Nuvoco Vistas Corporation Ltd --- the cement arm of Gujarat-based Nirma Ltd --- will be setting up a new grinding unit of two million tonnes per annum (MTPA) capacity in Kutch as it looks to refurbish and operationalise the assets of recently acquired Vadraj Cements. This move will add an estimated ₹300 crore to the company’s original plan of spending ₹1,200 crore in restarting the cement assets of Vadraj in Kutch and Surat districts of Gujarat.
“We have identified that there are fiscal opportunities available in the state of Gujarat, for expanding in Kutch and we have decided to set up a grinding unit in Kutch facility for 2 million tonnes. The overall capex needed to rebuild the Kutch and Surat facility and also put up a grinding unit in Kutch will now be turned up from the original ₹1,200 crore to ₹1,500 crore,” Jayakumar Krishnaswamy, managing director of the company, said during an earning’s call held for the fourth quarter results.
The company is targeting to commission the new grinding unit along with the existing assets of Vadraj cements at Kutch and Surat by December 2027.
The official said that Nuvoco will be investing ₹1,500 crore in three phases by investing ₹600 crore each during calendar years 2025 and 2026 and then ₹300 crore in calendar year 2027. “To fund this capex from internal accruals, we pare down our capital expenditure to run the current operations to a maximum of ₹100-150 crore so that we have adequate cash flow in the organisation to fund the capex of Vadraj,” Krishnaswamy added.
Vadraj’s assets that have been acquired by Nuvoco include a 3.5 MTPA clinker unit in Kutch, a 6 MTPA grinding unit in Surat, high-quality limestone reserves and a captive jetty in Kutch. With this acquisition, Nuvoco’s total cement production capacity is set to increase to approximately 31 MTPA. In addition to the ₹1,500 crore that the company will spend to operationalise the Vadraj’s assets as per the revised plan, it also needs to make an additional ₹1,800 crore upfront payment for the acquisition.
“Out of the ₹1,800 crore of financing we need to do upfront, we will take a long term debt of ₹600 crore in Nuvoco’s books. Then the balance ₹1,200 crore will be through instruments like CCPS (Compulsory Convertible Preference Shares) and CCDs (Compulsory Convertible Debentures) which will be on a long term maturity. Interest cost of this will be at the end of the period so that the balance sheet of Nuvoco does not get loaded,” Krishnaswamy said.
“So Novoco will pick a debt of ₹600 crore in the short term and till the financing happens, we will also take a bridge loan of ₹1,200 crore for a maximum period of six months. In short ₹600 crore will be on the books of Nuvoco in the form of long term debt and the balance ₹1,200 crore will be through CCPS and CCDs which will be long term and will not figure on debt levels of Nuvoco,” he said.
The official said that the company has investors who will invest into Vadraj in the form of CCPS and CCD, and at an “opportune time” the company can repay when the maturity happens. Nuvoco has been reducing its net debt down since the last four years. Compared to the net debt of ₹6,730 crore in FY 21 the figure stands at ₹3,640 crore in FY25. “For the size of the company and the size of the business we have, we are comfortable operating around with a net debt of ₹3,500-4,000 crore. In the last three years we have pursued to pare down the debt from where we were three years ago till now. In this quarter (fourth quarter of FY 25) we reached ₹3,640 crore,” Krishnaswamy added.
Currently Nuvoco sells one million tonnes of cement in Gujarat market which is sourced from its production facilities in Rajasthan. After the Vadraj cement’s plants in Kutch and Surat get operationalised by Q3 of FY 27, it will not only help serve in markets in Gujarat and northern Maharashtra, but will also free-up capacities in Rajasthan, that can subsequently be deployed to serve the markets in the north, the company said.