Shree Cement revives Raipur cement plan, to invest Rs 1,000 crore

Shree Cement, the biggest in the northern region, with market capitalisation of Rs 5,920 crore, is set to put up a two-million tonne clinkerisation unit near Raipur, Chhattisgarh, with an investment of Rs 1,000 crore.

This is the first time the company is setting foot outside Rajasthan. H M Bangur, managing director, said, “We have been acquiring the land for the last two years and have got partial success. We have acquired 75 per cent of the area and once completed, we will first put up the clinker plant.”

The Rs 1,000 crore would be funded through internal accrual, Bangur added. He did not specify any schedule for commissioning but said the order for equipment would be placed soon. Adding: “Once the entire land purchase is complete and we are sure about the time frame of the clinker unit, three-six months from thereon, we will look at the grinding unit.”

In April 2007, nine cement companies had each signed a memorandum of understanding (MoU) with the Chhattisgarh government for new cement plants and expansion of existing ones, with a total investment of Rs 6,800 crore. A year later, the MoU’s were put on a back burner due to the government’s inability. Now, after four years, Shree Cement has revived its plan.

Shree was expected to add 1.5 million tonnes per annum (mtpa) of grinding capacity by April 2011 to its existing 12 mtpa, taking the total to 13.5 mtpa. Apart from the northern region, where cement prices have reached a record high, it has been supplying to the central region, too. The price there last month was around Rs 240 per 50-kg bag; North India showed Rs 260 per bag for grade-A companies.

Jinesh Gandhi, research analyst with Motilal Oswal Securities, wrote in a note to clients last month, “Shree Cement has been gradually diversifying into the central region and now derives 72 per cent of its volumes from North India and 28 per cent from Central India.”