Buy / Sell Sagar Cement share
The resolution professional of Andhra Cements, a Jaypee Group company has declared Hyderabad-based Sagar Cement as the successful resolution applicant for the former.
The RP has also issued a letter of intent (LOI) for the same.
Reports last year had indicated that Sagar Cement was the frontrunner to acquire Andhra Cements, which had also received expressions of interest from Jindal Poly, Dalmia Bharat and Khandwala Finstock Pvt. Ltd.
The National Company Law Tribunal had directed initiation of insolvency proceedings against Andhra Cements in April last year. The direction came after Pridhvi Asset Reconstruction and Securitisation Company Ltd. filed a petition against Andhra Cements, claiming a default.
Pridhvi has 86 percent share of the verified debt in Andhra Cements, while Union Bank of India and SBI have 11 percent and 3 percent share respectively.
Reports also say that Andhra Cements had taken loans from banks like IDFC First Bank, HDFC and Karur Vysya Bank between 2012 and 2016.
However, the sum for which Sagar Cement will complete the takeover of Andhra Cements is undisclosed.
Brokerage firm Nirmal Bang believes that the acquisition of Andhra Cements will boost Sagar Cement’s total capacity to 11 MTPA. The brokerage also said that the company’s future volume growth will be aided by the company’s capacity expansion recovery in economic activity and the government’s focus on infrastructure and housing.
However, Nirmal Bang expects the company’s short-term outlook to remain challenging due to input price volatility and rising interest costs for debt taken for potential acquisitions.
Shares of Sagar Cement have corrected 8 percent over the last month.
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