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R. Balaji

Chennai, July 23 Dalmia Cement (Bharat) Ltd has floated a subsidiary which will invest over Rs 4,000 crore in the next three years to expand cement production.

Mr Puneet Dalmia, Managing Director, Dalmia Cement, told Business Line that the subsidiary Dalmia Cement Ventures Ltd will make the investment over the next three years to set up an additional 10 million tonnes (mt) a year cement capacity in different regions.

Dalmia Cement is now a regional player concentrated in the South with a capacity of 3.5 mt in two units in Andhra Pradesh and Tamil Nadu. The company is setting up two more factories in these locations to double the capacity. This will help to strengthen Dalmia Cement presence in the South.

Also, the company has invested over Rs 200 crore for a 21.7 per cent stake in OCL India Ltd in Orissa. This was through the merger of an erstwhile subsidiary Dalmia Cement Meghalaya with OCL. This unit has a cement production capacity of 2 mt a year. An expansion programme is on to double the capacity at this facility.

Mr Dalmia said that the company has done a detailed study of 24 micro markets across the country where cement plants can be installed to cater to the regional needs.

On funding plans, he said the company is looking at a 2:1 debt equity ratio. The equity would be through internal accruals and raising fresh capital. The company is examining various options including private equity, FIIs, multilateral agencies and infrastructure funds.

On the decision to float a subsidiary to expand the capacity, company officials said that Dalmia Cement sees this as a ‘risk aversion’. The company now has a Rs 1,500-crore expansion programme to set up two greenfield factories with a capacity of 2.25 mt a year each. The unit in Cuddapah, Andhra Pradesh, is expected to start production by the year- end and the unit in Ariyalur, Tamil Nadu, in 2009.

Net drops in Q1

Our Tiruchi Bureau reports:

Dalmia Cement (Bharat) has reported a drop in its standalone net profit for the first quarter ended June 2008. During the quarter, the profit declined 38.34 per cent to Rs. 50.46 crore from Rs 81.84 crore in the same quarter last year. Net sales rose to Rs 414.59 crore while total income was Rs 423, 04 crore in the quarter. The company posted earnings of Rs. 6.24 a share, a press release said

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