ACC sells power plants to TEC

By Our Corporate Bureau | 02 Apr 1999

1
The wheel is coming full circle for the Tata group. Companies that diversified into non-core businesses for one reason or another are disposing of those businesses in order to focus better.
     Remember how the Tata Iron & Steel Company entered the cement business, especially because it had huge piles of slag from its steel furnaces, which it could turn into cement? And then repented at leisure because running a new cement business and continuing with its old steel operations, it found, were two very different cups of tea.
     Now Associated Cement Companies expects to realise Rs 350 crore from the sale of two new power plants of 25 MW each to Tata Electric Companies. The plants, located at Kymore and Jamul in Madhya Pradesh, are likely to be commissioned by May 1999. The cement company has already sold a 37.5 MW power plant at Wadi to TEC in January 1999 for Rs 90 crore.
     According to NH Italia, ACC's president (finance), the plants sold to TEC will supply power exclusively to ACC's cement plants. He says the cost of this power will be lower than that supplied by the state electricity board.
     ACC will retain its diesel generating capacity of 66 MW across 12 cement plants. ACC will use the Rs 350 crore it gets from the sale to repay debt of Rs 250 crore, borrowed to build the power plants. The remaining amount will be saved for capital expenditure. It will part-finance a new 3 million tonne cement capacity costing an estimated Rs 750 crore.

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