The Hindu Business Line : Barak Valley Cement plans capacity expansion

Concrete steps
The company is enhancing the capacity of its biomass power plant to 6 MW
‘The power plant expansion will be completed by November’

Our Bureau

Mumbai, Aug. 17 Buoyed by encouraging demand, the Assam-based Barak Valley Cement Ltd has drawn up a plan to expand its capacity to 600 tonnes per day (tpd) from 420-550 tpd.

The company is also enhancing the capacity of its biomass power plant to 6 MW with an investment of Rs 22-24 crore.

The company has filed the draft red herring prospectus with SEBI to tap the capital market in the first week of October for raising Rs 40 crore. The promoters will dilute 25 per cent of their holding through the IPO.

Mr Bijay Garodia, Chairman, Barak Valley Cement, said, “The power plant expansion will be completed by November and we expect it to bring down our power cost from Rs 5.50 per unit to Rs 2.75. Ours is the first cement company in the North-East to tap the capital market.”

The biomass power plant, which will generate carbon credit for the company, uses agriculture waste sold by farmers.

Cement price realisation of the company stands at Rs 205-210 per 50 kg bag while the average price at the retail level is Rs 250-275 per bag.

Realisations are high as the company is completely exempted from excise duty. The company expects the prices in the North-East to stabilise at the current level with a slight upward bias.

The company foresees a net profit of Rs 4 crore in the first quarter of the fiscal year 2008, while sales turnover may touch Rs 18 crore.

“There is a big demand-supply mismatch in North-East as the production is about 1.5-2 million tonnes per annum (mtpa), while the demand hovers around 3.5-4 mtpa. This throws up a great opportunity for the company,” Mr Kamakhya Chamaria, Managing Director, said.

Centre’s plan

The Centre is planning to invest Rs 65,000 crore over next 5 years in the road sector in the North-East region. These apart, major investments are expected in hydel power from Reliance Power, JP Group, NTPC, NHPC.

To encourage investments in the North-East, the Government is offering various concessions, which include sales and income-tax exemption, three per cent subsidiary on working capital loan, reimbursement of insurance premium and transportation subsidiary.

Ruling out any threat from possible cement import, Mr Garodia said: “We believe Pakistan has only 5 mtpa of excess capacity to export while quality is a big issue as far as China is concerned."

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