Suvarna Cements achieves break-even

City-based Suvarna Cements Limited has achieved break-even for financial year 2003-04. It achieved a turnover of Rs 30 crore for the year.

In 2002-03, the company had recorded a net loss of Rs 2.3 crore on a total income of Rs 8.77 crore.

Suvarna Cements, which has its plant at Kodada in Nalgonda district, had been a loss-making company since its inception in June 1986.

The company was referred to the Board for Industrial and Financial Reconstruction (BIFR) in 1989. A BIFR rehabilitation scheme in 1991 saw capacity being ramped up from 200 tonnes per day (tpd) to 300 tpd, but this also had not helped revive the sick company.

The company continued to make losses till the new management of Hyderabad Bottling Company Limited comprising promoter-directors J S Krishna Murthy, J S Rao, J Triveni and J V Choudary took over in June 2000.

The new management fulfilled the one-time settlement (OTS) payments to the financial institutions under a BIFR-approved scheme.

The company had a total accumulated losses of Rs 10.39 crore at the time of takeover by the new management. By 2002, the company's networth had turned positive and it was out of the purview of the BIFR.

The company registered a net profit of Rs 1.05 crore and Rs 1.29 crore for the years 2000-01 and 2001-02 respectively. The state government, which did away with sales tax incentives for all industries in 2001, accorded the company 'a pipeline industry status' in view of its expansion project till 2003.

A pipeline industry status would mean that the state government would honour all tax exemption commitments made and the company would be exempt from the new provisions.

Following the successful revival of the sick company, the company was last week presented the 'Best Turnaround/Revival of a Sick Small/Medium Scale Industry' from the Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci) for 2002-03.

J Triveni, managing director of Suvarna Cements told Business Standard that the company's management undertook a modernisation-cum-expansion project at a cost of Rs 18 crore in 2002-03.

While the promoters brought in Rs 6 crore, State Bank of India (SBI) and Canara Bank pitched in with Rs 6 crore each.

Apart from modernising the plant machinery, the management also expanded the plant capacity from 300 tonnes per day (tpd) to 900 tpd. However, the continual slump in cement prices saw the company register losses during the year.

Triveni said that despite the persistence of adverse conditions on the cement price front till September 2003, the rise in the prices in the following months helped the company recoup and achieve break-even for the year 2003-04.

Triveni also attributed the break-even to initiatives that the company undertook to reduce power consumption and the optimisation of capacity.