Sagar Cements has officially withdrawn its application for reclassification under Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, concerning Mr. P. V. Narasimha Reddy. This development marks a reversal of the company's earlier stance on the matter.

Background

The cement manufacturer had initially submitted the reclassification application on August 6. However, in a surprising turn of events, the company has now decided to retract this application.

Official Communication

J. Raja Reddy, Company Secretary and Compliance Officer of Sagar Cements, formally communicated this decision to both the National Stock Exchange of India Limited (NSE) and BSE Limited through a letter dated September 15. The letter states:

"This is with reference to our earlier communication dated 06th August, we also withdraw our application for reclassification in accordance with Regulation 31A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations') in respect of Mr. P. V. Narasimha Reddy."

Implications

The withdrawal of this application could have potential implications for the company's shareholding structure and regulatory compliance. However, the specific reasons for the withdrawal and its impact on Mr. P. V. Narasimha Reddy's status within the company remain undisclosed at this time.

Company Profile

Sagar Cements, with its registered office in Hyderabad, Telangana, is a prominent player in the Indian cement industry. The company operates multiple manufacturing facilities across Telangana, Andhra Pradesh, and Odisha, catering to various markets in the country.

Investors and market watchers will likely keep a close eye on any further developments or clarifications from Sagar Cements regarding this decision and its potential impact on the company's operations and governance structure.

Sagar Cements Limited has reported a remarkable turnaround in its financial performance for the second quarter, showcasing significant improvements across key metrics. The company's strategic initiatives and market conditions have contributed to a substantial boost in revenues and profitability.

Revenue Growth

Sagar Cements witnessed a notable increase in revenue, which rose to Rs. 587.00 crores in Q2. This represents a significant jump from Rs. 475.00 crores in the corresponding quarter of the previous year and Rs. 540.00 crores in the preceding quarter. The year-on-year growth of 23.58% and sequential growth of 8.70% underscore the company's strong market position and improved demand for its products.

Extraordinary EBITDA Performance

The most striking aspect of Sagar Cements' Q2 results is the exceptional growth in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). The company reported an EBITDA of Rs. 60.00 crores, marking a staggering 900% increase from Rs. 6.00 crores in Q2 of the previous year. This substantial improvement also represents a 93.55% growth from the Rs. 31.00 crores reported in Q1 of the current fiscal year.

Margin Expansion

The company's EBITDA margin expanded significantly, reaching 10.22% in Q2 compared to approximately 1.26% in the same period last year. This eightfold improvement in margin reflects enhanced operational efficiency and better cost management.

Operational Highlights

Volume Target and Achievement

Sagar Cements has set an ambitious target of 6.2 million tons volume for the current fiscal year. The company has already achieved 2.5 million tons in the first half, indicating a strong start towards meeting its annual goal.

Cost Optimization

A key factor contributing to the improved performance is the reduction in average power and fuel costs. These costs decreased to Rs. 1,626.00 per ton from Rs. 2,062.00 per ton in Q2 of the previous year, representing a significant saving that has positively impacted the company's profitability.

Financial Position

The company maintains a gross debt of Rs. 1,533.00 crores with a debt-equity ratio of 0.80:1, indicating a balanced capital structure.

Future Outlook

Management expects EBITDA margins to range between Rs. 800.00-850.00 per ton for the second half of the fiscal year. This optimistic outlook is supported by anticipated improvements in capacity utilization at the company's acquired units:

• Jeerabad unit is expected to achieve 80% utilization
• Jajpur unit is projected to reach EBITDA breakeven

Government Incentives

In a positive development, Sagar Cements has received approval for Rs. 150.00 crore in incentives from the Madhya Pradesh government. These incentives will be disbursed over a seven-year period, providing additional financial support for the company's operations and expansion plans.

The strong Q2 performance and positive outlook for the remainder of the fiscal year position Sagar Cements for continued growth and improved financial health. The company's focus on operational efficiency, strategic acquisitions, and government support are key factors that are likely to drive its performance in the coming quarters.