Mysore Cements To Reduce Costs, Lift Efficiency

Even as Mysore Cements is bringing in an Israeli partner which will be holding a 9 per cent stake, the company is busy putting through a cost-cutting exercise.

The Sudarshan Kumar Birla cement major which has decided to bring in Nesher Israel Cement Enterprises through a preferential allotment of equity, feels it is pointless blaming the depressed market and wants to cut flab to emerge as a competitive cement maker. Besides, measures to tap operational efficiencies and strengthen marketing network are also being undertaken. The cement industry had been facing a decline in selling prices and spiralling input costs.

According to the company, the cost-cutting measures include use of low-ash coal, lowering of electricity consumption and installation of captive power plants to curb expenditure.

The S K Birla group is in the midst of a major restructuring exercise with Cimmco Birla having decided to spin off its non-engineering business into a new company. This would leave to Cimmco Birla focusing on the engineering business. Similar measures are being weighed for flagship Birla VXL. A study by ICICI Securities is now on and further steps will be decided only after the report is submitted.

According to Mysore Cements, measures to cut costs are beginning to yield results as is evident from the significant reduction in production costs. A 15 mw thermal power plant is also under installation and with its commissioning, the company's Damoh plant would become self-sufficient in power. Besides, upgradation of technology at Damoh should result in further savings, the company said.

At its annual general meeting scheduled for December 15, Mysore Cements will seek shareholders' nod for issuance of shares to the Israeli co-promoter and other foreign institutional investors, overseas corporate bodies or mutual funds. Besides, the company will also be proposing a resolution to buy back shares to enhance shareholder value.