In a clear move from its traditional EPC business, Shriram EPC, part of the financial services major Shriram Group, is likely to pick up a majority stake in Sree Jayajothi Cement.
The company?s board, which met recently, approved picking up a significant equity share capital of Sree Jayajothi by partially converting the dues owned by Sree Jaya Jothi into equity.
Shriram EPC, which provided EPC services to the latter?s cement plant at Yanakandala village, near Banaganapalli in Kurnool district of Andhra Pradesh, has invested its own money for the project. Shriram EPC will seek shareholders? nod in this regard through postal ballot mode and hopes the deal gets over in the next 45 days to a couple of months, said T Shivaraman, managing director and CEO at Shriram EPC.
?For us it is a strategic move, for the group it is a diversification to get into cement business. This move will have long term benefits for us. As Sree Jayajothi could not return the money which we have invested over the years, we thought it fit to convert the dues into equity. We are converting part of the dues into equity and it will be for majority stake,? Shivaraman said.
?We will keep watching the developments and have no plans to either look for strategic partners or change the name of the company at this point in time. We will try to run the plant efficiently and will keep a look out for future prospects,? he added. ?The company will discuss with group companies and may add another group company as equity partner of our dues.?
According to the sources, Shriram EPC, over a period of years, had invested a little over R500 crore into Sree Jayajothi Cement?s plant.
The company found it difficult to recover the money as Sree Jayajothi was not able to find a suitable investment partner for its cement business. Sree Jayajothi has been involved in selling the cement project equity to strategic or equity investors for over a period of time but in vain.
With the process of repayment taking a lot of time and to avoid any discrepancies in recovering the invested amount, Shriram EPC decided to convert the dues (including accrued interest over a period of time) into equity, which works out to a substantial majority stake.
?The promoters of Sree Jayajothi Cement are willing to accommodate Shriram EPC as its strategic investment partner with substantial majority stake,? sources privy to the development told FE.
