Asia / Oceania
Flat growth in South India forces cement companies to exit
Aug, 07 2012
(India) -- Several cement companies in South India are opting for the exit route after reeling under two years of flat growth and excess capacity in the region.
After it was reported that Sree Jayajothi Cements is looking for buyers, it is learnt that the promoter of Bhavya Cements is also scouting for buyers.
The cement manufacturers are operating their plants at only 70-75% of the rated capacity. The growth has languished in lower single digits since the last two years.
The promoter of Bhavya Cements, V Ananda Prasad, is reported to be expecting around Rs 900 crore or roughly $160 a tonne. Bhavya has mandated Ernst & Young to find buyers for the 1.4 million tonne per annum cement plant that it operates in Thangeda, near Dachepalli in Guntur district of Andhra Pradesh.
However, E Venkat Rao, Director on the board of Bhavya Cements, dismissed talks of a sale. "We are not selling or looking for external funding. We already have investment interest from Wayzata Investment Partners," Rao said.
The original promoters of Sree Jayajothi Cements, Jayavilas Group of Rajapalayam, had to sell off their plant to Shriram EPC, unable to pay the EPC company dues for setting up the plant.
Shriram EPC has a 70% stake in Sree Jayajothi Cements after it converted long-pending dues into equity earlier this year. Jayavilas Group holds the remaining shares.
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