Financial Daily from THE HINDU group of publications
Sunday, Jun 30, 2002
Eternit fortunes look up on ACC stake hike
COIMBATORE, June 29
THE fortunes of Eternit Everest Ltd (EEL), one of the major producers of roofing materials and reinforced building boards in the country, have started looking up with the cement major ACC hiking its stake in the company to 76 per cent.
ACC hiked its stake by buying out the majority stake of its Belgium collaborator in the venture early this year.
EEL is now focussing on launching new products and expanding its reach in the country. The effort is already yielding results with the sales volume going up by 18 per cent in the first five months of the current calender year compared to the corresponding period last year (2001), according to Mr Manish Sanghi, Marketing Director, EEL.
Speaking to Business Line, he said the Etex group from Belgium, which had a 51 per cent stake in EEL and management control, had sold off its stake to ACC, which had a 25 per cent stake (the balance with retail and institutional investors). The deal became effective early this year.
He said ACC saw a lot of synergy between the businesses of EEL and itself since both were in building materials market, and roofing material, in a way, was value-added cement product. The equity base of EEL was around Rs 14.50 crore.
Mr Sanghi said EEL had recorded a turnover of about Rs 140 crore in 2001, but it had not been making profit in the past couple of years.
He said the strength of ACC's brand value had rubbed off on EEL which was now being projected as ``an ACC group company''.
At EEL, a lot of effort had gone into process improvements and improving efficiencies. This had been achieved without making any fresh investments and apart from human efficiency, even the efficiencies of machinery has improved by 20-25 per cent, he added.
EEL, from a ``non-growing'' kind of stage, has achieved around 18 per cent growth in the first five months of the current calender year (EEL's financial year is January-December).
The company was in a major drive to expand its marketing reach in rural areas besides trying to cut down costs at the factory level.
EEL wanted to further boost its sales in the South since it felt that it had not fully exploited the potential of this region which was perceived to be the biggest market for fibre cement in the country.
Mr Manish Sanghi said EEL also has launched `Eternia' , which was an "eco-friendly" roofing material as it was asbestos free and was Euro-compliant. It came in a range of colours and was durable as it was given acrylic-coating.
He said apart from roofing materials, its bread and butter segment, it recently launched a new product aimed at the reconstituted wood segment that included particle boards, plywood and gypsum for applications like false ceilings, partitioning, panelling and pre-fabricated structures.
The company's reinforced building boards were made from cement, cellulose and select mineral filters. But unlike traditional false ceiling materials, EEL's product was moisture- and fire-resistant and termite- and vermin- proof.
Mr Sanghi said he expected the reinforced building material products to contribute about 15 per cent of the company's annual earnings and the goal was to double it.
He also added that Mr M. L. Gupta, currently President, Corporate Affairs, ACC, will be taking over as the new Managing Director of EEL early next month.
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