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Ch. R.S. Sarma

VIJAYAWADA, June 6

THE Andhra Cement Company unit here, once the only major industry in Vijayawada, which provided employment to many of the citizens and contributed substantially to its growth, is set to pass into history and in its place is proposed a modern residential colony with all amenities and a commercial complex.

Lotus Constructions, a local real estate company, the highest bidder, has been chosen by the company for selling of 54 acres of its prime land here at Kedareswararao Peta on the recommendation of the BIFR to pay off its creditors.

However, the final clearance is still awaited from the State Government on the recommendation of the Vijayawada-Guntur-Tenali Urban Development. A co-operative society of ex-employees has raised an objection to the sale, which the company sources say is not tenable.

The State Government has instructed the VUDA to examine the issue and submit a report for final clearance.

The Andhra Cement Company has a chequered history. It has two units — one, the first and the oldest one, here and another at Dachepalli in Guntur district.

The unit was set up in 1937 at Kedareswararao Peta by the late Mr D.L.N. Raju in what then was the outskirts of Vijayawada and it was inaugurated by the late Mr V.V. Giri, a Minister in the composite Madras State, who later on became the Union President. It was the first cement unit established in the South India and the second in the country.

The factory, in the vicinity of the railway station, flourished for a time but lagged behind subsequently in a competitive market. The town also grew rapidly during the eighties and nineties and, as many residential areas sprang up around the factory, people started complaining of pollution.

The company found the going tough and, as the complaints of pollution increased, the management was forced to reduce cement production here and altogether stop it by the early nineties.

The employees were given voluntary retirement in the nineties and the factory was abandoned. For sometime, the management attempted to produce clinker here and convert it into cement later at Dachepalli, but even that was given up.

The company was referred to the BIFR and the latter recommended the sale of property here to pay off the creditors.

However, a difficulty cropped up in 1997 when the State Government revoked exemption given earlier to the company under the Urban Land Ceiling Act on the ground that the company had stopped production of cement and, therefore, there was no longer any rationale for continuing the exemption. It was challenged by the company in the AP High Court and the verdict went in its favour.

Subsequently, on the recommendation of the BIFR, the company applied for permission from the State Government for conversion of land use. It sought the Government to allow it to convert 48 acres of land from industrial use to residential use and six more acres from the industrial use to commercial use.

The State Government gave its consent to the conversion of 48 acres first, subject to the condition that the company would first have to pay up its commercial tax dues of roughly Rs 10 crore. Consent to the conversion of six acres was withheld on certain procedural grounds.

The company invited tenders and Lotus, which quoted Rs 40 crore, was chosen as the highest bidder. However, there are still many loose ends to the deal and it has to be finally cleared by the VUDA and the State Government.

The company would, after the completion of the deal, be in a position to clear debts to financial institutions and dues to the Government department to the extent of Rs 30 crore or so, sources say.

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