Birla Corporation plans to raise to 30 mn tonnes by 2027

The increase is a new target set by the company, which had earlier said it would raise production to 25 mt by 2025

M P Birla group flagship, Birla Corporation, will increase its annual cement production capacity to 30 million tonnes (mt) by 2027.

Addressing shareholders at the company’s annual general meeting on Wednesday, Harsh Vardhan Lodha, chairman of the MP Birla group, said, “Plans are afoot to reach a target of 30 mt by 2027,” adding that details of the plans would be announced once they are firmed up and approved by the board of directors.

The increase to 30 mt is a new target set by the company, which had earlier said that it would raise its production capacity to 25 mt by 2025.

Birla Corporation’s current production capacity is 15.6 mt, which will go up to almost 20 mt by the end of the current fiscal year, when its greenfield 3.9 mt plant at Mukutban, near Nagpur, is commissioned.

The Mukutban project was disrupted last year due to the flight of migrant labour. The delay, coupled with an increase in commodity prices and Covid-related costs had led to a cost escalation from Rs 2,450 crore to Rs 2,744 crore.

“The state-of-the-art plant will receive GST incentives to the extent of our capital investment for 20 years and it is expected to significantly improve your company’s profitability once volumes pick up over the next couple of years,” Lodha told shareholders.

During the year, the company also concluded a project to expand the capacity at one of its key units, the new Chanderia Cement Works. At a cost of Rs 150 crore, the annual production capacity was scaled up by around 0.5 mt at Chanderia.

However, even as Birla Corporation embarks on its next phase of growth, Lodha said, the company would “as a policy, remain conservative on borrowings”.

The company took advantage of the lower interest cycle to refinance and renegotiate loans worth almost Rs 1,800 crore, bringing down the borrowing cost from an average cost of 9.26 per cent to 7.83 per cent.

Lodha said that the company would expand in markets where it has an edge over competition and demand for cement was projected to get stronger.

Compared with legacy assets of the company, the new plants are going to be more efficient and profitable. Lodha said, the plants of RCCPL Pvt Ltd (the erstwhile Reliance Cement Co Pvt Ltd which was acquired in 2016), subsidiary of Birla Corporation Limited, are among the best in India judged by operating parameters.

On raw materials, Arvind Pathak, the company’s newly appointed managing director and chief executive officer, said Birla Corporation Limited has enough limestone reserves to last decades at its current scale of operations.

Pathak was appointed managing director and chief executive officer with effect from March 31, 2021. His appointment was placed before shareholders at the AGM for approval.

Among the six other resolutions, a promoter entity of the group, The Punjab Produce & Trading Co Pvt Ltd, proposed the candidature of Rameshwar Singh Thakur for the office of director of the company. The Nomination and Remuneration Committee and the board of Birla Corporation strongly recommended against the appointment of Thakur on grounds of “conflict of interest”, as Punjab Produce has ongoing litigations with the companies/entities belonging to M P Birla Group.

The notice to shareholders also mentioned that it was at the “dictates” of two of the three joint Administrator Pendente Lite (APLs) to the Estate of late Priyamvada Devi Birla –Justice Mohit S Shah and A C Chakrabortti; the other joint APL, Mahendra Kumar Sharma was totally opposed to them.

Voting results on resolutions at the AGM are awaited.