The Hindu Business Line : India Cements maps out greenfield projects for N. India

Chennai, Nov. 19India Cements Ltd has announced a Rs 1,450-crore expansion plan to be part-financed with a $150-million (Rs 600 crore) issue of equity or equity-linked securities in the international or domestic markets.

Addressing a press conference here on Monday, Mr N. Srinivasan, Vice-Chairman and Managing Director, India Cements, said the company would set up two cement plants in Rajasthan and Himachal Pradesh with a total capacity of 3.5-4 million tonnes a year, a captive power plant of about 40-50 MW, and buy two ships of about 40,000 tonnes each to transport coal.

The company has several mining leases in these two States and is looking at leases in Madhya Pradesh.

Apart from the issue of equity-linked securities, the expansion would be funded through internal accruals and borrowings. The company would seek shareholders’ approval at an EGM to be held on December 14. The exact nature and timing of the issue would be decided later, he said.

Capacity targets

He said that the proposed expansion, along with its ongoing expansion programme, would see the company’s capacity doubling from its present 9 million tonnes. India Cements would emerge as a ‘pan-India’ player with a total capacity of about 18 million tonnes in 2009-10.

Its ongoing expansion programme would be completed by mid-2008, taking its production capacity to 14 million tonnes. The company would start work on the greenfield projects in the North in March 2008 and start production in January 2010.

He described this as a “two-step transition” which will see the company get “a footprint across the country.” The latest expansion would put the entire northern markets within its reach at a time when these markets are the ideal place to be, he said.

Ship plans

On the plans to purchase the ships, he said India Cements is strengthening its coal supply chain even as it exploits the buoyant cement market. The ships would help cap the cost of coal freight. “I am then not subject to the vagaries of the freight market,” Mr Srinivasan said.

Coal and freight costs were major issues that need to be addressed.

The company imports over 9 lakh tonnes of a coal a year from Indonesia. Landed cost has in recent times increased three times to about $120 a tonne with freight alone costing $50. A division within India Cements would operate the ships, he said.

Coal concessions

To a question on further efforts to secure coal, Mr Srinivasan said the company “will definitely secure our coal.” India Cements would look at coal concessions. This was a necessity in a volatile market where coal was also not available internally.

On the Exchange on Monday, the company’s shares gained 6 per cent to close at Rs 311.70 after opening at Rs 295 a share of Rs 10.