Financial Daily from THE HINDU group of publications
Tuesday, Jul 16, 2002
Shiva Cement may move into red
KOLKATA, July 15
The Rourkela-based Shiva Cement Ltd may register a loss for the financial year ended June 30, because of low product price, plant closure for almost 100 days and some external factors.
According to Mr R.P. Gupta, Managing Director of Shiva Cement, the management had to close down its production unit for over three months starting in August last year. As a result, production was heavily affected.
``It was an external political problem. However, the creators tried to make a labour-related issue out of it. We had to keep our units closed for 90-100 days. This has affected the results of our company'', Mr Gupta told Business Line from Rourkela.
Another external factor for the poor results, Mr Gupta felt, was the disruption of power supply to the State by the NTPC due to differences with the Orissa State Electricity Board.
For the year ended June 30, 2001, Shiva Cement registered a turnover of Rs 27.5 crore and a nominal profit of Rs 50 lakh.
In the previous financial year, 1999-2000, it registered its first loss of Rs 81 lakh in 16 years on a turnover of Rs 21 crore.
According to Mr Gupta, in 2001-02, the turnover would remain more or less around Rs 27.5 crore but there would not be any profit.
``It is too early to give a clear picture as we are currently preparing our accounts'', he said. In the beginning of the fiscal, the company expected a turnover of Rs 33 crore.
Shiva Cement is yet to get a nod from the banks and financial institutions regarding its proposed plan for capacity expansion to 3.31 lakh tonnes per annum (tpa) at a cost of Rs 40 crore.
Meanwhile, it expanded its capacity to 1.77 lakh tpa from 1.28 lakh tpa.
In the first half of 2001, Shiva Cement also invested a little over Rs 5 crore for de-bottlenecking some sections of the production line-up.
It is over two years now that the company has been waiting for approval from the banking consortium. According to the original programme, the project was supposed to be funded through internal accruals, a preferential issue and loans.
The consortium the State Bank, IDBI, IFCI and ICICI was requested to give a loan of Rs 26 crore. About Rs 7 crore would have been garnered from internal accruals and the remaining Rs 2 crore from a preferential issue.
According to Mr Gupta, banks and financial institutions have delayed because they are looking at the long-term business feasibility of small cement plants. ``Moreover, the stock market has not revived and so we are left with hardly any option'', he said.
However, Mr Gupta was optimistic of the business potential during the current financial year. He said volumes and prices were also increasing.
``Demand for cement grew at a healthy pace of 20 per cent last year in Orissa and 15 per cent in the eastern region'', he said.
In December, last year, the company opted for a stock-split and a 1:2 bonus issue. Each equity share of Shiva Cement, then valued at Rs 10, was sub-divided into five shares of Rs 2 each.
Regarding this decision, the management felt that it tried to satisfy a long-standing demand from ordinary shareholders.
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