L & T To Double Cement Production

The Larsen & Toubro (L&T) has decided to lay greater emphasis on cement and proposes to double its output by the turn of the century. The companys present cement manufacturing capacity stands at 6.5 million tonnes.

Our focus will now be on the cement division and we are planning to add capacities of around 6 million tonnes over the next three years, said S D Kulkarni, managing director and chief executive officer of L&T to Business Standard.

The company will set up a 1.75 mt greenfield cement venture at Anantapur in Andhra Pradesh. The project is expected to be commissioned next year and will require an investment of over Rs 600 crore, he said.

 

The company has decided to go slow on new capacity additions in the engineering division and instead focus on cement which offers unlimited opportunities because of the emphasis on infrastructure development.

Elaborating on the new venture, Kulkarni said that the site was chosen to take advantage of the high limestone availability in Andhra Pradesh. The South Indian markets have an unlimited potential as it still remains a cement-deficit region, he added.

Besides, the new site is well connected to Madras by both roads and railways.

L&T has also undertaken an expansion programme to double its cement output from its Gujarat unit. At present, the plant has an installed capacity of 1.5 million tonnes and the capacity expansion will cater to the requirements of the West India markets.

The company has already syndicated foreign currency worth $115 million through a ANZ Grindlays Bank-led consortium, which will be realised over a period of three years, he said.

The companys Rs 500-crore bond issue will also cater to the fund requirements at the Tarpatri cement unit at Ananatpur in AP.

The companys new unit in Gujarat, with a total investment of Rs 550 crore, is likely to be commissioned by March this year. The twin units in Gujarat will take advantage of the Papapav port facilities which will enable the company to tap the Western markets.

The company also has cement plants in Hurmi near Raipur, Madhya Pradesh and a grinding unit at Jasugoda in Orissa.

At present the Tata and the Birla groups are leading players in the cement sector. ACC, which is the countrys largest cement company, has the Tatas as the majority share holders. Besides, Tata Steel has its own cement manufacturing division.

On the engineering division, Kulkarni said that the company was stressing on engineering project consultancy services to take up assignments on a turnkey basis.

The division has forged two alliances with Chiyoda Corp of Japan in the hydrocarbon sector and Sergent & Lundy of the US for power engineering projects.

India does not have the basic engineering facilities and the two joint ventures will go a long way in tapping the unexplored sectors, he added.

FIIs contention dismissed

Larsen & Toubro (L&T) has refused to endorse the perception of the foreign institutional investors that the company has lost its focus in the process of its large-scale diversification.

L&T managing director and chief executive officer, S D Kulkarni, said: We do not accept the FII perception that the company has lost its focus by moving into diversified areas. The company instead believes that it can assume the role of a market leader in all the businesses that it would undertake. In this context, Kulkarni added that L&T is a professionally managed company which does not venture into any new area half-heartedly. Kulkarni was reacting to a recent study by an international investment firm which had pointed out that the company was losing its focus by diversifying into steel .

L&T proposes to set up an 5-million tonne integrated steel plant in Gopalpur, Orissa.

We are studying the situation and have engaged an international consultancy firm to examine the total market situation. Both the domestic and international markets are witnessing a rather dull phase but we hope to give the finishing touches to the project by the next six months.