Idbi Okays First Cement Loan In Two Years

The Industrial Development Bank of India (IDBI) has sanctioned a loan of Rs 100 crore to Gujarat Ambuja Cements Ltd (GACL) for expansion activities in Andhra Pradesh and Maharashtra. This is the financial institution's first loan to the cement sector in two years.

IDBI had in 1998 taken an in-principle decision not to increase exposure in the then recession-hit cement sector.

GACL will utilise Rs 100 crore to more than double its cement grinding capacity at Ropar from the current 1.04 million tonne per annum (mtpa) by adding fresh grinding capacity of 1.3 mtpa, and it is setting up a new grinding facility of 1.05 million tonne at Bathinda.

 

The expansion and addition of fresh capacities marks GACL's renewed thrust in the northern markets.

The total cost of the two projects works out to Rs 235 crore of which IDBI would provide a term loan of Rs 100 crore, while the balance Rs 135 crore will be arranged from accruals, sources close to GACL said. In the north, GACL is the leader with a market share of around 40 per cent. It has become the largest player by acquiring the DLF 1.8 million tonne cement unit in Raipur in Rajasthan.

The company is poised to become a market leader in the north and east and a decisive player in the west.

The GACL-ACC combine will have a market share of around 40 per cent in eastern region. According to data provided by the Cement Manufacturers Association, GACL had an installed capacity of 6.8 mtpa at the end of March 1999 of which 3 mtpa came from its units in Kodinar (Gujarat).