Investment for greenfield cement plant with efficient capital

The demand for cement was rising in central India and no new capacity was coming up in the region. Birla Corp poised to take advantage of this.

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Birla Corporation Limited, the M P Birla group flagship company, would invest around Rs. 2,400 crore for its proposed new cement plant at Mukutban near Nagpur.

“We are planning to invest around Rs. 2,400 crore for four mtpa greenfield cement plant at Mukutban. We will now go to the board for approval”, chairman of Birla Corporation Harsh V Lodha told reporters after the company’s AGM here today.

Funding of the project

Lodha said after the completion of the new plant, the total cement production capacity of the company would touch 20 mtpa from the present 15.5 mtpa after acquisition of Reliance Cement. Funding of the project would be a mixture of debt and internal accruals, he said. Birla Corporation had acquired the cement plants of Reliance at a consideration of Rs. 4,800 crore. To fund this acquisition, Birla Corporation had taken a loan of Rs. 1,000 crore on its books.

Capital and Efficient Expectations

Lodha said that the company was making some capital expenditure at the acquired plants to make it more efficient. “Reliance’s plants did not have a captive power plant. So we are in the process of setting up a waste heat recovery system at a cost Rs. 125 crore”, he said. This would provide us power to meet a portion of the total demand, 45 MW, free of cost. “We are studying the feasibility of a captive thermal power plant there”, he noted.

Lodha said as the demand for cement was rising in central India and no new capacity was coming up in the region, the company was well—poised to take advantage of this. On GST, he said it would not have any major impact.

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