The Hindu Business Line : JP Morgan in talks to buy stake in Andhra Cements

JP Morgan is aiming at precisely 14.95 per cent of the company's equity, sources close to the development said. The overseas body has also agreed to pay a premium for the shares, which are likely to be privately placed by the promoters.

"In all probability, the promoters would be deploying the amount earned from the deal back into the company. The proceeds would be in the range of Rs 90 crore. However, to avoid the compulsory open offer to the minority shareholders, JP Morgan's proposed buy-out would be just under the 15 per cent mark," the sources added.

Speaking to Business Line, Mr Goenka confirmed that talks had reached a critical stage. However, he preferred not to disclose the premium JP Morgan was willing to pay.

"In fact, we have been talking to a number of parties and JP Morgan is one of them. It is slightly premature to give further details on it. Probably within the next 10 days, everything would be finalised."

On the other bidders for his 15 per cent stake in Andhra Cements, Mr Goenka said that it would be unfair on his part to disclose the names at this point.

The GP Goenka group has already committed to infuse approximately Rs 90 crore into Andhra Cements by reducing the promoters' stake as part of the corporate debt restructuring exercise of its flagship company, Duncans Industries Ltd.

The shareholding pattern filed with the BSE indicates that the Indian promoters led by Mr Goenka, as on March 31, 2005 hold 71.60 per cent, while foreign promoters and private corporate bodies hold 13.04 per cent and 5.38 per cent respectively. The public has 9.3 per cent.

Andhra Cements, which has plants in Vijayawada and Visakhapatnam, markets its products under the `Durga' brand name. Since 1990, several factors have affected the company's finances, ultimately driving it to sickness.

For the quarter ended June 2005, the company recorded a total income of Rs 34.64 crore against Rs 36.02 crore in the previous quarter. Loss after tax was Rs 4.19 crore.

In the quarter ended March 2005, the company managed to clock a net profit of Rs 16.23 crore despite registering a loss after tax of Rs 3.35 crore because it recorded an extraordinary income of Rs 19.5 crore.

The Andhra Cement stock has been buzzing on the bourses in recent days with increasing volumes. On Monday, the counter reached its 52-week high of Rs 46.50, up from the previous day's close of Rs 42.30. A total of 1,70,923 shares were traded.

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