The Dalmia Cement Bharat Limited (DCBL), the essence of Indian cement industry, plans to double its cement manufacturing capacity in the eastern states to 17 MT (million tonnes) within the next 2 years at a total investment of INR 3,500 crore. Dalmia Bharat is highly bullish about its growth prospects in the eastern region. They believe a combination of new production capacity coupled with expanded product portfolio could help the cement maker consolidate and garner additional market share in the region.
“Currently, we have four units operating in the east producing 8.5 million tonne s of cement annually,” said Mahendra Singhi, group CEO, cement and whole-time director, Dalmia Cement Bharat Ltd (DCBL). “As part of our expansion plan, we have decided to put up two new units in Odisha and one each in Bihar and West Bengal,” he added.
Recently while taking part in the groundbreaking ceremony of the third unit with capacity of 2.25 MT of cement and 3 MT of clinker in Rajgangpur (Odisha) and 2.5 MT in Kapilas (Odisha), he said the (civil) work would be completed in 18 months. It entailed an investment of INR 2,000 crore and INR 500 crore respectively. After the completion, Dalmia Cement will increase total cement production capacity in Odisha to 10 MT cement and 6 MT clinker.
Moreover, DCBL is putting up two cement plants of two million tonnes each in West Bengal and Bihar which would be funded mostly through debt and internal accruals. “We are the only major integrated cement plant in Odisha. We produce green cement using slag and flyash, which has less carbon footprint. We have 24% market share in Odisha and we will continue to maintain our leadership position,” Mr. Singhi said. According to him, the eastern units generated revenue of almost INR 4,000 crore with Odisha accounting for INR 1,500 crore.
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“There is a growing demand for cement due to infrastructural growth in eastern India and our plan to add fresh capacity through this new unit is an approach to be ready to cater to this growing demand,” he added.
The company already operates five plants in the east in Bihar, Jharkhand, Bengal and Odisha, including the recently acquired assets of Kalyanpur Cement in Bihar through the corporate insolvency route. With the new addition, the total capacity of the cement maker would reach around 18 million tonnes in the east. The cement demand in the eastern region is estimated at around 50 lakh tonnes per month and Dalmia Bharat has a market share of over 12 per cent.
In addition to expanding in the east India, DCBL is looking for additional capacity in the south through the acquisition of Nagpur-based Murli Industries. The acquisition is awaiting approval from the NCLT. Dalmia Bharat Cement already has plants in Andhra Pradesh, Karnataka and Tamil Nadu.
According to Icra's estimates, domestic cement production grew 6.3 per cent to 298 million tonnes in 2017-18 compared with 280 million tonnes in 2016-17. Most of this growth was recorded during the second half of the year and was driven largely by better demand in key markets. Icra expects the cement growth momentum in India to continue in 2018-19 at a rate minimum 6 per cent although, the rising input costs such as power and fuel expenses and freight expenses are likely to put pressure on the operating profitability of cement companies in the coming quarters.