The Hindu Business Line : Madras Cements to go for captive thermal plants

Alternative plan
40-MW plant to come up at its Ariyalur facility; 25 MW plant is to come up at RR Nagar
The company has decided to reduce its dependence on wind power

R. Balaji
N. Ramakrishnan

Chennai, July 9 Madras Cements Ltd will invest Rs 280 crore to set up 65 MW of coal-based captive power plants at two of its cement production facilities.

According to Mr A.V. Dharmakrishnan, Executive Director - Finance, the new capacity, along with its existing 70 MW, will make the 10 million tonne a year cement manufacturer self-sufficient in power.

This will give it the advantage of assured power supply and save the company about Rs 15 crore a year in power costs paid as fixed charges to the electricity board.

Madras Cements has placed orders for equipment with Thermax for a 40-MW power plant at its Ariyalur facility. The plant will go on stream in 18 months. The other plant of 25 MW is to come up at RR Nagar. Both these plants are in Tamil Nadu.

The company has installed 36 MW of coal-based captive power plants for the Jayanthipuram (Andhra Pradesh) and Alathiyur (Tamil Nadu) plants.

Madras Cements, which has invested over Rs 1,000 crore in 180 MW of captive wind power capacity, has decided to move away from its dependence on wind power, he said.

The prevailing power shortage in the State and the stand of the Tamil Nadu Electricity Board on wind power banking prevents the company from exploiting the benefit of its captive wind power, he said. There is a total power cut for about five hours a day and the TNEB does not allow wind power generators to use the extended wind power banking facility which results in the banked power lapsing without any benefit to the company.

Grid delink

Once the captive coal-based power plants go on stream Madras Cements will be able to delink from the grid. It would then sell its entire wind power to the TNEB, which would give Madras Cements revenues of over Rs 100 crore a year.

This surplus power will also be available at a later date when it plans further expansions, Mr Dharmakrishnan said.

During 2008-09, the company completed an expansion programme which increased its cement production capacity to nearly 10 million tonnes (mt) from 6 mt earlier. It has five production facilities – at RR Nagar (1.5 mt a year), Alathiyur (3 mt) and Ariyalur (2 mt), all in Tamil Nadu; Jayanthipuram, Andhra Pradesh (3.3 mt); and Mathode, Karnataka (0.2 mt).

During the current year, the company expects to have cement grinding capacity of about 11 mt a year. It has commissioned a 0.6-mt a year grinding unit in Kanchipuram and is in the final stages of commissioning a similar facility at Salem.

A third unit of 0.95 mt is coming up at Kolaghat in West Bengal and is to be commissioned by August.

Packing plants

According to the annual report for 2008-09, Madras Cements is also setting up dedicated packing plants at Hyderabad and Nagercoil, each with a capacity of about 120 tonnes an hour. This will help the company access its markets and avoid the restrictions on movement on heavy vehicles in cities.

The report says that Madras Cements has acquired from a group company, Ramco Systems Ltd, vacant land of nearly 50,000 sq.ft in Chennai for Rs 75 crore.

Last year it had acquired from the same company a 10-floor office building with built up area of 1.31 lakh sq.ft (which houses Ramco Systems’ headquarters) in Chennai for Rs 90.12 crore.

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