)
IFC proposes to partly finance BCL’s turnaround plan, subject to the transfer of ownership and completion of all regulatory formalities related to the transaction.
The project funding involves an equity contribution of $47.5 million, working capital loans worth $ 6.5 million and a $50 million long-term debt, which includes IFC investment of $33 million.
In a disclosure, the IFC said the total project cost is estimated at $104 million, and it is proposing to invest $33 million (up to Rs 200 crore) as a long-term debt finance in BCL, which is under severe financial stress.
IFC’s financing will provide the much-needed long term capital to support the operations and aid the future growth of BCL. This would not only help protect the existing jobs of more than 1,500, but also create around 700 new jobs.
The project would also support a regional cement manufacturer to expand its market and improve the access to raw material.
BCL is controlled by Bharat Mines & Minerals group (BMM group), which is owned by Bengaluru-based Singhi family. The group has presence in mining, ore processing, steel manufacturing and power generation.
The transfer of ownership of BCL to south India-based Sagar Cements Limited (SCL) is under place at present. After its completion, BCL will become a wholly -owned subsidiary of SCL.
BSE-listed Sagar Cements Limited (SCL) is backed by AvH Resources India Private Limited, the Indian subsidiary of Belgium-based global conglomerate-Ackermans and Van Haaren, and balance is held by institutions and public.
Till last year, SCL had a joint venture with Vicat SA of France and Vicat Sagar Cement Private Limited - an IFC investee company, which currently owns and operates an integrated greenfield cement plant in Karnataka’s Gulbarga district with a capacity of a 2.75 million tonnes per annum. SCL exited from the JV in September 2014.
BCL has established a 0.95 mtpa integrated cement manufacturing unit in Andhra Pradesh’s Anantpur district. Commissioned in 2012 and it produces ordinary portland cement and portland pozzalona cement.
Due to various internal and external issues, the capacity utilisation of the plant has been low since inception and the company had been incurring losses.
Consequently, the shareholders of BCL entered into an agreement in November 2014 to transfer the ownership of BCL to SCL, which has a cement manufacturing capacity of 2.75 mtpa, spread across two plants located at Matampally and Pedaveedu in the Nalgonda district of Telangana.
SCL’s turnaround plan for BCL includes improving operational efficiency of the plant by investing in refurbishment, insurance spares, working capital and restructuring of the balance sheet by injecting long-term capital, including debt refinancing, according to the IFC disclosure.
