Mumbai: Cement major, India Cements Ltd, is planning to sell off Sri Vishnu Cement Ltd. with a view to bringing down its debt interest cost. The likely buyer is Italcementi, which already has a presence in India through a joint venture with Zuari Cement.
India Cements had a debt burden of Rs 1,800 crore, as on 31 March 2001 and its interest cost in fiscal 2001 amounted to Rs 190 crore.
Sri Vishnu Cement had posted a profit of Rs 3.20 crore in the year ended 30 June 2001, whereas selling the company could fetch India Cements as much as Rs 496 crore. If the sale materialises, and India Cements settles its debt, it could save as much as Rs 65 crore towards interest cost. This would have a positive impact on the bottom line and therefore on the earnings per share of the company.
Though company management has not confirmed the deal, terming the news purely speculative, sources close to the management said the two companies have already signed a memorandum of understanding. The deal is likely to go through once the board of Italcementi ratifies the MoU.
India Cements had acquired 88.50 per cent stake in Sri Vishnu Cement for Rs 115 crore, when it had taken over Rassi Cement a couple of years back. India Cements later increased its stake to 94 per cent.