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regular-article-logo Friday, 19 July 2024

Birla Corporation set target to achieve cement capacity of 25 million tonnes by FY2026

Central India is the core market for Birla Corp, which has six plants in the region

Our Special Correspondent Calcutta Published 06.09.23, 10:42 AM
Harsh Lodha

Harsh Lodha Sourced by the Telegraph

Birla Corporation has set a target to achieve a cement capacity of 25 million tonnes (mt) by FY2026 as part of the next phase of expansion.

The company plans to take up construction of a new plant at Maihar, Madhya Pradesh, where a 3.2mt clinker facility is going to come up. The unit will effectively allow Birla Corp to expand cement making capacity by 5mt, moving up from 20mt at present.

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Central India is the core market for Birla Corp, which has six plants in the region. Maihar will be a brownfield expansion, adding another line to an existing plant. The management, however, declined to commit an investment number to the project at this stage.

This fiscal will, however, be the year of consolidation as the management is focused on ramping up capacity of the newly constructed Mukutban plant in eastern Maharashtra and accelerate production of captive limestone and coal mines to bring down raw material cost.

“I would like to say that 2022-23 created the platform for the next phase of growth for the company. The current year will be one of consolidation,” Harsh V. Lodha, chairman of Birla Corporation, said at the 103rd annual general meeting of the company.

Like its peers, the company suffered badly for about two quarters last year because of high coal prices in the aftermath of the Russia-Ukraine war. The energy shock came at a time Birla Corp started commercial production from the Mukutban plant and capitalised the Rs 2,700 crore investment, including a Rs 300 crore cost escalation.

While production from the greenfield plant is now at 1.2 lakh tonnes per month, Birla Corp is hoping to end the fiscal with 2 lakh tonnes per month. The enhanced capacity utilisation of the 3.9mt plant will bring down the cost of operation.

It also progressively plans to increase the source of captive fuel to kiln by starting production from Bikram and Marki Barka coal mines. The share of captive fuel is expected to go up to 55 per cent from the present level of 20 per cent when the mines are operationalised. It also acquired a company with limestone reserves as part of a long term raw material security plan.

“We are hopeful of taking our EBITDA margins to Rs 850 per tonne by the end of the year from Rs 660 a tonne in Q1,” Sandip Ghose, managing director and CEO of Birla Corporation, said at a post AGM conference.

He sounded confident of creating a niche in the Maharashtra market — despite the presence of entrenched players such as UltraTech and Adani Cement — with focus on both premium and popular brands under Birla Corp’s portfolio. “There is room for another quality player getting in there,” Ghose added.

One of the reasons the company is taking one step at a time for the expansion is to reign in its debt level. Aditya Saraogi, CFO of Birla Corporation, said the company would like to keep a debt to EBIDTA ratio of 3.

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