Ambuja Cement Rajasthan, formerly DLF Cement, which was acquired by Gujarat Ambuja in December 1999, has been referred to the Board for Industrial and Financial Reconstruction (BIFR). The company, which has been loss-making since inception, has completely wiped out its net worth.
Anil Singhvi, executive director at Gujarat Ambuja, said, "We have referred Ambuja Cement Rajasthan to BIFR for registration and already submitted the papers (to BIFR)."
Due to continuous losses in the past three years, the company's net worth has completely eroded. It incurred a net loss of Rs 55.09 crore for the year ended June 2001.
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Ambuja is, however, aiming at a turnaround within the next six months. "By June 2002, Ambuja Rajasthan will start making profits. The company's debt has already been restructured and productivity enhancement measures have been adopted. Besides, the cost of production has substantially dropped," Singhvi said.
Post debt revamp, the company's average cost of borrowing stands reduced at 11.5 per cent. A part of the company's total debt of Rs 300 crore has already been re-paid.
Usage of pet coke instead of coal has helped the company save costs substantially. Moreover, with the captive power plant in place, the company is self sufficient in terms of power requirement.
"In Rajasthan, where there is no scope for an upward revision in prices, adopting such measures were the only way to stay afloat," Singhvi said.
The company has been trying to reduce production cost at this unit to Rs 820 a tonne. The 1.4-million-tonne unit at Pali in Rajasthan caters to the Delhi and Haryana markets apart from Rajasthan. Gujarat Ambuja primarily targets the retail segment, which accounts for 95 per cent of its business. Over the last 18 months, margins at the unit have been hit by declining cement prices following the drought last year in Gujarat and Rajasthan.