The Hindu Business Line : ACC picking up 12% stake in Shiva Cement

ACC Ltd, which is in the process of taking 12 per cent stake in Shiva Cement Ltd (SCL), has aimed at making it a joint venture within a couple of years. Mr Ramit Budhraja, Business Head (East) of ACC, told Business Line that the warrants conversion next year, however, was subject to "fulfilment of certain conditions".

The present strategic investment is planned to be scaled up gradually and it will take a while to reach the level of joint venture. Even after conversion, ACC will have minority status in the expanded capital of Shiva Cements.

As a part of debt restructuring, Shiva Cements has allotted IDBI 36.21 lakh shares on March 30, 2007. Shiva Cements has also proposed to allot 2.2 crore equity shares to a clutch of six non-promoters. These entities hold a total quantity of 4.5 crore convertible warrants, issued on preferential basis on February 7, 2007. These conversions, effective from last month, enhanced the paid up equity of Shiva Cements to 10,52,63,972 shares of the face value of Rs 2 each aggregating to Rs 21.05 crore.

The preferential issue of shares to ACC would further increase the equity capital of Shiva Cements and it would seek shareholders' approval later this month for increase in the authorised capital and increase in borrowing limits.

Apart from subscribing to preferential allotment of 1.45 crore shares and 2.27 crore equity warrants in Shiva Cements, ACC has also signed a supply agreement with the Rourkela-based cement manufacturer. Shiva Cements' mini cement plant has a clinkering capacity of 350 tpd and cement grinding capacity of 1.3 lakh tpa.

Retiring Loans

Under the agreement, for a period of five years beginning April 1, 2007, whole of the plant's production would be purchased by ACC and marketed under its brand. Cement despatches from the Shiva Cements' plant in ACC brand has commenced from April 7, 2007. Based on the limestone reserves in its quarry, the clinkering capacity could be raised substantially to augment the plant's cement production, Mr Budhraja said.

The Rs 46 crore investments by ACC through equity and warrants, to be converted by September 30, 2008, would be utilised to expand Shiva Cements' production. A plan for 0.5 million tonne capacity would be taken up first. Shiva Cements, as a joint venture of ACC, would also acquire land and mines for future capacity addition upto 3 mtpa. Shiva Cements has also planned retiring some of its older loans.

After the conversion of warrants, ACC, indirectly controlled by Holcim, would have around 35 per cent stake in the joint venture. ACC has a cement plant in Orissa at Bargarh. Currently the Bargarh plant's capacity of 0.96 mtpa is being raised to 2.14 mtpa.