Birla Corporation Ltd, the flagship of MP Birla Group, is putting in place a plan to expand its cement capacity by 50 per cent at an investment of $1 billion,
The sixth largest cement maker in the country has a capacity of 20 million tonnes (mt). The target is to reach 30mt by 2030 with a mix of a de-bottlenecking exercise, brownfield expansion and a new plant, Harsh Vardhan Lodha, chairman of BCL, said.
The debottlenecking exercise and a new grinding unit is expected to add 2mt capacity. The brownfield expansion at Maihar in the Satna district of Madhya Pradesh may account for another 4mt additional capacity.
The new plant is likely to come up in Chhattisgarh, Lodha said. The decision, he insisted, is not cast in stone and the company has some time before it finalises the move.
“This road map for growth has been drawn up based on projections that cement demand will expand the most in the central and eastern Indian markets over the next few years,” Lodha said at a press conference after the annual general meeting of BCL, which took place physically.
Explaining the possible choice of Chhattisgarh, Arvind Pathak, chief executive officer of BCL, said the company usually expands to a state where it already has a presence in some form.
“We don’t want to go to a disconnected area. This state (Chhattisgarh) happens to be the one contiguous to my expansion to Maharashtra. So it becomes a seamless expansion,” Pathak added.
Mukutban plant
The company’s new plant in Maharashtra’s Mukutban, which came to production in April, may turn EBIDTA positive by the end of this year. In his address to the shareholders, Lodha admitted to ‘‘initial difficulties’’ but assured that the fundamentals of the plant are robust.
The unit would start getting Rs 650 a tonne incentive from the Maharashtra government from the next year, chief financial officer Aditya Saraogi said, adding that it would boost profitability at the unit.
The plant is scheduled to get Rs 2,300 crore incentives from the state for cement sold within Maharashtra over the next 20 years. “We hope to consume it over the next 11-12 years only,” Saraogi guided.
Moreover, the production from the plant is expected to reach 3mt — it has capacity of 3.9mt — in the next fiscal year after the stabilisation of the new unit, while benefitting from scale. The company also hopes to get coal linkage from Coal India, which will bring down fuel cost.
BCL expects the cement market to rebound post Diwali and demand to stay robust ahead of the general election in 2024, blunting the margin squeeze in the last fiscal because of a rise in input costs.
