Mumbai, Sept. 3: Anil Ambani today formally entered the cement business dominated by giants such as Kumar Mangalam Birla and Holcim.
The younger scion of the Ambani clan has ambitious plans in the segment as he prepares to exploit the strong potential that the infrastructure and construction sectors hold out over the next few years.
Reliance Infrastructure, which is spearheading the cement foray through wholly owned subsidiary Reliance Cement Company Pvt Ltd (RCC), is establishing two projects with a total capacity of 10 million tonnes in Maharashtra and Madhya Pradesh. The group will invest Rs 6,000 crore in the two plants.
RCC today commenced production from its first manufacturing unit at Butibori in Nagpur, Maharashtra. Sources said the grinding unit would source clinker and market the cement. The unit will largely service the Vidarbha market in Maharashtra. Cement produced by the company will be marketed under the Reliance Cement brand.
Apart from this grinding unit, the company is now in the midst of implementing two projects with a capacity of 5 million tonnes each. A press statement from Reliance Infrastructure said the two projects would set the foundation for the upcoming projects thereafter.
“All the manufacturing facilities of the company will be state-of-the-art in terms of technology and scale, and will also leverage best practices in logistics, distribution and last mile selling,” Reliance Infrastructure added.
One strategy of the company is to have its clinker producing plants close to the main raw material limestone and then have satellite grinding units closer to the target markets.
Sumit Banerjee, vice-chairman of Reliance Cement, said the group hoped to be counted among the the top five cement makers in India over the next five years.
“Commissioning of the Butibori unit is a landmark event in the cement industry, marking the entry of one of the largest business groups of India into the sector. Reliance’s foray into the cement industry is a natural extension of its interests in power and infrastructure businesses. Reliance Cement aspires to be a NextGen cement company,” he said, adding that various other projects were under different stages of development.
The cement industry is now witnessing a demand-supply mismatch as the sector has put up huge capacities. It is estimated that close to 71 million tonnes of fresh capacity will come over the next three years.
At a recent meeting of shareholders, Kumar Mangalam Birla, who heads one of India’s largest cement company, said conditions for the industry would be challenging in the near term but would improve over the longer term because of the potential of the infrastructure and construction sectors.