The Hindu Business Line : Shree Cement unveils Rs 700-cr expansion plan

Expansion programme
The board of directors has decided to set up a new grinding unit at the Khuskhere village near Bhiwadi in Rajasthan.
The company has decided to set up a new co-generation power plant of 18 MW capacity.

Kolkata , May 5

Shree Cement Ltd, belonging to Mr H.M Bangur, on Friday announced a Rs 700-crore expansion plan which would take the company's total cement capacity to 9.1 million tonnes per annum by 2007-08.

According to Mr Bangur, a new cement plant of 1.5 million tonnes per annum capacity would be set up at Pali in Rajasthan. This would be fifth cement unit of the company.

The third unit is already in that place and it has a similar capacity. The fourth unit is currently being set up in the same place. Its capacity is also 1.5 million tonnes per annum.

New grinding unit

The board of directors of Shree Cement in its last meeting has decided to set up a new grinding unit of two million tonnes per annum capacity at the Khuskhere village near Bhiwadi in Rajasthan.

Shree Cement has decided to set up a new co-generation power plant of 18 MW capacity. At present, it is implementing a 36-MW capacity. The plant would take care of its additional power requirements.

Talking to Business Line, Mr Bangur clarified that there would be no fresh issue of equity shares and the expansion project would be funded through internal accruals and debt.

The debt component would not be more than Rs 350 crore. "Profitability of the cement industry is extremely good now. We too are generating healthy profits and it would be enough to fund our expansion programme. We would raise funds through the equity route," Mr Bangur.

According to him, it already has Rs 85 crore in its books and has further recorded a net profit of Rs 90 in the last quarter of 2005-06. In the first quarter of 2006-07, sales are up 40 per cent and profitability would record a similar growth.

The expansion programme is scheduled for completion in 2007-08. Mr Bangur said that high profitability of the cement is likely to continue till then. "Hopefully, we would continue generate profits to fund our expansion project", he said.

While giving the break-up of the investment plans, he said, the grinding unit and power plant would cost Rs 150 crore and Rs 140 crore, respectively. The rest would be used for expanding the cement capacity.