Birla Corp aims 20 MT to become fifth largest cement company in India

While the Mukutban project has been financed by a Rs 1,625 crore term loan stretching 12 years from a consortium of four banks led by the Bank of Baroda at less than 9 per cent interest

Birla Corporation is increasing its total cement manufacturing capacity in the next three years to around 20 million tonne per annum (mtpa), spread across western, northern and central India. 

It is constructing a 3.9 mtpa factory, along with a 40 Mw power plant and a 10.6 Mw waste-heat recovery one, at Mukutban in Maharashtra. The investment is Rs 2,450 crore and this should be commissioned by the second quarter of 2021-22. Once done, it will take the company’s installed capacity from the existing 15.58 to 19.48 mtpa, at parity with that of Ramco Cement (whose current installed capacity is 16.69 mtpa).

According to brokerage Anand Rathi, another 1.2 mtpa expansion of its cement grinding plant at Kundanganj in Uttar Pradesh is also on track, for probable commissioning by March 2021. Clinker expansion of 480,000 tonnes at the NCCW plant at Chanderia has begun to fulfil the additional needs of the Kundangunj grinding unit.

Birla Corporation declined to comment on the development. According to sources, it is also considering another production line at its existing unit at Maihar in Madhya Pradesh. The Mukutban project has been financed by a Rs 1,625 crore term loan stretching for 12 years from a consortium of four banks led by Bank of Baroda, at a little less than nine per cent annual interest. Another Rs 2,500 crore will be invested over other projects.

According to Yes Securities, the capacity addition plan of 5.2 mtpa in UP and Maharashtra will translate to growth of 33 per cent in capacity to 20.5 mtpa, making it the fifth largest cement group in India. 

Currently, the MP Birla Group company is ranked seventh in terms of installed capacity.

Sandip Ghose, chief operating officer at Birla Corporation, says once the company is able to scale up capacity, with market share gain and more visibility, it could enter new categories within cement, besides emerging a serious player in building and construction solutions.

“For example, we are not present in concrete and do not have any research facility. We can look at those things once we have a sizable installed capacity and increased exposure to the market,” he said. 

It has ventured into the construction chemicals market, with wall putty products and waterproofing compounds. Water repellents is among other products under consideration. 

Industry officials say the country’s additives market is Rs 1,390 crore a year and growing at 12-25 per cent annually. Wall putty has 60 per cent market penetration, and offers a 25 per cent margin. 

Construction chemicals has an extremely low market penetration of 7per cent but offers a 40 per cent cut for the company.