Shree Cement''s Rajasthan plant to be up by 2005

The Calcutta-based Bangur group promoted Shree Cement (SCL) is setting up of a greenfield cement plant with a capacity of 1.2 million tpa at Beawar in Rajasthan, which is expected to be completed by end of 2005.

The company is expected to spend over Rs300 crore for the project. The plant will be supported by the company''s existing captive power plant and its limestone reserves. The work on this capacity addition has already begun and the project is slated to become operational by December 2005.The company plans to fund this capex through a mix of debt and internal accruals.

It plans to borrow Rs2 billion through an ECB / term loans, and the balance amount of Rs1 billion is to come from internal accruals. Shree Cement is one of the most efficient cement producers in India. The company''s captive power plant runs on alternate fuel, the first in India to do so, and meets its entire power requirement. The company operates in cement-deficit north India where cement prices are strong.

The company management plans to set up additional capacities and increase sales to the retail segment, where margins are high. SCL is a Rajasthan-based cement manufacturer and has the largest single location plant in northern India with an installed capacity of 2.7 million tons and a 36 MW captive power plant. SCL manufactures ordinary Portland cement (OPC) and Portland Pozzolana cement (PPC) namely, Shree Ultra 53, 43 and 33-grade cement. Last year the company introduced, for the first time in India, ''Shree Ultra Red Oxide'' cement with rust-retardant properties.

The product was well received in the market and today constitutes almost 37 per cent of SCL''s sales. SCL markets cement in Rajasthan, Delhi, Punjab, Haryana, Western UP and Uttaranchal. The company has over 11 per cent of the market in the northern region, which is traditionally a demand-excess and supply-shortage region, ensuring that SCL gets the best cement prices in the country. Its cost of production is around Rs860 per ton, making it the lowest cost cement producer in India.

For FY2003-04, on sales of Rs5.86 billion, SCL reported a net profit of Rs130 million. It has shifted its focus from the institutional to the retail segment and has introduced branded cement and new variants such as Shree Red Oxide Cement, which was a huge success and accounted for 37 per cent of SCL''s production.