Shree Cement Ltd is going to come up with a fresh round of capacity expansion, including a new grinding unit in Bengal, in line with the company’s vision to reach 80 million tonnes (mt) by 2030.
The Hari Mohan Bangur-led company will launch four projects, having a combined capacity of about 10.5mt of cement capacity, entailing investments of around Rs 5,500-6,000 crore.
The new plants will come up in Uttar Pradesh, Punjab, and Karnataka apart from one in Bengal near the Sankrail-Kolaghat area. The company, which is in possession of the land in these locations, has applied for government clearances. Once the approvals are in place, work will kick off.
These four units will be over and above the three plants the Calcutta-headquartered cement giant is building. They are coming up at Purulia in Bengal, Nawalgarh in Rajasthan and Guntur in Andhra Pradesh.
Once the expansion is completed, Shree Cement’s combined capacity will go up to 55.9mt from the current level of 46.4mt. The Purulia plant in Bengal, a 3mt grinding unit, is likely to be commissioned in the next 10 days.
“Given the robust demand for cement in the country and Shree Cement’s aspiration to grow further, we are looking at four more units once the present phase of expansion gets over. The units will come up in Uttar Pradesh, Punjab, Karnataka, and Bengal,” Prashant Bangur, vice-chairman of Shree Cement, toldThe Telegraph.
India is the second largest producer and consumer of cement after China. Total capacity in the country stood at 570mt by the end of FY22, according to an investor’s presentation in January 2023.
The market is largely dominated by UltraTech from the AV Birla empire and the ACC-Ambuja combine from the Adani stable. Shree Cement ranks as one of the top 5 producers in the country.
India Ratings, a Fitch company, expects domestic demand to grow 8-9 per cent on the back of the government’s infrastructure push ahead of the general elections in 2024.
Cement companies are expected to go on an expansion spree, and add 145-155mt between fiscals 2023 and 2027, which translates to 4-5 per cent compounded growth on a high base, a Crisil note said. India’s cement capacity stood at 570mt by FY22.
Shree Cement, known for its execution capabilities to build greenfield units, recorded Rs 18,311 crore of total income and Rs 1,269.14 crore PAT in FY23. Instead of joining the growing din of M&As, the company decided to grow, primarily, by building plants.
While the corporate headquarter of the company is in Calcutta, the company did not have a manufacturing presence in the state. With the commissioning of the Purulia plant, it will now have a direct presence in the market.
The proposed plant in the Sankrail-Kolaghat region will be a 2.5mt grinding unit to service the Calcutta-Howrah market, Bangur explained.
Once the new unit comes up, Shree Cement will have a sizable presence with 5.5 million tonnes of grinding capacity.
“We have been living in Calcutta but were absent from Bengal. It had to change,” Bangur said, underlining the family’s desire to grow in this state.