Birla Corporation, the MP Birla Group flagship, plans to scale up cement production capacity to 30 million tonnes (mt) by 2027.
The company’s production, which currently stands at 15.6 mt, is expected to increase to 20 mt by the end of this fiscal once the 3.9 mt greenfield plant at Mukutban near Nagpur is commissioned. It had earlier targeted to further raise production capacity to 25 mt by 2025.
Capacity expansion
According to Harsh V Lodha, Chairman, MP Birla Group, details of the plans are yet to be firmed up and would be announced once approved by the company’s board of directors.
“We had earlier stated that the company is looking to scale up capacity to 25 mt by 2025. Plans are afoot to grow further and achieve a target of 30 mt by 2027,” he said while addressing the company’s annual general meeting on Wednesday.
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The company faced disruptions in the commencement and progress of work at Mukutban due to non-availability of workers (mainly migrants). The project cost had to be revised from ₹2,450 crore to ₹2,744 crore on account of revisions in project commencement schedule necessitated due to pandemic, augmentation of infrastructure and other factors including commodity price. However, the company is now hopeful of completing work and commencing production by Q4FY22.
Increasing profitability
The second wave impacted the company’s performance during the first quarter to some extent but things were “better managed” this year due to experience gained from last year.
“In certain parameters we are back to pre pandemic levels… despite continuous disruptions our profitability and realisation is going up due to increasing share of premium cement in volume sales,” Lodha said.
Rural demand
The good monsoon should translate into good harvest and this would augur well for rural demand. Demand for cement is likely to grow by double digits this year backed by the demand for housing and the expected high momentum in infrastructure spending by the government.
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While high commodity prices might exert some pressure, the company is hopeful of sustaining margins by going in for a price hike if demand remains steady.
Birla Corporation, Lodha said, would expand in markets where it has an edge over competition and demand for cement is projected to get stronger. According to him, compared to legacy assets of the company, new plants are likely to be more efficient and profitable.
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