India Cements Ltd today said it has realised Rs 349 crore from the sale of its 94.5 per cent stake in Sri Vishnu Cements Ltd to Zuari Cement Ltd.
The deal was struck on Thursday at an enterprise value of Rs 385 crore and if the debt portion of Sri Vishnu is cleared, the realisable value arrived at is Rs 349 crore.
The company, which incurred Rs 170 crore in acquiring Sri Vishnu, thus made a profit of Rs 179 crore from the deal. While India Cements acquired 39.5 per cent stake in Sri Vishnu through the acquisition of Raasi Cement, its subsidiary ICL Securities acquired 55.20 per cent through an open offer at a price of Rs 98.25 per share in 1998.
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N Srinivasan, vice-chairman and managing director of India Cements, said: "The expectation of growth was high when we acquired Sri Vishnu. But since the demand has slowed down now, it's time to re-adjust. Tomorrow, if any opportunity comes, we will go and buy."
He added that the capacity of the company, before and after the sale of Sri Vishnu, would remain same as the existing capacity was upgraded by more than 1 million tonne in the past two years. At present, the company, with a capacity of 9 million tonne, has a capacity utilisation of 70 per cent.
India Cements claimed that it has realised Rs 3,850 per tonne per annum, which according to the data provided, was the highest price offered in any sale in India.
Srinivasan said, with the demand expected to pick up gradually, the company would be able to increase its capacity utilization.
On the utilisation of the sale proceeds, Srinivasan said, " A part of the funds, around Rs 50 to Rs 60 crore, will be set aside for converting the existing wet-process plants to dry-process plants. The remaining amount would be utilised to retire the high-cost debt." He added that a part of the funds will also be used for voluntary retirement scheme.
At present, India Cements has a total debt of Rs 1,800 crore at an average cost of 13.5-14 per cent. Total interest outgo, during the current fiscal, was Rs 184.65 crore.
Srinivasan said, "After restructuring the existing loans, we would bring down the debt-to-equity ratio to 1.8 from 2.2 by the end of this fiscal."
Meanwhile, the share price of India Cement closed at Rs 39.20 on the Bombay Stock Exchange after hitting an intraday high of Rs 43.