Calcutta , Nov. 2: Calcutta-based Emami Group will set up a cement plant in Bengal. The move is part of the group’s entry into the cement business covering three states — Bengal, Orissa and Chhattisgarh.

A 1.5-million-tonne (mt) unit will come up at Mejia in Bankura along with a 10MW power plant at an estimated investment of Rs 350 crore.

Emami Cements, the group company overseeing the latest foray, has identified a plot for the unit.

“We don’t need more than 80-100 acres. The company will buy that directly,” Mohan Goenka, director of Emami Group, said.

The company has tied up with the Damodar Valley Corporation for the supply of fly ash that is mixed with clinkers to make cement. It is in talks for securing other facilities such as water and railway sidings.

The Bengal plant will be a grinding unit as limestone — cement’s key raw material — is not available in the state. A similar grinding facility will come up in Orissa, while Chhattisgarh will have an integrated plant.

“We are looking at the first quarter of 2012 to go on stream,” Goenka said.

The plan is to supply clinkers to the Bengal and Orissa units for grinding after which they will be mixed with the fly ash produced from the power plant.

In Chhattisgarh, the company plans to carry out the entire process — from mining to producing clinkers and grinding them for the final product.

The total investment in the cement venture is estimated at Rs 1,750 crore, including Rs 160 crore for the 0.6mt unit at Orissa. The biggest chunk will go to Chhattisgarh where a 2.5mt clinker facility, a 1mt grinding unit and a 40MW power plant will be set up.

The three projects will have a 2.5:1 debt-equity ratio and the group’s contribution will be Rs 500 crore. Shyamsundar Sharma, CEO of Emami Cements, said the company had received in-principal approvals for the loans.

In Chhattisgarh, the company has acquired 400 acres, about 70 km from Raipur. It needs another 60-70 acres to start construction. However, the bigger challenge could be the surface rights for limestone mining. It has received mining leases for a 1,000-acre area. It has purchased 25 acres of the limestone area, while the government will transfer another 85 acres. However, Sharma said he was hopeful of getting the land by the end of this fiscal.

The company wants to leverage the Emami brand, which has a strong recall among buyers in the personal care segment.

Initially, Emami will produce 3.1mt cement, almost half of which is to come from Bengal, the group’s headquarters.

Strong demand in Bengal has prompted the group to foray into the state in cement.

The demand in Bengal was 3.65mt between April and September, while production was at 2.37mt, Sharma said.