Panyam in sell-off talks

Loss-making unit valued at Rs 125 cr

The management of the loss-making Panyam Cements & Mineral Industries Limited is reportedly in sell-off talks with a few industry groups from the state.

Industrialists with whom it is in talks include Lok Sabha member from Nandyal S P Y Reddy, the owner of Nandi Pipes and T G Venkatesh of Rayalseema Alkalies.

Panyam Cements has its lone plant at Panyam in Kurnool district with a capacity of 0.72 million tonnes.

The company has been incurring losses for the last four years and the total liabilities are said to be in the region of Rs 90 crore. It is learnt that prospective buyers are keen on getting tax breaks from the state government for reviving the sick plant before they invest. Panyam has been valued at approximately Rs 125 crore.

The promoters' stake in the company is 37.63 per cent, while institutional investors hold 9.17 per cent. Private corporate bodies and the Indian public hold 10.88 per cent and 42.33 per cent.

For the financial year ended March 31, 2004, the company reported a net loss of Rs 18.44 crore on the total income of Rs 48.1 crore. The company incurred an expenditure of Rs 56.88 crore. For the quarter ended June 30, 2004, the company recorded a net loss of Rs 4.9 crore on the total income of Rs 6.3 crore.

During the most recent quarter the cement division contributed nil revenues as the plant was shut down. The revenues were entirely from the wires division of the company.

When contacted V Raamnatth, vice-chairman and managing director of Panyam Cements, declined to comment on the sell-off plans.

Raamnatth said that the company was exploring various options to cope with the working capital constraints being faced and also said that the company had recently shut down its cement plant.

"Our major concern is to revive the plant. We are also engaged in talks with some banks to re-start the operations. I cannot disclose any thing more at this moment. A solution is expected to emerge shortly," he said. He was also non-committal on the possibility of a merger.