Grasim Cement Capacity Set To Top 7.5m Tonne

Grasim Industries' total capacity will rise to nearly 7.5 million tonne after the acquisition of, both, Dharani Cements and Shree Digvijay Cements is complete. The total capacity of the Aditya Birla group will rise to over 10 million tonne making it the third-largest producer after ACC and L&T.

The Shree Digvijay Cements takeover will benefit Grasim in many ways. A port location will enable the company to import coal and export cement if necessary. It will also make it possible to ship cement from Gujarat to other parts of the country, though Grasim executives said this would not be possible.

 

"Most of the cement would be sold in Gujarat as the brand name Kamal is well-recognised here," chairman Kumar Mangalam Birla said here yesterday. The jetty will enable Grasim to import essential raw materials for the entire group as well as for its other units like viscose staple fibre. A new VSF plant of 60,000 tonne is coming up at Bharuch, Gujarat for which raw material like wood grade pulp will need to be imported.

The total cost of the acquisition (including the assuming of debts and liabilities) is over Rs 250 crore. Grasim is expected to raise the funds internally. The company has Rs 717 crore worth of investments, plus over Rs 600 crore locked up in receivables. But Birla said funds are not a problem and cash generation is sufficient to cover up the amount required. "Due to industrial slowdown, the cash generation will not be so much as last year's. But we don't need the money immediately, so there is not much of a problem," he added.

The acquisition will give Grasim a presence in all major regions of the country.

In south, it has Dharani, and Digvijay gives it a presence in the Gujarat market where demand grew by 11 per cent last year against the national average of nine per cent.

Though realisations were lower due to new commissionings by L&T, Birla said they would improve over the next few years as demand increases due to infrastructure projects.