The Chanda facility in Maharashtra is facing a situation where the price, as has been perceived by the Tata think-tank body, is below the book value of Rs 50 crore. The unit has a net present value of a negative Rs 28 crore.

The Mancherial unit at present has a book value of Rs 41 crore, while its net present value is only Rs 10 crore. The Jamul unit, on the other hand, has a book value of Rs 70 crore and a net present value of Rs 20 crore.

Chanda, however, has the highest internal rate of return amongst the plants, while Wadi has the highest net present value than all the plants.

The think-tank has advised that ACC should "focus and invest further" on efficientand/or profitable locations, whose examples, it says, are Wadi, Madukkarai, and Chaibasa. ACC ought to "harvest" efficient plants in unattractive markets (example: Kymore, Lakheri after 1.4 million tonnes per annum), it says.

ACC ought to divest if price is lower than present value or book value in cases of marginal and/or non-efficient plants (example: Chanda, Mancherial, Jamul) and set up or acquire at an appropriate price at attractive locations in the south or east, of which the examples given are Tamil Nadu, or south Andhra Pradesh and cement business of Tisco, it says.

While expansion projects recommended for Lakheri and Chaibasa units of ACC will drag their net present values above their book values, those of units at Jamul and Chanda will remain below book values.

The analysis has shown that facilities at Madukkarai, Gagal and Wadi have present values greater than book values. The book value of Gagal, for example, is Rs 400 crore against its net present value of Rs 600 crore, according to a TataStrategic Management Group document available with The Financial Express.

The book value of the Wadi plant is pegged at Rs 160 crore, whereas the net present value of the plant is estimated at more than double the amount at Rs 335 crore.

The total book value of ACC's manufacturing facilities in 10 units are estimated by the thnij-tank at Rs 1,624 crore, against a total net present value of Rs 1,688 crore.

The think-tank has assumed a hurdle rate of 15 per cent for each of the net present value calculations.

Last year, ACC's modernisation focus was on units at Lakhei, Kymore (where a new 1.2-million tpa clinkering facility went on stream on May 1, 1998), Sindri, Madukkarai, Kymore and Jamul. Chanda did not figure among plants where substantial modernisation and expansion programmes are in progress.