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ABG Cement will be utilising the proceeds from sale of its 51% stake in the Gujarat unit mainly for debt reduction of the company, Dhananjay Datar, chief financial officer of the company told Business Standard today.
The company plans to close the deal by end of April and is in advanced talks with Dubai’s SIMEC for the same.
“Lack of liquidity is a problem for us. Our focus is to better the group’s cash flow and so most of the proceeds of about Rs 550 crore will be utilised towards reducing the Rs 2,000 crore debt on ABG Cement,” he said. “A very small portion of the proceeds will go towards operations of the Gujarat plant,” he added.
ABG International, promoter of ABG Cement holds 94% stake in the cement business and the balance minority stake is held by IFCI.
ABG Group’s cement business housed under ABG Cement comprises a 5.8-million-tonne grinding unit at Surat and a 3.3 million tonne clinker unit at Kutch near limestone reserves.
“As per the agreement, management control will remain with ABG Cement for the first 7-8 years though the majority stake will be with the new investor,” said Datar.
ABG Group’s shipyard business recently received Rs 11,500-crore debt recast package from a 22-lender consortium headed by ICICI Bank. The 27 year old group company forayed into the cement business a few years ago as part of its broader plans in the infrastructure space and its access to limestone mines in Gujarat.
