Malabar -Travancore Cements merger set to go before boards

KOCHI: Malabar Cements Ltd and Travancore Cements Ltd are set to merge to become a much bigger Malabar Cements with a capacity to make more than three million tonne annually, if things move ahead as planned.

This will take out one more public sector company from the long list of loss-making state level public enterprises (SLPEs).

Talking to businessbenchmark.news, VB Ramachandran Nair, the managing director of Malabar Cements Ltd (MCL) and chairman & managing director (CMD) of Travancore Cements Ltd (TCL), said the major stumbling block to the merger – the scattered shares to the extent of 20 to 25 per cent in Travancore Cements — has been resolved.

Nair said the government has increased its shareholding in Travancore Cements to about 91 per cent by buying out a big chunk of the minority shareholding and also upping its investment in the company.

Decks are now cleared for the proposal to be taken to the respective boards for their ratification before being presented to the government for its go ahead.

The merger can cash in on better synergies in terms of marketing, production and production facilities. Already, MCL has finalised plans to more than double its capacity to around 2 million tonnes.

Nair said though TCL now makes white cement, cement paints and wall putty, its facilities can also be used to make additional one million tonnes Portland cement and thus augment the combined cement capacity to an ambitious three million tonnes per year.

As part of the new plans, the white cement capacity of Travancore Cements will also be raised from 35,000 tonne to around 50,000 to 60,000 tonne. Once the merger is through, Malabar Cement will have Nattakom facility too, besides the Walayar, Chertala and Cochin Port Trust (CPT) mixing plant, where construction work is in its final stage.

Malabar Cements has already embarked on a modernisation and expansion plan that envisages a total investment to the tune of Rs300 crore, which will either be loaned from KIIFB or other financial institutions, subject to the approvals and guidance of the government.

While Malabar Cements has a paid up capital of Rs26 crore and reserves of Rs233.81 crore, the total assets of the company have been computed at Rs372.21 crore as on March 31, 2017. MCL is one of the star performers among the 90 odd public sector companies in the state with a profitability history.

On the other hand, the less privileged counterpart – Travancore Cements — has a paid up capital of Rs2.71 crore where the state government holds 91 per cent stake. The company that sits on a negative networth of Rs58.06 crore as on March 31, 2017 posted a loss of Rs12.04 crore and has already accumulated losses to the tune of Rs63.94 crore as of the close of 2016-2017.

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