Emami Group to invest Rs 8,500 cr in cement arm

The company has also appointed McKinsey India to recommend a marketing strategy

Shortly after venturing into the cement space, the Emami Group is aiming at capacity of 15-20 million tonnes (mt) in the next three to five years, from the existing 2.4 mt, investing Rs 8,500 crore to do so.

The cement arm of the diversified group will invest Rs 3,500 crore to build a 5.5 mt per annum (mtpa) clinker unit in Chhattisgarh and two grinding units of 1.5 and 2 mtpa each in Odisha and West Bengal.

“A part of the limestone will be used up in the Chattisgarh plant and the rest will be sent to the grinding units in Odisha and West Bengal,” Aditya V Agarwal, director of the Emami Group of Companies said.

The Chhattisgarh unit is expected to achieve full capacity utilisation in 2018. In the same year, the Odisha grinding unit is to commence production. The West Bengal unit will start in January next year.

Emami Cement will further invest another Rs 3,500 crore to set up a six mtpa plant in Rajasthan, where it recently won a limestone mining lease. This project is expected to become operational in the next three years. “A part of the limestone will be used in the Chhattisgarh plant and the rest will be sent to the grinding units in Odisha and Bengal,” said Aditya V Agarwal, group director.

Another two mtpa capacity clinker unit will come up in Guntur district of Andhra Pradesh, where the group has earmarked Rs 1,500 crore.

Agarwal is expecting the cement division to contribute Rs 2,500 crore as revenue by 2018-19, up from Rs 500 crore this financial year. The proposed investment will be funded in a debt equity ratio of 70:30.

“Our plan with cement is to cater to the demand in east and central India,” Agarwal said, adding the growth rate of 9.1 per cent in east India far exceeded the growth in national cement demand.

It is also looking at acquiring smaller integrated cement units in central and east India. “We (Emami Group) have a history of acquiring sick companies and then turning them around,” said Manish Goenka, director.

On the group’s decision to get into cement, Agarwal said, “The cement market is gradually getting consolidated and not many players will be able to enter the market in the coming years.”

Limited availability of limestone was another entry barrier.

It has appointed McKinsey India to recommend a marketing strategy, expected to be given in the next two months.

FUTURE PLANS

• The cement arm will invest Rs 3,500 crore to build a 5.5 mt per annum (mtpa) clinker unit in Chhattisgarh and two grinding units of 1.5 and 2 mtpa each in Odisha and West Bengal
• The Chhattisgarh unit is expected to achieve full capacity utilisation in 2018
• The Odisha grinding unit is to commence production in the same year
• The firm will further invest another Rs 3,500 crore to set up a six-mtpa plant in Rajasthan, where it had recently won a limestone mining lease