The Hindu Business Line : Ambuja Cement shelves expansion plans till June

AMBUJA Cement Eastern Ltd (ACEL), a subsidiary of Gujarat Ambuja Cements Ltd (GACL), has decided to shelve its expansion plans till the closure of the company's current accounting year at the end of June 2004.

The management of ACEL, which was earlier known as Modi Cement Ltd, was contemplating doubling the capacity. According to Mr Harshavardhan Neotia, Managing Director of AECL and a director of GACL, the company has already received necessary permissions for the capacity expansion.

"Still we are holding back the project for the time being. We would first like to end the financial year 2003-04 in June and then we would go to the board of GACL with the proposal of the capacity expansion. The board will take the final decision," Mr Neotia told Business Line.

ACEL was acquired by GACL from the Board for Industrial & Financial Reconstruction (BIFR) in December 1997.

Under the GACL management, ACEL turned around and its net worth turned positive at Rs 15.90 crore by June 30, 2003. Couple of weeks back it cleared itself from the BIFR net.

At the beginning, AECL had just one unit at Bhatapara in Chhattisgarh. In January 2000, it embarked on a one-million-tonne grinding unit at Sankrail in West Bengal. The plant was commissioned within a year in January 2001. Clinker for this unit was mostly supplied by the Bhatapara plant.

In January, this year, Mr Neotia announced that the management wanted to double the capacity of the Sankrail unit and for that, permissions from the State Government and other authorities had been sought.

However, now, Mr Neotia seemed doubtful that there might be a shortage of clinker if the capacity of the Sankrail unit was doubled.

"Again, I am not too sure. We may just make it. So to be completely sure of the clinker position and other matters, we are holding back the expansion proposal and finally get the plan cleared by the GACL board", he said.

When inquired about the advantages ACEL would gain by coming out of the BIFR, he said that it would help the company in penetrating more into the market. He, however, added: "We were out of the BIFR for quite some time. The formal clearance came recently."

It may be noted that as per the sanctioned rehabilitation package, the company is paying off its secured and unsecured creditors. The management, after taking over Modi Cement, has made a capital expenditure of Rs 40 crore and also infused Rs 166 crore.