PE fund may invest 4 bn
It is learnt that a private equity fund may invest Rs 400 crore to set up a captive power plant in the Kurnool cement unit of Sree Jayajothi Cements.
The private equity fund is also expected to pay the erstwhile promoters of Sree Jayajothi Cements. This will improve Shriram EPC's liquidity as it also has a stake in Sree Jayajothi Cements. The deal is to be finalised by the year end.
Shriram EPC picked up a majority stake in the 3.2 million tonne cement unit in Kurnool to recover its dues from the promoters, the Rajapalayam-based Jayajothi Group. The cement firm owes payment to Shriram EPC for the latter's engineering contract.
Reports suggest that Shriram EPC's investment in the cement firm continues to weigh it down as the net worth of the cement company has been partially eroded. For the second quarter, Shriram EPC reported a net profit of Rs 4.26 crore on a total income of Rs 376.84 crore. In the corresponding period the previous year it reported a net profit of Rs 6.28 crore on a total income 216.43 crore.
Shriram EPC has invested over Rs 366 crore in the cement unit including Rs 108 crore as equity and Rs 256 crore, indirectly through a group company, in Optionally Convertible Debentures.