Reliance Cementation issues LoI for Satna factory plan

Reliance Cementation Pvt Ltd (RCPL), part of the Anil Dhirubhai Ambani Group, has moved ahead on its cement factory plan. “Reliance Cementation has issued a letter of intent (LoI) for equipment for its Satna-I unit in Madhya Pradesh. The LoI has been issued to European engineering majors Polysius, FL Smidth and Loesche,” said a source. The European majors outbid Chinese equipment players. The price differential was about fiva per cent.

And European insurance agencies also charge five per cent of the debt raised as fees, whereas the nodal insurance agency in China charges seven to eight per cent of the debt raised.

RCPL is a full subsidiary of Reliance Infrastructure. The Satna-I unit is supposed to have annual capacity of 5.08 million tonnes per annum (mtpa). The plan is for an integrated unit at Maihar, a blending unit at Gondavli and a grinding unit at Kundangang in Madhya Pradesh.

The source further says, “ A part of the site has received environmental clearance, where work would start first and they have received Terms of Reference clearance for the final stage. ToR is the first level of clearance from the environmental ministry before it gives the final nod for the project.”

Since the inception of the company in 2007, it has not yet placed any order for construction of cement units. It says it has been focusing on setting up two 5-million tonne (mt) plants, at Mukutban in Maharashtra and Maihar in Madhya Pradesh. The company website says a grinding unit at Butibori, Maharashtra, will be the first operational unit from the company's stable, with an initial capacity of 0.6 mtpa. According to RCPL, this unit is slated for commissioning in March-April 2012.

However the source adds, “Though the company has been saying the Butibori capacity will come first they have not placed any order for the same. So, it would be difficult to say which one would come first. As of now they have just signed the LoI.”

The latest move has come after the joining of Sumit Banerjee, erstwhile chief executive officer of ACC.

It is also looking at inorganic expansion and is in talks with Andhra-based Sree JayaJyothi Cements.