Star Cement looks to invest ₹1,000 cr on clinker plants

11 September 2017

Star Cement Ltd, a subsidiary of Kolkata-based Century Plyboards (India) Ltd, is looking to invest ₹1,000 crore for Greenfield and brownfield expansion of its cement grinding and clinker manufacturing plant.

According to Sajjan Bhajanka, Chairman, Star Cement, the company plans to set up 1.5-2 million tonnes per annum (mtpa) cement grinding unit at Siliguri in West Bengal. Plans are also afoot to double its clinker manufacturing capacity at Lumshnong in Meghalaya to five million tonnes per annum in the next three years.

While its Greenfield cement grinding unit will entail an investment of ₹200-300 crore; the estimated investment on the brownfield project will be close to ₹700 crore. The investment will be funded partly by internal accruals and partly by debt.

“Our annual general meeting is on September 11 in Meghalaya; the board will deliberate on the issue of both Greenfield and brownfield expansion,” Bhajanka told BusinessLine.

The company has a 40-acre land at Siliguri and has also received environmental clearance for setting up a cement grinding unit.

“There were some minor issues with land but that is likely to get resolved soon. Once we get the board approval, we will commence work on the project,” Bhajanka said.

Star Cement has a capacity to grind 4 mtpa of cement from its own grinding units at Meghalaya and Assam. However, the capacity utilisation for cement, which varies from season to season, is roughly around 70 per cent.

The company produces 2.7-2.8 mtpa of cement from its own units and three hired grinding units at Bankura, Siliguri and Durgapur in West Bengal put together.

Talking about the need to add capacity, Bhajanka said, the cement industry is expected to perform better this year due to improved demand on the back of a rise in the number of infrastructure projects and enhanced capacity utilisation.

The ‘Housing for All by 2022’ scheme will drive real estate construction across the country, which will help the company strengthen its offtake in its key focus markets in Eastern India — West Bengal and Bihar.

The company expects its cement production to increase to 3 mtpa this year on the back of a good demand.

For the quarter ended June 30, 2017, the company posted a net profit of ₹109 crore on a consolidated basis, as compared with ₹37 crore during same period last year. Net revenues grew by 10 per cent to ₹ 451 crore.

“The profits in the April-June 2017 quarter was better because of higher prices, better capacity utilisation and lower costs,” he said.

The company’s clinker manufacturing unit at Lumshnong in Meghalaya produces about 2.5 mtpa of clinker. The clinker plant, at times, is unable to meet the company’s total cement production capacity.

“Our clinker capacity is not enough, sometimes when the cement demand is good then we have to buy clinker from outside. The capacity addition will help meet our demand,” he said.

Star Cement has adequate limestone reserves in Meghalaya which could take care of its clinker capacity expansion plans. “Since we have our limestone reserves in Meghalaya, our clinker plant has to come up there,” he said.