Calcutta, Aug. 17: Bangur group-owned Shree Cement Ltd is planning to expand its production capacity to 10 million tonnes by 2010 from 3 mt at present.

The company is setting up a new cement plant of 1.2 mt at Pali in Rajasthan, which will go on stream by November this year. At present, Shree Cement has two plants in Rajasthan and a fourth unit, having a production capacity of 1.5-2 mt, will come up soon adjacent to the third unit at Pali. Following that, two or three more units will be set up with a total capacity of about 4 mt.

For the next phase of expansion, the company has earmarked an investment of Rs 2,000 crore. To fund the capital expenditure plan, it is considering market borrowings and internal accruals, primarily.

The cement producer is, in fact, planning production facilities outside Rajasthan in keeping with its expansion roadmap. “We are seeking mining rights in different states such as Madhya Pradesh and Tamil Nadu,” a company official said.

Shree Cement achieved a turnover of Rs 723 crore in the last financial year, recording a 19 per cent growth over the previous fiscal.

The company, which held its annual general meeting today, is banking on high domestic demand for its sales growth.

Commenting about the current state of Indian cement industry, B G Bangur, executive chairman of Shree Cement, said the cement industry was going through good times on the back of an increasing demand.

“The demand for cement has grown at the annual rate of 6.75 per cent over the last two years and lower capacity additions during these years failed to keep pace with the growing demand,” Bangur added.

The rise in demand has so far been fed from the previous supply stocks. Many cement companies have been running their plants overtime.

Last year, Shree Cement’s capacity utilisation stood at 116 per cent against the industry average of 84 per cent. Against an installed capacity of 2.6 mt, the company produced 3.16 mt of cement.

For the year ended March 2005, Shree Cement reported a 31 per cent rise in its operating profit at Rs 174 crore against Rs 132 crore, primarily because its productivity enhancement steps, energy and resource conservation and cost cutting measures paid off.

Profit after tax more than doubled to Rs 29.07 crore in 2004-05 from Rs 13.04 crore in 2003-04.

The company rewarded its shareholders with a 40 per cent dividend.