Grasim, Zuari to market CCI products

By Our Staff Reporter

HYDERABAD, AUG. 24. The Cement Corporation of India (CCI), a sick company since 1996 and expected to be offered for sale anytime now by the Union Government, has chalked out plans to activate as many units as possible out of its ten plants, so that its realisation can be maximised during the bidding time.

As part of this strategy, it has signed a marketing agreement with Zuari Cements and Grasim Industries for marketing its 43/53 grade cement produced at Tandur (Andhra Pradesh) plant. Under the one year agreement, extendable to two, the two private sector companies will each market 35 per cent of production from its one million tonne capacity Tandur cement plant.

Announcing the details at a press conference here on Monday, Mr. K. Teckchandani, Chairman and Managing Director, CCI, said the balance 30 per cent would be marketed by CCI under its own brand name of CCI Mahashakti 43 grade and CCI Paramshakti 53 grade.

Zuari will market in Andhra Pradesh, Tamilnadu, Pondicherry and Kerala, while Grasim will do so in Maharashtra and Karnataka. CCI retains the exclusive marketing rights to sell its own brand within an area of 100 km around Tandur. Accordingly the Tandur unit has been recommissioned on April 27, after a gap of one year.

Mr. Teckchandani said Rs. 8 crores would be spent on upgrading the plant so that it could produce about 25-30 per cent above the BIS standards. Hitherto, while Zuari, Grasim and others have been making cement of 25 to 30 per cent above BIS standards, CCI was making only 15 per cent above BIS standards. He said a pricing mechanism had been agreed upon which takes care of fluctuations in the market price, and the agreement was beneficial for all three parties. The Tandur plant's target is to achieve 90 to 100 per cent capacity utilisation.

He said CCI in all had 38 lakh tonnes capacity with two plants each in Andhra Pradesh, and Chhattisgurh, one each in Karnataka, Madhya Pradesh, Assam, Himachal Pradesh, Delhi and Haryana. The corporation has outstanding credit liability of Rs. 1,537 crores (including Rs. 900 crores to the Government), and a net worth of Rs. 425 crores. The CMD was frank enough to concede that the corporation would never be able to come out of its negative net worth unless some units were sold. The Government's sale offer of CCI as a whole or in parts is expected soon, he said.

Mr. Teckhandani said with Tandur plant's commissioning, the turnover was expected to touch Rs. 240-250 crores this year and Rs. 270 crores in a full year. In 6-7 years, the unit is expected to become profitable after meeting salaries, depreciation etc.

Efforts are on to put into operation the Delhi cement grinding factory with five lakh tonne capacity. This had been closed for six years. CCI already has a marketing alliance with Grasim for the Rajban plant (Himachal Pradesh), with the latter agreeing to lift 50 per cent of installed capacity.

For Tandur, it is expecting a Rs. 12 crore working capital from the Government. For recommissioning the four lakh tonne Adilabad (Andhra Pradesh) plant it requires Rs. 27 crores. Salaries were not paid in eight plants since March. But it is hopeful of paying salaries regularly from October.

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