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Pratim Ranjan Bose / Abhishek Law The ₹16,000-crore Emami Group is planning to list its cement venture, Emami Cement, according to sources. The IPO will help raise funds for expansion and be a pan-India player.
According to market sources, the company has already appointed a consultant to explore public issue prospects. Preliminary discussions are on with at least four merchant bankers.
While the issue size is yet to be decided, sources told BusinessLine that the company was planning the IPO “as soon as possible”. The Emami Group currently has three listed entities — flagship Emami Ltd, Emami Infrastructure Ltd and Emami Paper Mills Ltd.
Doubling capacity
Aditya Agarwal, Director, Emami Cement, though refused to comment on the listing plans, maintained that the company is looking forward to consolidating its cement business.
The Kolkata-headquartered cement maker, which is on an expansion mode, reported a cash profit on a turnover of ₹1,000 crore in 2017-18. The turnover is expected to double this year, with fresh capacities scheduled to come on stream.
The company has already invested over ₹4,000 crore to double the capacity from 4.4 million tonnes (mt) to 8 mt — with plants in Chhattisgarh, West Bengal, Bihar and Odisha — this fiscal.
Fresh acquisition
Emami Cement is already operating an integrated plant with 3.2 mt clinker and 2 mt cement making capacity. It also has limestone mine at Chhattishgarh. In addition, the company has a 2 mt grinding unit at Panagarh in West Bengal.
A second grinding unit of 2.5 mt is expected to become operational at Jajpur in Odisha in August. The project entails an investment of ₹500-600 crore.
Meanwhile, Emami Cement acquired Eco Cement at Durgawati in Bhabua district of Bihar through a private deal, at an undisclosed price.
Eco Cement has 1 mt Portland cement manufacturing capacity which is expandable to 4 mt. An application for environment clearance is in an advanced stage of approval.
Phase-II expansion
With the current expansion plan nearing completion, Emami lined up a Phase-II expansion plan to 20 mt. Considering the company’s mining rights in Rajasthan and Andhra Pradesh, the next phase of expansion should target the pan-Indian market.
According to Crisil Research, cement demand is expected to grow by 6.5-7.5 per cent, led by affordable housing, rural and infrastructure-led activities, especially in a pre-election year.
In terms of region, cement demand is expected to be driven by North and Central India with States such as Rajasthan and Madhya Pradesh being primary consumers.
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