"We are looking for mines.... We have just started thinking on that," UltraTech Cement President and CFO K C Birla told reporters after the company's annual general meeting here today.
UltraTech is an Aditya Birla Group company engaged in the cement business.
Birla, however, said it was too premature to provide any further details now and declined to make further comments on possible acquisitions.
The group has embarked upon a capacity expansion programme designed to take it to a total of 48 million tonnes per annum (mtpa) by 2010 from the present 31 mtpa.
Grasim, another group company, is setting a 4.4-mtpa greenfield plant in Kotputli and another 4.4-mtpa plant in Shambhupura, Rajasthan. UltraTech is setting up a 4.9-mtpa project in Tadpatri in Andhra Pradesh.
An additional 3.3 mtpa capacity is being augmented through a 1.3-mtpa grinding unit in Dadri and 2-mtpa grinding capacity augmentation in UltraTech at its Pipavav plant.
UltraTech Cement today also increased its capital expenditure (capex) by Rs 1,000 crore to Rs 4,300 crore.
Of the total corpus, the company will spend Rs 250 crore for setting up a waste heat recovery system, while the remaining amount will be invested in setting up additional ready mix concrete (RMC) plants and extension of the Gujarat jetty and new port terminals.
In its earlier estimate, the company had earmarked a total investment of Rs 3,300 crore. The company will spent around Rs 2,400 crore in the next three years, said Aditya Birla Group Chairman Kumar Mangalam Birla.
In 2007-08, the third largest cement maker, with a capacity of 18.2 million tonnes after ACC and Ambuja Cements, had spent Rs 1,800 crore on its ongoing expansion plans.
The company currently has 27 RMC units, which will be taken up to 39 by the end of the current financial year. This will take the overall capacity of its RMC operation to 7.2 million cubic metres from the current 4.8 million cubic metres.
Pointing out the current slowdown in the country's economy, Birla said, "The economy is gravely affected with rising interest rates and inflation. Unless it is contained, the construction sector will see a slowdown, which, in turn, will affect the cement demand in the country."
On the price front, the chairman said the company had no policy on prices. "The market forces of supply and demand will decide the prices of cement," he said.
According to K C Birla, chief financial officer, UltraTech, the rise in coal prices from $78 a tonne to $179 a tonne has a cost effect of Rs 10 per bag of cement (of 50 kg). However, the industry has not raised cement prices. "If such a scenario continues with input costs going up, there will be no option but to pass it on to the customers," he said.
Over the government gradually shrinking coal linkages to the cement industry, the company said it is looking for buying coal mines in South Africa. UltraTech imports around 50 per cent of its coal requirement of around 1 million tonnes.
Birla ruled out any chance of setting up a separate company for RMC. ACC, the country's largest cement maker, has set up a subsidiary for its RMC segment under the name ACC Concrete.
The company expressed concerns over the surplus cement situation in FY09. "The effect of this will start showing by the end of the current financial year, but the full impact will be felt in FY10, when all the announced capacities will go onstream," said Birla.
Coal accounts for a 27 per cent of the total fuel cost at UltraTech and since the price of the commodity has gone up since last year, acquisition of coal mines would help the company to reduce its production cost. The company imports about 1 million tonnes of coal annually.
