Shree Cement, one of the largest producers of cement in north India, has put its Karnataka plant on the backburner, following land acquisition problems at the site.
The proposed plant, which would have been the first outside North India, was meant to have a capacity of six million tonnes. However, with the project hitting the land hurdles, the company now plans to expand at its existing facility in Rajasthan, making it the largest in the world at a single location at 19 million tonnes.
“We had a very good quarter. It is time to move ahead. We had plans for moving out of North India with our two plants – in Karnataka and Raipur (Chhattishgarh). But because of land issues in Karnataka and procedural delays in Raipur, we have rather decided to expand capacity in Rajasthan at the existing unit over the next 2-3 years, where we have bought additional land,” Shree Cement managing director HM Bangur told Business Standard.
“Right now, we have 13 million tonne capacity there. We will add 3 million tonnes over the next two years and in another one year the total capacity should be 19 million tonnes. After this, it will be the single-largest unit at one place. The investment would be about Rs 4,000 crore in the next couple of years,” he added. The Kolkata-based company has bought about 50 acres of additional land adjacent to the existing unit Rajasthan.
The company has not yet been able to put up its Karnataka unit, even though it has already acquired 90 per cent of required 400 acres. “There are some 20-30 acres of land in between, which we are not being able to get, stalling the project. With a land policy of no government intervention, I do not know when we will be able go ahead with that. But capacity expansion cannot wait. Our capacity utilisation may come down for some time, but for long term growth production should go up,” he noted.
The company entered into a memorandum of understanding (MoU) with the Karnataka government in 2010, to set up the cement unit. It proposed to invest Rs 1,500 crore on a cement manufacturing unit with an annual capacity of 3-mtpa.
On the other hand, although it has got possession of the land in Raipur, according to Bangur, due to “procedural delay”, it will take time to be operational. “We are hoping to start construction work by the end of fiscal,” he said. It was proposed to be a 2-mtpa pant with an investment of Rs 1000 crore.
However, the company is not keen on international presence at this point in time. Responding to reports of Shree Cement's intention to acquire the cement operations of Lafarge in South Africa, Bangur said, “We did talk to Lafarge. But immediately dropped the plan, as I think we are not ready yet for such a big acquisition overseas. We can think of something like this may be after two years. In fact, overseas expansion is not in our agenda right now.”
