Business Daily from THE HINDU group of publications
Tuesday, Oct 21, 2008
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Business Daily from THE HINDU group of publications Tuesday, Oct 21, 2008 ePaper | Mobile/PDA Version | Audio | Blogs |
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Corporate Results
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Cement Digvijay Cement turns sick; Q2 net loss at Rs 3.35 cr
Grasim Industries had divested its entire equity holding of 53.63 per cent in Shree Digvijay Cement to Cimentos De Portugal, SGPS, South Africa (Cimpor), in December 2007. Shree Digvijay is confident of coming out of the red by better inventory management and improved productivity Our Bureau Mumbai, Oct. 20 The Gujarat-based Shree Digvijay Cement, which is now owned by Cimpor of Portugal, has declared itself ‘sick’ as more than 50 per cent of the company’s net worth has been eroded. A resolution to consider the company sick under the Sick Industrial Companies (Special Provisions) Act, 1985 was passed unanimously in an extra ordinary general meeting on Monday. Grasim Industries, an Aditya Birla flagship company, sold its entire equity holding of 53.63 per cent in Shree Digvijay Cement to Cimentos De Portugal, SGPS, South Africa (Cimpor), for Rs 322 crore in December 2007. Cimpor now holds a 73.63 per cent stake. Shree Digvijay Cement has accumulated a loss of Rs 114 crore as on March 31, 2008. The peak net worth during the immediately preceding four financial years was Rs 142 crore as on March 31, 2007, resulting in erosion of 50 per cent of the peak net worth. The company has a capacity of a little over a million tonnes of cement a year. CAUSES FOR LOSSListing out the causes for the erosion of net worth, the company said it did not pay interest on its debentures and other borrowings to Grasim Industries, the erstwhile holding company, since April 1, 2004. The total arrears of such interest from April 1, 2004 to March 24, 2008 was Rs 43.32 crore. The amount was paid to Grasim Industries and was charged to profit and loss accounts of the company during the financial year ended March 31, 2008 exerting pressure particularly at a time when the demand for cement is falling due to economic slowdown. Apart from the loss suffered due to partial operation of the plant for about two months, the company incurred one-time replacement cost of Rs 4.41 crore to repair a captive DG (diesel generator) set that got damaged during the year. The amount was charged to the accounts in the financial year ended March 31, 2008. CONFIDENT OF BACK IN BLACKThe company is confident that it will drive out of the woods by better inventory management, improvement in productivity and reduction in cost through better product mix “The causes for negative financial results refer to non-recurrent spot event and transferred from previous financial years. “The company has taken all steps within its control to minimise inventories of its products through export sales,” said Mr P.A. Nair, Chief Executive Officer, Shree Digvijay Cement. The company has reported a net loss of Rs 3.35 crore in the quarter ended September 30, against a profit of Rs 1.50 crore. Sales rose 73 per cent to Rs 72 crore (Rs 41 crore) in the quarter under review. The company’s shares on BSE closed 5 per cent down at Rs 6.50 on Monday. Grasim divests Shree Digvijay Cement stake for Rs 322 cr More Stories on : Cement | Sick Units
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