MUMBAI, AUG 8: Takeovers can be a big burden in India. First, the Aditya Birla group's takeover of Sri Digvijay Cement hit roadblocks with the latter posting huge losses and going to the Board for Industrial and Financial Resconstruction (BIFR). Now, it's the turn of Narmada Cement Company Ltd which was taken over by Larsen & Toubro last year.With the company now knocking at the doorstep of BIFR, it has planned remedial measures. The company has proposed the calling up of the uncalled share capital on 41.4 lakh equity shares (face value Rs 10) which have been paid up to the extent of Rs 2.50 per share. Shareholders' approval will also be sought for conversion of 17.5 lakh fully convertible debentures (face value Rs 100) into fully paid equity shares at par. Besides, any other measure considered appropriate to improve the current situation may also be taken up at the shareholders' meeting.Notwithstanding the change in management, the fortunes of Narmada Cement showed no signs of improvement with the company reporting a loss of Rs 22.77 crore during 1999-2000. The balance losses carried forward from the previous fiscal aggregated to Rs 16.78 crore.According to the company, in spite of a double-digit growth in cement consumption, the Indian cement industry had to pass through a very difficult period mainly due to excess supply in the market. Further, the export prices of cement as well as clinker have been extremely unattractive due to competition from South-East Asian countries. In order to finance the deficit, the company had to resort to additional borrowing and incur additional interest cost, it has said.``Takeover can be a headache in India. Both Narmada and Sri Digvijay have been making huge losses. As a result, acquirers got into problems. Instead of helping the acquirer in achieving a vertical growth, such acquisitions can become millstones around the neck,'' said an analyst. BIFR has sweeping powers to work strategies for the revival of a sick company. ``It has powers to get fresh loans from institutions at concessional rates, change the promoter and even close the company,'' he said.According to industry sources, the financial position of many cement companies which are on the takeover block is not different from Narmada or Digvijay Cement. ``Excess capacity, lower price realisation, lower demand and high interest burden have pushed many of them into red,'' sources said.
