The firm wants to build on the recent acquisition of the Rs 4,800 crore cement business of Anil Ambani-led Reliance Infrastructure (RInfra) through which it will also get mining lease of Mukutban limestone mines situated in the Yavatmal district of Maharashtra.
Besides, the firm expects that the acquisition will help it become a pan-India player in the “foreseeable future”.
Cement accounted for 91.34 per cent of its total sales in 2015-16. The company’s turnover stood at Rs 3,768.42 crore in the period.
“The mining lease at Mukutban would enable the company to set up a clinkerisation unit of 3 MT in the foreseeable future,” Birla Corp said in a regulatory filing.
Maharashtra has limestone reserves of around 1,371.43 million tonnes with extensive deposits located in Yavatmal, Chandrapur and Gadchiroli districts. Mukutban mines are known for its cement-grade deposits of limestone.
Birla Corp said: “The company can gain a sizeable presence in the profitable Western (India) market by expansion of the Mukutban operations.”
The economies of scale and the synergies from the deal will help the firm invest on manufacturing, brand, marketing among others, it added.
On the acquisition, Birla Crop in its annual report for 2015-16 said mineral concession with Reliance Cement Company Pvt Ltd (RCCPL) will help the firm become a pan-India player in the cement space.
“The company’s expansion potential will also be enhanced with mineral concession in the states of Madhya Pradesh, Maharashtra, Rajasthan, Karnataka, Andhra Pradesh and Himachal Pradesh, enabling the company to emerge as a pan-Indian player in the foreseeable future,” it said.
It further said: “Company will also benefit from RCCPL’s strategically located raw material sources, captive coal mine, optimum manpower, efficient operating parameters and technical capability for producing top-end quality product.”
In the report, Birla Corp had said that its profitability in 2015-16 fiscal was impacted due to outsourcing of limestone at higher prices, which is a key ingredient in making cement.
“Substantial quantity of limestone was raised by mechanical means. However, it was still short of the total requirement, which has to be outsourced at substantially high rates,” it added.
Reliance Cement Company Pvt Ltd (RCCPL) has 3 plants located at Maihar in Madhya Pradesh (MP), Kundanganj in Uttar Pradesh (UP) and Butibori in Maharashtra. It has a total installed capacity of 5.8 MTPA and 3.30 MTPA respectively.
Birla Corp has seven cement plants, two each at Satna (MP), Chanderia (Rajasthan) and Durgapur (West Bengal) and one at Raebareli (UP). It has a total cement capacity of 10 MTPA. With this acquisition, its total capacity will increase to over 15 MTPA.
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