Somani Cement to set up new plant at Bhavnagar

Vadodara-based Somani Cement Company (SCCL) will set up a 1.000 tonne per day (TPD), Vertical Shaft Rotrate Technology cement plant at Mahuva in Bhavnagar district with investment of over Rs 150 crore, Bimlesh Kumar Mishra, managing director, Somani Cement, told Business Standard.

Cement major, ACC, has conducted a geological survey and the project viability study. Somani plans to enter into a technical collaboration with ACC and will purchase machinery and equipment worth over Rs 65 crore from Cimco Birla.

The company is in process of financial structuring and plans to fund the entire project with debt of Rs 110 crore from various NRI groups and equity of Rs 40 crore through its second public offering scheduled by the end of the current financial year.

"We are setting up our new plant with 1,000 TPD capacity to meet the increasing demands. The new plant is expected to be operational in the next two years. For this huge project, the company will seek technical assistance from ACC, which conducted the geological survey in 680 hectares, basic engineering, detail engineering and also found that huge quantity of limestone is available in this part of land," said Bimlesh Kumar Mishra.

"We have decided to tie up with various multinational corporations (MNCs) and joint ventures with other leading companies and financial support from NRI group for the success of the project," said Mishra.

Banks, foreign institutional investors and insurance companies have 5 per cent stake in the project. Punjab National Bank has a 4.35 per cent stake and Morgan Stanley has 0.5 per cent stake.

At present, the company manufactures and trades in port land cement and lime pozolone cement. It has a 300 TPD manufacturing facility in Panchmahal district in Gujarat.

Somani Cement has reported a cumulative loss of Rs 20 crore in the last financial year, and plans to turn around in the next two years. "We have reduced our losses by Rs 3 crore in the last financial year, this year it will be further reduced by Rs 4 crore. We will be in black in next two years," said Mishra.

The promoters hold 13 per cent stake in the company, while the companies promoted by promoters hold 17 per cent and 58 per cent is held by the public.