Suarashtra Cem Moves Bifr To Merge Sidhee

The Mehta group flagship Saurashtra Cement has submitted a proposal to the Board for Industrial and Financial Reconstruction (BIFR) to merge its sick subsidiary, Gujarat Sidhee Cement, with itself.

A spokesperson of Saurashtra Cement said, "We are planning to merge Saurashtra and Gujarat Sidhee, subject to necessary clearances. The key operations of the two companies have already been merged. It is just that they exist as two separate legal entities."

"We are solving the issues relating to the merger keeping in mind that Gujarat Sidhee is a BIFR-referred case," the spokesperson said.

The Mehta group has been looking for a foreign strategic partner in Saurashtra Cement to whom they could offload up to half of the promoters' 60 per cent stake.

 

Analysts said a merger between the two companies would result in a higher valuation for Saurashtra Cement prior to the strategic stake being offloaded.

The total capacity of Saurashtra and Sidhee put together is 3 million tonne. The company has designed an expansion plan which will increase its capacity to 4 million tonne at an estimated investment of around Rs 270 crore.

"We are planning to go the L&T way. However, we would be looking at retaining management control. We are in talks with some leading foreign players," the executive said. He said that it was unlikely that the partner would be a domestic player.

Gujarat Sidhee's turnover declined last year to Rs 147.75 crore from Rs 160.59 crore, while its net losses increased to Rs 61.41 crore from Rs 54.02 crore in the previous year. The company's reserves and surplus stood at a mere Rs 26.95 lakh.

Even the parent Saurashtra Cement, posted a lower turnover at Rs 212.83 crore against Rs 219.37 crore in the previous fiscal. Its losses had also increased to Rs 37,41 crore as compared with Rs 12.56 crore in the year before. Its reserves and surplus stood at Rs 110.3 crore.