Hemadri Cements makes concrete plans to reopen plant

With the cement industry buoyant on revival of demand and surge in prices, Hemadri Cements Limited "� a mini-cement company in Andhra Pradesh "� has firmed up plans to reopen its plant which has been closed for the last four years.

Hemadri, which operates a 2.5 lakh tonne mini-cement plant near Jaggaiahpet in Krishna district, is reopening the plant in the first week of June. The plant has been shut for the past four years save for 10 months.

The company's director, K Gopi Prasad, told Business Standard that the decision to reopen the plant had been taken in the wake of positive outlook in the industry on demand factors as was reflected in the price hike of cements.

The plant was commissioned in 1985 and operated till the year 2000. "The company had not only ramped up capacity from the initial 200 tonne-a-day to 750 tonne-a-day, but also ran the plant successfully with over 85 per cent capacity utilisation.

The depression in the cement industry which began in the late nineties made it unviable to run the plant. The company could operate the plant only for a short duration of 10 months in the last four years when the prices looked up.

It makes sense to run a mini-cement plant only if the prices are at least Rs 150 a bag at the factory level. There had been a rampant fluctuation in prices below that level and hence the decision to shut the plant," Prasad said.

Hemadri went in for a one-time settlement scheme in 2001. As per the scheme, the promoters brought in a capital of Rs 2.5 crore and the remaining Rs 6 crore was to be paid in installments.

However, things had not worked out for the company. The company is again approaching the Appellate Authority for Industrial and Financial Reconstruction for another package. Meanwhile, the plant would be made operational.