Calcutta, Aug. 30: Shree Cement, owned by the Calcutta-based Hari Mohan Bangur family, is set to enter the power generation business in a big way.

The Rs 2,200-crore company is chalking out plans to set up a 750MW coal-based plant on the western coast of India. The unit is most likely to come up in Maharashtra.

H.M. Bangur told The Telegraph that the decision to foray into power was not prompted by similar moves by other firms and had been taken after much thought.

“Demand for power will remain buoyant for the next few years and prices will be remunerative. I think it will hedge the commodity business such as cement. Therefore, we will focus more on power than cement in the near term,” Bangur said.

The project will cost around Rs 3,000 crore. However, unlike others who created separate subsidiaries and eventually came out with IPOs, Bangur wants to keep the power venture within Shree Cement, without any equity dilution.

Internal cash flow and a small debt will finance the project. Shree Cement will generate Rs 1,000-1,200 crore cash this year, and the trend is expected to continue.

“My idea is to create earnings for each share rather than dilute the value,” Bangur said.

There are other power plants that Shree Cement operates on a smaller scale.

One of them is a 125MW plant in Rajasthan, in which the company sells 30MW after meeting internal demand.

Another 150MW plant is coming up in Rajasthan, which will be operational by April next year. About 45MW of the 150MW will be produced through the waste heat recovery method.

The firm uses petroleum (pet) coke to fire its existing Rajasthan plant and wants to do the same for the upcoming unit in the state.

It is more cost-effective for the company to use pet coke — imported from the US — than trawling for coal in central India. “Given that pet coke is high on calorific value, using it in states such as Rajasthan makes sense,” Bangur said.

However, the coastal location for the bigger plant will give Shree Cement the freedom of choosing between thermal coal and pet coke.

Expansion drive

While power will be the focus, Shree Cement will add two more grinding units at Roorkee in Uttarakhand and Suratgarh in Rajasthan, taking its total capacity to 12 million tonnes.

Bangur said he planned to enter the southern market through a clinker and grinding unit in Karnataka.

Land acquisition for the 2mt plant in Karnataka is underway. Besides the clinker and grinder units, the project comprises a limestone mine.

A similar mine-cum-plant in Chhattisgarh is in the pipeline, but the land acquisition process has been slow. The company has managed to get 80 per cent of the land in Karnataka compared with only 15 per cent in Chhattisgarh.

Bangur, who is the president of the Cement Manufacturers’ Association, said supply would exceed demand next year.