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Birla Corp plans to scale up cement manufacturing capacity

IBEF:  August 13, 2019

Birla Corporation Ltd, which is the flagship company of the MP Birla Group, is planning to scale up cement manufacturing capacity by around 60 per cent to reach 25 million tonnes (MT) from the present time 15.5 MT in the next four to five years.

This expansion, which would be relatively greenfield and brownfield, will involve a total investment of around Rs 5,000 crore (US$ 695 million), to be funded through a mix of debt and equity.

The company has already begun the construction of 3.9-MTPA greenfield project at Mukutban in Maharashtra. This is expected to be complete by FY22. The investment projected is close to Rs 2,450 crore (US$ 340.5 million). The company has tied up with a consortium of lenders for a 12-year term loan of close to Rs 1,625 crore (US$ 225.8 million).

The company has set a goal to reach 25 MT by 2024-25 and will add another 5 MT thereafter either through greenfield or an acquisition.

Birla Corporation and its subsidiary, RCCPL Private Ltd, have 10 cement plants all around the country with an annual installed capacity of 15.5 MT.

Birla Corporation is also establishing up the second production line at Kundanganj in Uttar Pradesh of 1.2 MT to augment unit capacity to 3.6 MT. There is also expansion of NCCW plant at Chanderia in Rajasthan. This will add clinkerisation capacity of 4,80,000 tonnes which, in turn, can feed the additional clinker needs of the Kundanganj grinding unit. The company will also look to add another production line at its existing unit at Maihar in Madhya Pradesh.

Birla Corporation has been able to upgrade capacity utilisation across its factories to well over 95 per cent. For the quarter that ended on June 30, 2019, the capacity utilisation was up at 98 per cent.

The company had also registered 4 per cent volume growth in Q1FY20 and is optimistic of keeping the momentum of growth in the coming quarters.

The share of premium brands, which was around 20 per cent of the company’s portfolio on a smaller base (of production) around three years ago, presently stands at close to 40 per cent.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.