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GACL may take balance Tata stake in ACC by year-end

Our Bureau

MUMBAI, Sept. 18

GUJARAT Ambuja Cements Ltd (GACL) may pick up the balance three per cent equity stake of the Tatas in ACC by the end of this year.

According to the annual report of GACL for 1999-2000, ``the Tata group companies have option to sell the remaining 52,19,450 shares representing 3 per cent of the share capital of ACC at the same price of Rs 370 per share up to December 31, 2000.''

GACL has so far acquired 11.4 per cent of the Tata stake in ACC at a cost of Rs 732.31 crore. The ACC scrip is currently ruling far below the Rs 370 offer by GACL to the Tatas for acquiring their entire 14.4 per cent stake in ACC. The scrip closed at Rs 108.95 on the BSE on Friday.

The annual report mentions that ACC and GACL will continue with their individual identities and management structure. ``The strategic alliance will result in mutual cooperation in the areas of Research and Development, Distribution, Logistics Management and Project Implementation. Both the companies have a large pool of talented and experienced people.

Their shared experience and expertise will go a long way in achieving greater efficiency and further reducing manufacturing costs. Specifically, project cost, cost of production and logistics cost. This will further improve the operating margins and help add value to the wealth of the shareholders of both the companies,'' the report states.

On the future outlook for the cement industry, the report mentions that the demand for cement is likely to grow faster than in the past. ``We believe, even with a modest growth in construction activity, the demand for cement would grow at 8-10 per cent i n the coming years. And should the economy grow faster, so will the demand for cement,'' it states.

The report said the prices have improved in most parts of the country and even the monsoon month of July has not dampened the prices. ``And trends in many regional markets indicate that prices will look-up after the monsoon,'' it states.