The Hindu Business Line : Gujarat Ambuja on capacity expansion drive

GUJARAT Ambuja Cements Ltd , the country's fourth largest cement manufacturer, is executing a Rs 2,200-crore capacity expansion drive aimed at hiking its capacity to 20 million tonnes over the next three years, from 13.7 million tonnes.

The expansion, being planned through a mix of greenfield operations, acquisitions and through de-bottlenecking, would be funded entirely through internal cash flows, a company executive said.

ACC, in which Gujarat Ambuja holds a 14.4 per cent stake, has the largest capacity of 17.63 million tonnes.

While the company recently added one million tonnes of fresh capacity at its production facility in Ropar, Punjab, it also completed its expansion of the cement-grinding unit at Darlaghat in Himachal Pradesh.

A 1.2 million fly-ash unit at Dadri is in the pipeline, for which it has tied-up with the National Thermal Power Corporation. It has also earmarked Rs 190 crore for setting up a 60-MW thermal captive power plant at its manufacturing unit at Ambujanagar in Amreli district of Gujarat.

According to industry experts, the scope for larger companies such as Gujarat Ambuja to expand by way of buying out existing capacities or using the merger route makes better sense than opting for greenfield expansions.

"The scope for consolidation is huge, especially since the setting up of greenfield projects would require considerable capital investments of around Rs 3,500 per tonne production of cement. The expansion route through buying out of units or through mergers makes better sense under the present environment," an analyst said.

Gujarat Ambuja currently sells 15 per cent of its production in the export market and uses sea transportation for 35 per cent of its sales.