INDIA: Govt revives plan to sell 7 units of Cement Corporation

The government is actively pursuing its plan to put seven non-functional units of Cement Corporation of India on the block and invest the proceeds into the three financially viable units of the public sector cement producer. This is despite the recommendations of a Parliamentary Standing Committee that these units should be revived through joint ventures or leased out to private players. 

“Some of these units are located in prime locations in Delhi and Karnataka and private players had evinced interest in taking them over,” said an official with the ministry of heavy industries, adding that the sale of these seven units could fetch the government an estimated µ1,500 crore. The ministry is not too keen to attempt a revival of these units as experience has shown that revival of terminally sick units does not reap any benefit in the long run. 

The government had in 2008 planned to sell six units of Cement Corporation and had appointed IFCI Ltd as consultants for the sale. But the process was put on hold following opposition from political parties and trade unions. 

“SBI Caps had done the valuation of these units and put their combined value at Rs 800 crore,” the official said. Almost all the big players in the industry, including JK Cements, Ambuja Cements, Birla Cements, ACC Ltdand Lafarge, had shown interest in the proposed sale, he said. 

Many of these companies declined to comment when ET contacted them on Thursday. The official said the government would soon re-evaluate the seven units and come out with an expression of interest. 

“We have initiated the process and will try for outright sale of these non-operating plants,” he said. The heavy industries ministry is of the view that it would be better to sell these units and deploy a part of the proceeds in strengthening Cement Corporation’s functioning units. 

“Some part of the proceeds can also be utilised to pay off loans and towards strengthening human resources,” the official said. Cement Corporation, which has 1,037 employees on its rolls, has not recruited any staff since 1998. Heavy industries minister Praful Patel had recently called for a different approach towards sick public sector units. 

“Some disinvestment, some outright sale,” Patel had said, hinting at a change in the government’s divestment strategy. The ministry recently cleared a full stake sale in Scooters India and HMT Bearings.