ACC Nihon Castings has been saddled with mounting losses owing to depressed prices and a sluggish economy. ACC has decided to turn the venture into a wholly-owned subsidiary to pave the way for financial and infrastructure support.

"With a view to providing ANCL with greater technical, financial and infrastructural support to make it a stronger entity, Nihon Cement Company has been persuaded to sell their holding in ANCL for making ANCL a 100 per cent subsidiary of ACC," the company said.

ACC Nihon Castings was set up with a paid-up equity of Rs 15.43 crore. While ACC has a majority holding of 54.5 per cent in the company, the rest is held by the Japanese company.

ACC has an equity investment of Rs 8.48 crore in thejoint venture, while its dues from the castings unit aggregated to Rs 9.29 crore in the last financial year. Besides, ACC has also given guarantees to financial institutions on behalf of its subsidiary, and the contingent liability under these heads stood at Rs 8.52 crore as on March, 31, 1998.

The castings industry is going through a severe recession with margins having come under tremendous pressure. Despite a 92 per cent capacity utilisation in the last year, the venture piled up a net loss of close over Rs 6 crore. The company posted a cash loss of Rs 4.53 crore on net sales of Rs 19.22 crore in 1997-98. Secured loans stood at Rs 9.78 crore, while unsecured loans have shot up to Rs 21.26 crore.The management plans to turn the venture around once a planned restructuring is completed. The company, which shut down its engineering division in December last year, has developed 250 new products in the last financial year. "These have contributed to a production of 400 million tonnes and have the potential togenerate orders for several years," the company has said.In the last fiscal, production fell to 2775 million tonnes, as against 3096 million tonnes in the previous year. Sales dropped from Rs 27.84 crore to Rs 19.22 crore during the period.