Sagar Cements board approves merger of subsidiary Sagar Cements (R) with the company

The subsidiary has cement manufacturing and power generation facilities at Gudipadu village, Yadiki Mandal, Ananthapur District, Andhra Pradesh.

Apr 27, 2021 02:04 IST India Infoline News Service

Sagar Cement
Sagar Cements board of directors have approved the proposal of the merger of its wholly-owned subsidiary Sagar Cements (R) Ltd with it. The subsidiary has cement manufacturing and power generation facilities at Gudipadu village, Yadiki Mandal, Ananthapur District, Andhra Pradesh.

The benefits derived from the merger include:

1. Enhancement in the scale of operations providing a significant impetus to the growth of the Company, since both the companies are engaged in the same line of business. These may be derived by drawing upon synergies between the two companies -
  • Synergies in business activity, consolidation, focused attention, centralized administration, the economy of operation, integrated business approach and greater efficiency.

2. Reduction in the cost of overheads and improvement of organization efficiency -
  • The consolidation by way of amalgamation would lead to more efficient utilization of capital and an improved financial structure
  • The benefit of consolidation of financial resources, managerial and technical expertise of both entities will result in the overall optimization of operational and administration costs

3. Reduction in multiplicity of legal and regulatory compliances and a more simplified group structure -
  • The amalgamation will rationalize and optimize the Group’s legal entity structure to ensure greater alignment of the businesses by reducing the number of legal entities and statutory compliances required.

Notably, since the merger is between a holding company and its wholly-owned subsidiary, there will not be any fresh issuance of shares by SCL.

Sagar Cements (R) Limited (SCRL) was incorporated in the State of Karnataka as a public limited company on 30th August 2007 under the name BMM Cements Limited (BMM). The entire 100% shareholding of BMM was later acquired by Sagar Cements Limited (SCL) in the year 2015-16, making SCRL a wholly-owned subsidiary of SCL.

Consequent to the above change in ownership structure, the name of BMM was changed from BMM Cements Limited to Sagar Cements (R) Limited and the Registered Office of the Company was also shifted from Karnataka to Telangana.

At around 2.23 pm, Sagar Cements is trading at Rs729 per piece flat compared to the previous closing on Sensex. 

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