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Gujarat Ambuja bails out Gujarat Hi-Tech - Views on News from Equitymaster
Cement major, Gujarat Ambuja has proposed to buy out the assets of
Gujarat Hi-Tech Industries for Rs 120 m.
The draft rehabilitation scheme for the sick company prepared by the
Board for Industrial and Financial Reconstruction (BIFR) envisages the
sale of all moveable assets of GHIL including plant, equipment,
machinery, land, mining rights, excluding book debts and current assets
for Rs 120 m.
Gujarat Ambuja's offer is however, subject to the condition that it will
purchase the assets without any liability whatsoever and that the assets
are free from encumbrances. It has also clarified that it will not
assume any responsibilities wither for labour and labour dues, nor for
employment of labour.
GHIL had set up a plant to manufacture Oil Well Cement and Sulphur
Resistant Cement in 1988. The company was subsequently declared sick in
1995. Gujarat Ambuja was the only bidder for the company. The cost of
rehabilitation has been worked out to Rs 200 m. Apart from the purchase
consideration of RS 120 m, Gujarat Ambuja will incur an expenditure of
RS 50 m to bring the plant to working condition. Another Rs 30 m will
need to be infused as working capital requirement.
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While topline witnessed growth on the back of higher cement sale volumes, a 50.5% YoY fall in other income weighed on Ambuja's bottomline during the quarter ending June 2017.
UltraTech Cement completed the acquisition of cement plants of Jaiprakash Associates Limited (JAL) and Jaypee Cement Corporation Limited (JCCL) during the quarter ended June 2017.
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