India Cements sets Rs 900 cr capex for MP plant

Referring to the east Indian markets, N Srinivasan, VC-MD, India Cements said, “We do not drive into heavy traffic zones and crowded highways. The agreement to takeover Springway comes with a mining lease for 100 mn tonnes of limestone. We have applied for environmental clearances which typically take about nine months. After that, we dig the first hole for the plant.”

Noting that the new plant will entail an investment of Rs 900 to Rs 1,000 cr, he said it would be funded through internal accruals and in case, the cash flows of the previous year are insufficient, the company would opt for a bridge loan. The plant, expected to be commissioned by January 2021, will cater to MP, central and eastern UP.

The company anticipates capacity utilisation to go up from the current 80 per cent to touch 100 per cent by March next year.

This confidence comes on the back of demand from the neighbouring states of Andhra Pradesh and Telangana, which have seen the monthly offtake doubling to 30 lakh tonnes.

“We think the current quarter (Oct-Dec) may be the last difficult quarter. From the Jan-March 2019 quarter, we expect to operate at almost full capacity,” Srinivasan said, adding his assessment could at best be delayed and spill over to the April to June quarter.

Every plant’s output had improved and the infra boom in Maharashtra, AP, Telangana and Gulbarga cluster has augured well for the company, he said adding within four years, the sector will see an “outstanding position” like the 2005-06 period, when business was booming.

The quarter ended September 2018, did not end on a great note as the company had “managed to do well in a bad season. Though the capacity utilisation had gone up, the price had not risen. Also, pet coke, fuel (diesel), power costs had shot up,” Srinivasan said, adding efforts to curb logistics cost were on and the company had fared well compared to competition.

The company’s total income was Rs 1,390.84 cr compared to Rs 1,274.90 cr in the same quarter of last year. Gross profit (EBIDTA) was Rs 159 cr against Rs 188 cr in the same period last year. Net profit plunged to Rs 1.43 cr against Rs 23.67 cr in the same period last year.

Net plant realisation in Q2 was Rs 3,347 per tonnes against Rs 3,473 per tonnes in Q2 last year. Total cement sales were 30.77 lakh tonnes against 27.01 lakh tonnes of the same period last year.