The Aditya Vikram Birla groups plans to acquire the K K-S K Bangur group company, Digvijay Cement, has been put on the backburner temporarily with the Bangurs being unable to fulfil certain specific terms and conditions of the memorandum of understanding entered into between the two groups.
The A V Birla group had earlier signed an MoU with the Bangurs on the specific condition that they will have to hive-off the non-cement businesses of Digvijay Cement before signing a formal acquisition deal. Following the failure of the Bangurs to fully comply with this condition so far, the acquisition plans have been kept on hold, sources told Business Standard.
A final decision on the acquisition of Digvijay Cement was expected to be taken last month after being deliberated upon by the top brass in the Birla group.
According to the 1991 family settlement of the Bangurs, the four non-cement divisions of Shree Digvijay Cement Ahmedabad Cement Mill, Fibre Products Division, Shreeram Silk (Synthetics Fabrics) division and Coir & Felt Division was to be transferred to Gujarat Composite.
Acquisition talks with the Bangurs were initiated sometime mid-1997 and the deal was expected to be finalised in February.
While consultants Price Waterhouse conducted the due diligence report for the takeover, an independent appraisal of the acquisition of the cement unit was done in-house by the A V Birla group as they have a strong presence in cement and have adequate technical skills.
To set the ball rolling, the Birlas have already chalked out an action plan to modernise the unit and reduce cost involving an investment of about Rs 200 crore over three-years. The project, which would include rationalisation of workforce and optimum utilisation of the jetty to import inputs for the other group units, is expected to be implemented in 12 months.
Some of the improvisations in the loss-making unit include use of fly ash in place of sandstone in raw mix, using 20 per cent lignite against 100 per cent coal, repairs of DG set under break down and incorporation of full automation by installing DDS system with all the supporting systems.
Besides, the group had also decided to install pre-grinding and close circuiting of cement mill, installation of dynamic separator in vertical coal mill, changing roller lubrication system from grease to oil and replacement of pneumatic transport system of kiln feed and silo feed with rubber belt elevators, installation of mullet-channel burner and 2DG sets of 6 MW each.
The acquisition of Shree Digvijay Cement, which has a capacity of about one million tonnes, would enable the Aditya Vikram Birla group to explore export possibilities as well as import coal through ships.
