Binani Industries, as part of its expansion plan in the cement business, has decided to step up capacity by over 3 million tonne to 5 million tonne.
The company plans to set up a 2 million tonne greenfield cement unit at a port-based location, in Gujarat. The study on the possible location is currently underway.
At the same time, Binani will increase the capacity of its existing cement plant at Sirohi in Rajasthan to 3 million tonne, from the current 2 million tonne, through debottlenecking. Company officials said the estimated cost of the proposed expansion would be around Rs 550-600 crore, but declined to reveal how it was to be funded.
Binani executives said the company is in the process of conducting a techno-economic feasibility study and will be taking a final call on the exact location soon.
According to the company, steps have already been initiated to obtain a mining lease in this region. "Once we finalise the location, we will be taking a decision on the method of financing the proposed investment," an official added. "The idea behind the expansion is to further consolidate our position in the cement business and enhance market share," the official said.
The company had earlier been looking at the acquisitions option to increase capacity. It had inked earlier a deal with DLF Cement for a merger of the cement operations of the two companies, but the deal eventually fell through.
Binani Cement has a market share of 15 per cent in Rajasthan, 17 per cent in north India and around 8 per cent Gujarat.
The northern cement market has now been almost dominated by the ACC-Gujarat Ambuja combine, which industry sources say, has enabled the duo to virtually control prices in the region.
The Gujarat market, on the other hand, has been saturated with cement manufacturers. However, following the earthquake earlier this year, demand is expected to shoot up in the coming quarters. The region also has other distinct advantages of quality limestone reserves. Analysts said a port-based location will enable the company save on freight costs.
