LVT bags two cement deals in Myanmar
LV Technology (LVT) has won two contracts to upgrade and expand two cement plants in Myanmar, which will pave the way for its diversification into cement manufacturing through a joint venture.
Aside from the cement plant upgrade in Myanmar at a cost of US$36 million (Bt1.08 billion), the company, which is listed in the Market For Alternative Investment, also announced that it had won contracts to provide engineering services and supply of equipment and machinery for a new pozzolan kiln plant in Brazil valued at $13.9 million, and a turnkey contract for a white cement kiln expansion system in Malaysia worth $8.97 million.
The contracts are worth totally Bt1.8 billion, among contracts from overseas companies, which boost the company's backlog to Bt3.8 billion.
The two contracts in Myanmar have strengthened LVT's foothold in the country's booming cement industry, LVT founder and president Hans Jorgen Nielsen said in a statement. Both contracts - being undertaken for the Max Manufacturing Group, a thriving industrial conglomerate in Myanmar - involved the upgrading of two old cement plants (Max 1 and Max 2) from wet to dry process, which would raise their production capacity from 500 to 2,100 tonnes per day each.
The Max Manufacturing Group will become the biggest cement producer in Myanmar by the end of 2014 when modification of the two plants is completed, churning out about 1.5 million tonnes per year, or roughly 18 per cent of the country's cement demand.
According to Nielsen, LVT has targeted to enter into a joint venture with the Max Manufacturing Group to tap the booming cement market in Myanmar. Details of the joint venture are expected to be finalised in the near future. The joint venture will correspond with the company's latest corporate strategy to create assets that could generate recurring income and profits in the long-term.
Investments in the joint venture will be funded by proceeds from a recent capital increase plus revenue from the partial divestment of another joint-venture subsidiary in India, LNVT. The company raised Bt215 million from its recent rights issue that was oversubscribed, with another 51 million shares set aside for private placement that would raise at least Bt64 million.
Meanwhile, the partial sale of LVT's stake in LNVT, the Indian subsidiary, has raised roughly Bt260 million, about Bt157 million of which is expected to be booked as consolidated profits in the first quarter this year. This would effectively turn the company around to profitability from losses in recent years.