Sagar Cement to add 30 MW power plant

Sagar Cement to add 30 MW power plant
20 December 2007

Sagar Cement is constructing a 30MW power plant which is in the advanced stage of completion.

In an interview with
CNBC-TV18, Sreekanth Reddy director of Sagar, said the power plant will be completed by June 2008.

Excerpts from CNBC-TV18’s exclusive interview with Sreekanth Reddy are featured below:

Q: What is the kind of capex and by when will this expansion come on board?

A: To the current capacity of 0.6 million, we are adding another 1.9Mt of cement grinding, which should make us to 2.5 on an OPC basis. The total capex that has been planned is Rs 300 crore. Out of Rs 300 crore, Rs 200 crore is the debt, Rs 45 crore is the equity and Rs 55 crore is the internal accrual.

Currently, we are in an advanced stage of completion of the project. In all likelihood, we would be completing it by June 1, 2008 and the entire capacity would come on stream.    

Q: You are also particularly looking at ramping up your captive power generation. What are the plans there? How much would that bring down cost by and augment your operating profit margins?

A: Out of the current installed capacity, 70% of our power is being met by our subsidiary company called Sagar Power, which is a hydro unit. Since it is hydro, the scale up is a limitation. We are adding a 30 megawatt captive power plant, which should be in line with the capacity expansion, wherein we are expecting to save 80 paisa per unit, which would definitely contribute significantly to the bottomline.       

Q: There were reports of you looking for a strategic partner and Orascom was the name that came up. Can you give us an idea where do your talks stand? Are you looking at tying up with them?

A: We did have a discussion with them, but it did not progress. There are a couple other people, who are interested in joining with us. It is still in early stages. So, as soon as we reach to a certain decision, we would definitely keep you abreast.

Q: What would be the nature of this agreement, that you would want to enter into, with other parties? Are they looking at a complete control of your business? Where does the promoter holding for Sagar Cements stand as of now?

A: Currently, as promoters we hold close to 48% and are definitely not looking at giving away complete control, at this point of time because of the capacity. But we are looking at a strategic partner, who would grow along with us, and then see how it is going to work.

Q: How much stake are you willing to give away to that strategic partner, if and when he comes in?

A: It is too early for me to comment on it. We are looking at those issues.

Q: How much time will that take?

A: That is also too early for me to comment on. This is in absolutely early stages.  
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