Ambuja Eastern Cement Ltd (AECL), a 94 per cent subsidiary of Gujarat Ambuja Cement, has put off its proposed equity participation in the Orissa-based Shiva Cement Ltd (SCL).
AECL managing director Harsh Vardhan Neotia said the company officials visited SCL plant and found "nothing interesting" in acquiring stake in SCL.
If the proposed joint venture with SCL came through, it would add a capacity of 1.3 lakh tonne per annum to AECL's production volume. It was also proposed that SCL would give up its own brand to produce cement under the Ambuja Brand.
Having an installed capacity of 1.8 million tonne- 1 million at the Sankrail unit and the balance at the Chhattisgarh plant- AECL intends to increase production by increasing efficiency of the units.
Describing it as "stretching the units as much as possible," Neotia said some of the Indian companies have been successful in the direction while AECL aimed at achieving it.
"However, it does not mean we are not interested in increasing capacity through expansion and acquisition. We are keeping our eyes open as far as acquisition of companies are concerned, " he added. AECL, he further said, was unlikely to go for a greenfield project because of the long gestation period involved in setting up a new cement factory.
Since taking over the company (formerly Modi Cement) from the Modis in 1998, the Gujarat Ambuja group so far injected Rs 230 crore for payment towards loan and liabilities. Post-capital restructuring AECL's debt stands at Rs 190 crore against an equity of Rs 200 crore.
Over the past one year, the promoters have invested Rs 150 crore-Rs 125 crore for setting up a 1 million tonne grinding unit here and the balance for upgradation of the Chhattisgarh unit- to turn the table. In fact, it had made a turnaround last year (financial year ending 2001, June 30) with a profit of Rs 6.5 crore.
Commenting on this year's performance, Neotia said the company targeted a turnover of Rs 300 crore which would be slightly higher than the previous year's level. Neotia, however, did not wish to comment on the expected profit this year.
Although this year the company's sale has increased 10-12 per cent so far, the rise in dispatches would not be reflected to the balance sheet because of lower price realisation.
Neotia was, however, optimistic about a better price realisation at the end of the year compared with the current price level as "cement prices began moving up and it would further firm up in the coming months."
He was very hopeful that AECL's market share in West Bengal would grow from the current 15 per cent "very shortly" as the company supplied "fresh cement in the state." "The company's dispatches has grown from 40,000 tonne a month to 70,000 tonne," he added.
