Emami Cement mulls plants in Rajasthan, AP, eyes Rs 2,800 cr income by FY19

Company has bagged limestone deposits in both the states, will focus largely on domestic market

Emami Cement Ltd is contemplating to set up cement making plants in Rajasthan and Andhra Pradesh. The company has bagged limestone deposits in both the states.

"We are planning new cement facilities in Rajasthan and Andhra Pradesh- we have won mining leases there. But, the plans for the new plants are still fluid as it will take time to develop the mining blocks. The company has committed Rs 100-200 crore on the blocks and we are in advanced stage of obtaining EC (environment clearance)”, said Vivek Chawla, chief executive officer, Emami Cement Ltd.

Chawla said, the company has kept its options open on inorganic growth, evaluating potential opportunities. However, the present focus is on domestic growth. Emami Cement is one of the newer entrants into the cement sector with a market share of 4-5 per cent. But, the company is eyeing to grab a market share of 10 per cent in all the regions of its operations by March 2019 as it expects to touch a capacity of six million tonnes per annum (mtpa) with the commissioning of its Odisha plant. The company is investing Rs 600 crore on the unit at Jajpur (Odisha) that would go on stream in March 2018.

With the commissioning of new capacities, Emami Cement's turnover is projected to record more than a three-fold jump to Rs 1400 crore in this fiscal, from Rs 400 crore in FY17. In 2018-19, the company hopes its turnover to expand to Rs 2800 crore. 

"In the last fiscal, we managed to sell 1.2 million tonnes of cement. This fiscal, we are targeting 3.2 million tonnes sales. We are also expanding to new geographies and this will drive sales”, Chawla said.

About 65 per cent of Emami Cement's sales come from the retail or trade segment. The rest 35 per cent is accounted for by institutional sales. While the company is looking to expand its institutional sales, retail would continue to be its key focus.

Emami Cement is now producing 60 per cent of its rated cement capacity of four mtpa. The production is from the mother clinker plant at Raipur (Chhattisgarh) and the grinding unit at Panagarh (West Bengal). By March this year, the two operational units target to achieve the production capacity of 3.2 mtpa. The proposed new grinding unit in Odisha would add two mtpa to the capacity. The company's overall Capex (Capital Expenditure) on all the three units is Rs 4000 crore.

Commenting on de-growth of the cement sector, he said, “The demand has gone down due to monsoon rains and effect of GST (Goods & Service Tax) but from October onwards, it will pick up. Pan-India, the cement sector is expected to grow 6-7 per cent while the eastern region would record 15-17 per cent in this fiscal.”

The country's cement production in April-July declined 3.5 per cent to 95.37 million tonnes as against 98.87 million tonnes in the same period of last fiscal. The downtrend was primarily due to very low inventory addition in real estate and housing which accounts for two-thirds of the cement consumption, CARE Ratings said in its recent update on the cement sector.

The Emami Cement CEO, however, is bullish on the commodity's demand in the future. “The RERA (Real Estate Regulation & Development) Act will boost cement demand. The pending projects would have to be compulsorily completed. Affordable housing and infrastructure would be the other demand drivers”.