Vicat Sagar Cement Limited (VSCL), a 51: 49 per cent joint venture between France-based Vicat and Hyderabad-based Sagar Cements, is all set to achieve financial closure for Phase I of the Rs 2,500-crore project by January 2010.
“Due diligence of the project has been completed and we expect to achieve financial closure by the first week of January. We will also start construction of the plant in the same month,” Sagar Cements executive director, S Sreekanth Reddy, told Business Standard, adding that Phase I was expected to be commissioned by 2012.
VSCL is developing a 5.5 million tonnes per annum (mtpa) integrated greenfield cement plant near Chatrasala village in Gulbarga district of Karnataka in two phases. The first phase, with an installed capacity of 2.7 mtpa, is estimated to cost Rs 1,750 crore.
The International Finance Corporation (IFC), a member of the World Bank Group, is expected to invest Rs 450 crore in the project. “IFC is expected to take a final decision in this regard at its board meeting to be held next month,” Reddy said.
On the other hand, IFC stated that it was considering an investment, in the form of a combination of debt and equity or quasi-equity, in the range of $75-90 million (Rs 375-450 crore).
According to Reddy, the first phase, which also involves the construction of a 40-Mw power plant and a waste recovery plant, is being funded through an equity of Rs 400 crore and a debt of Rs 1,350 crore. An additional Rs 250 crore will also be borrowed towards working capital.
Vicat, which is listed on the Paris Stock Exchange, has a cement production capacity of 18.6 mtpa spread over 11 countries. It had picked up a 6.67 per cent stake in Sagar Cements in June 2008 for Rs 70 crore at Rs 700 per share.
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The other main shareholder Sagar Cements has a 2.6 mtpa manufacturing facility in Nalgonda district of Andhra Pradesh. It is engaged in cement production for over three decades. In 2008-09, the company reported a turnover of Rs 306.54 crore and a net profit of Rs 19.48 crore.
Though the French company is the majority stakeholder in VSCL, Reddy would be the managing director of the joint venture.