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Ambuja Cement draws up Rs. 800-cr capex plan for ongoing projects

The Hindu BusinessLine:  April, 2014

Mumbai: Ambuja Cement, part of the Holcim Group, plans to invest Rs. 802 crore this year in various ongoing projects. The company has proposed to fund the entire capex through internal accruals, said Ambuja Cement in its annual report. It had invested Rs. 725 crore last year.

The company had announced a significant cement capacity addition of 4.50 million tonnes (mt) last year. It proposed to set up an integrated greenfield cement plant of 1.5 mt a year with 2.17 mt a year clinker facility at Marwar Mundwa, in Rajasthan.

Eco-clearance

The project involves clinker grinding units of 1.5 mt a year each at Dadri in Uttar Pradesh and Osara in Madhya Pradesh. These projects involve a cumulative investment of about Rs. 3,500 crore. Environmental clearances for the project were obtained but the Ministry of Environment and Forests had kept approval for Marwar Mundwa project in abeyance, said the company.

“We are in the process of tying up water sources required for construction and operations. Full-fledged construction work is expected to commence in the later part of 2014,” it added.

Last year, the company had taken up 13 new projects at different locations worth Rs. 272 crore to optimise and enhance efficiency.

These projects have a quick payback of two-and-a-half years to four years. Most of these projects are likely to be completed this year.

A new brownfield expansion project to set up a roller press at Rs. 70 crore at the Rabriyawas unit in Rajasthan, will add 0.80 million tonnes grinding capacity in the first half of 2014, it said. Ambuja Cement is also setting up a Waste Heat Recovery plant at Rabriyawas with an investment of Rs. 75 crore to optimise power costs and meet renewable power obligation.

Railway project

In order to strengthen logistics capability, the company has taken up a new railway siding project at its Rabriyawas unit in Rajasthan.

The total project cost is estimated at Rs. 250 crore.

“So far 40 per cent work of the railway project is over and is expected to be completed within the second quarter of 2016,” it said.

The company expects demand to gradually revive over 2014 and 2015 with a new government and recovery in construction activity.

“We expect the capacity utilisation rate of the industry to improve gradually from the current 73 per cent to 80 per cent by 2018 given the slowdown in pace of capacity addition and gradual recovery in demand,” it said.