Andhra Cements Limited Merges with Sagar Cements Limited; Share Swap Ratio Set at 29:98

Andhra Cements Limited Merges with Sagar Cements Limited; Share Swap Ratio Set at 29:98​

The merger of cement manufacturing giants Andhra Cements Limited and Sagar Cements Limited has been approved by the Board of Directors, setting forth a strategic amalgamation designed to achieve economies of scale and operational efficiencies. The scheme involves merging the operations of Andhra Cements Limited (ACL) with its holding company, Sagar Cements Limited (SCL).

The merger is supported by valuation and fairness opinions provided by independent third parties. A Valuation Report was furnished by M/s BDO Valuation Advisory LLP recommending the share swap ratio for the proposed merger. Furthermore, Anand Rathi Advisors Limited, a SEBI Registered Merchant Banker, issued a Fairness Opinion confirming the fairness of the share swap ratio recommended by the Valuer.

Financial Overview and Merger Structure

Andhra Cements Limited (ACL), serving as the Transferor Company, is a subsidiary of Sagar Cements Limited (SCL), which is designated as the Transferee Company. The merger aims to integrate the manufacturing and commercial functions of both entities into a single operating framework.

Details regarding the size and turnover of both companies are provided below, with figures listed in Rupees (Rs.) in Lakhs.


Under the approved scheme, no cash consideration is payable. Upon implementation, the Transferee Company will issue and allot equity shares to the shareholders of the Transferor Company (excluding SCL). The agreed share swap ratio stipulates that 29 equity shares of the Transferee Company, each with a face value of Rs. 2/-, credited as fully paid-up, will be issued for every 98 equity shares of the Transferor Company, which have a face value of Rs. 10/- fully paid-up.

Rationale and Strategic Benefits

The amalgamation is intended to allow SCL to achieve complete ownership and control over ACL's operations, given that both entities operate in the cement manufacturing sector and SCL is the promoter holding 75.00% of the equity capital of ACL.

Key rationales for the merger include:

• Operational Alignment: The proposal facilitates the alignment of manufacturing, branding, marketing, and distribution functions under one corporate structure, addressing the fact that ACL manufactures and sells cement under SCL’s brand name. This is expected to lead to operational efficiencies and enhanced value creation.
• Consolidation and Efficiency: The merger will consolidate commercial and manufacturing functions, enhancing end-to-end value chain coordination and allowing for optimal resource deployment across raw materials, logistics infrastructure, and financial capital.
• Competitive Positioning: The unified entity is expected to enhance the competitive positioning of SCL by leveraging economies of scale. This includes improved access to expanded marketing networks and distribution channels, benefiting from an enlarged resource base and deeper client relationships.

Shareholding Pattern Details

The merger will consolidate the manufacturing operations into a single corporate structure. The following table details the shareholding patterns related to the Transferee Company prior to and post-merger.

ACL Stock Price Movement​

Andhra Cements Limited gained 1.06% today, settling at ₹54.14 after trading in the post-market session. The stock saw a daily volume of 15,256 shares, closing well above its intraday low of ₹53.80.