May 25: The state-owned Udayapur Cement Industry (UCI) is holding its annual general meeting after a gap of fourteen years on June 13. Despite being one of the top choice brands among the customers, this industry has not been able to take advantage as per the expectation. As a result, it has not been able to hold its AGM since 2006/2007.

UCI, which has the investment of fourteen government bodies, is preparing to conduct the 33rd AGM this year. It has joint investment from the Ministry of Industry, Commerce and Supplies (MoIC), Department of Industry, Department of Mines and Geology, Accounts Control Office and then Department of Commerce among others. 

In last January, the government had appointed Gopi Krishna Neupane as  the general manager of the company. Neupane informed that the date for the AGM has been finalized by the board of directors. Neupane, however, refused to reveal which company holds the highest amount of share of UCI.

The company seems to have compromised in good governance and transparency which is evident from the lack of annual general meeting and audit of the company.

There is a provision for a secretary-level official of the government to be a member of the board of directors of UCI.

The AGM plans to submit proposals to increase the authorized capital of the company  and transfer the loan investment of the Ministry of Finance (MoF) to ordinary shares. Preparations have also been made to endorse the auditor's report from 2007-2020 in the AGM to be held virtually.

MoF has loan investment of Rs 3.38 billion in UIC together with initial loan amount and the accrued interest on it. Neupane said the AGM primarily plans to convert this amount into share capital.

The Japanese government had provided a loan of Rs 1.72 billion to the government to invest in UCI.  Later, it converted the loan into a grant. However, the Ministry of Finance has still kept the amount as a loan.  “Converting this loan amount into ordinary shares wouldn't make the company liable to pay the interest accrued on it. This in turn will reduce the production cost by Rs 30 per cement pack,” said Neupane. 

According to Udaypur Cement Industry, MoF should waive the loan amount or at least convert the amount into share capital. It will help the company sell the cement at a price less than the current price by Rs 30 per pack. If the amount is transferred to share capital, the industry’s capital will increase to Rs 7.38 billion.

The industry plans to increase the authorized capital to Rs 10 billion from Rs 4 billion.