Saurashtra Promoters To Tap FIs For Debt Revamp

Mumbai, July 30: | Updated: Jul 31 2003, 05:30am hrs
The Mehta Group, promoters of Saurashtra Cement and Gujarat Sidhee Cement, has decided to approach the financial institutions to work out a corporate debt restructuring (CDR) package. Group sources also insist that there are no plans for inducting a strategic partner at this juncture. However, industry sources say that the Mehtas may still be in talks with Mexican giant Cemex for a strategic alliance.

Saurashtra Cement has seen its total debt creep up from Rs 180 crore for the year ended June 1997-98 to Rs 278 crore in 2001-02.

The share of secured loans has also increased from Rs 137 crore to Rs 248 crore during the period. This may be partly attributed to the capital work in progress which saw a substantive jump from Rs 86.4 crore in 1999-00 to Rs 224.03 crore in 2001-02.

Saurashtras interest costs stood at Rs 28 crore for the fiscal 2001-02 on net sales worth Rs 187.57 crore.

Both the companies have been hit on account of the poor demand and price situation that has been prevailing in Gujarat for the past few years.

Gujarat Sidhees reserves stood at a negative Rs 177 crore as of March 2003.

The Appellate Authority for Industrial & Financial Reconstruction (AAIFR) has sanctioned the draft rehabilitation scheme prepared by the State Bank of India, which is the operating agency for Gujarat Sidhee. The effect of waiver, concession, relief and restructuring of existing loans pursuant to the scheme has been accounted for by the company in its March 2003 year ended results.

The cost of the scheme is proposed to be financed by loans from financial institution and banks, and by additional equity worth Rs 13.24 crore.

There are no plans to induct a strategic partner at this juncture. We are pushing for a CDR scheme, top group sources said. It may be mentioned that Saurashtra Cement had earlier mandated JM Morgan Stanley to find a strategic partner. Sources close to the development say that a deal was nearly clinched with Cemex but it fell off at the last minute.