Kolkata, Sep 27 (PTI) The country’s fifth largest cement maker Birla Corporation Ltd will invest USD 1 billion over the next eight years to ramp up its capacity to 30 million tonne from the present 20 million tonne, a top company official has said.
The plan entails the installation of a four-million tonne per annum each capacity in a greenfield project and brownfield expansion. While a two million tonne output increase will come from the de-bottlenecking of existing facilities. “We are committed to ramp up our production capacity to 30 million tonnes by 2030. That will translate into an investment of at least USD one billion dollars over the next eight years,” its chairman Harsh V Lodha told shareholders at the AGM.
The company has eight plants of which four are integrated units and the rest are grinding units.
“An integrated greenfield plant is most likely to come up at Chhattisgarh and would depend on the limestone block but it is not frozen,” Lodha said.
The company said it was considering Chattisgarh due to strategic cost and market reasons over other locations despite having limestone mining leases in Rajasthan, Himachal Pradesh and Andhra Pradesh. These leases are part of the Reliance Cement Company takeover in 2016. MP Birla flagship Birla Corporation said it was currently preferring greenfield plant execution rather than focusing on acquisitions which don’t favour economics with the valuation it is currently commanding. The acquisition of a controlling stake in Ambuja Cements and ACC by Adani group at USD 6.5 billion is valued at USD 160 per tonne while a new plant would cost around USD 100 per tonne and brownfield expansion will require USD 80 per tonne, officials stated.
The 3.9 million tonne plant in Mukutban in Maharashtra, which was commissioned this year, will take another year to reach three million tonne capacity if demand firms up. Lodha said that the plant carries an incentive of Rs 650 per tonne totalling Rs 2,300 crore of cement manufactured from this plant, which will help the company achieve a break-even from this plant soon.
The company also said the units are facing cost pressure and were unable to pass on the cost to recover its margins. The margins may get impacted further due to elevated cost pressure unless realisation improves from the third quarter. PTI BSM BAL BAL
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