Azim Premji’s Investment Arm To Pick 10% Stake in Sagar Cements

Azim Premji’s investment arm Premji Invest Opportunities Fund on March 25 agreed to pick a little over 10% stake in Hyderabad-headquartered cement firm Sagar Cements Ltd for around Rs 350 crore.

Sagar Cements ranks among India’s lowest-cost cement producers with its production capacity currently standing at 8.25 million tons a year. In a communique to stock exchanges, Sagar Cements said its board of directors at their meeting held on March 25 has approved issuing 1.32 crore equity shares of the face value of Rs 2 each in favour of Premji Invest at a premium of Rs 265 a share on a preferential basis.

Four-decade-old Sagar Cements with predominantly South India as its core market has expanded its market presence in East and Central India through its recent acquisitions. Sagar Cements said it would deploy the proceeds of Rs 350 crore from the stake sale to Premji Invest towards meeting organic and inorganic expansions, apart from funding its general corporate purposes.

The stake sale on a preferential basis to Premji Invest will bring down the holding of promoters of Sagar Cements to 45.2% from 50.28%.

Premji Invest, with a stake of 10.10% in Sagar Cements, will have a nominee on the board of the cement company. It will also work with the promoters of Sagar Cements in setting up a best-in-class governance process, through the appointment of advisors/ independent directors as appropriate in a bid to drive value creation for all the shareholders.

Sagar Cements’ joint managing director S. Sreekanth Reddy said they would look forward to inputs from Premji Invest “towards strengthening our processes and systems and enhancing value for all our stakeholders.”

Rajesh Ramaiah, Partner at Premji Invest, said Sagar Cements was well-positioned to become a pan India player with its inorganic plans and expansion outside Southern India. He said Premji Invest would “look forward to working together and helping the Company achieve its growth objectives and becoming a pan India brand with best-in-class governance processes.