India Cements to refurbish old cement plants costing Rs 1,600 crore: MD

Chennai: Cement maker The India Cements Ltd has drawn up plans to refurbish its old manufacturing facilities at an estimated outlay of Rs 1,500 to Rs 1,600 crore, its Vice Chairman and Managing Director N Srinivasan said on Friday.

The funds to undertake the refurbishment would be met through internal accruals and the firm has roped in two international consultants for this exercise, he said.

India Cements has embarked on a programme for a complete refurbishment of its old cement plants for improving their efficiency, Srinivasan told reporters.

The 'refurbishment programme' is estimated to cost Rs 1,500 crore to Rs 1,600 crore and will take about 15-18 months for completion, he said. The city-based company has a vast land of 26,000 acres and the funds would be raised by monetising the land bank, he further said.

Srinivasan said two international expert firms -- Krupp Polysius and F L Smidth -- were roped in as consultants on how to make these plants efficient. "We have asked the experts to submit their report as how to make these plants as efficient on par with the competition. They are expected to submit the report soon," he said.

According to company officials, the refurbishment programme would start with Malkapur and Vishnupuram plants in Telangana and would not cover the modern plants like Sankari in Tamil Nadu nor the Banswara plant in Rajasthan.

India Cements has manufacturing facilities in Chilamkur and Yerraguntla in Andhra Pradesh, Sankarnagar, Sankari and Dalavoi in Tamil Nadu, two grinding units with one near Chennai and the other at Parli in Maharashtra producing a combined capacity of about 16 million tonne.

"Since India Cements has a basket of vintage plants and technology with varying operating parameters, it has pushed the cost of production against its peers," Srinivasan said. The plants in Andhra Pradesh and Telangana were acquired by India Cements two decades ago.

The southern cement industry, which recorded a healthy growth of 15 per cent in the first half of the year, had to be content with a lesser growth of around 10 per cent in the third quarter with an overall growth of 13 per cent up to December 2022, the company said on the performance of the cement industry.

On the economic outlook, the company said the Indian economy is expected to remain resilient to weather the global headwinds although global agencies and official estimates have reassessed GDP growth to be around 6.8 to 7 per cent in 2022-23 and around 6.5 per cent in 2023-24.

The Union Budget for 2023-24 has retained focus on giving push to big ticket infrastructure projects and urban infrastructure development in Tier-II and III cities and has envisaged a jump of 33 per cent in capital expenditure at Rs 10 lakh crore apart from the outlay of Rs 2.4 lakh crore for railways, the firm stated.

The cement industry, especially in the south, has built adequate capacity to meet the demand of housing and infrastructure sectors, substantial capital expenditure in the budget would augur well for sustaining the cement demand from increased construction and housing activity, the company said in a statement.