Mumbai: There is finally some sign of optimism in the Indian cement industry. While its peers continue to hold back their expansion plans, Rajasthan-based Shree Cement is ready to infuse a whopping Rs1,000 crore in expanding its cement business as well as growing its power business into a prominent fraction of its total revenue.
The investment includes the plants in Rajasthan and Uttaranchal announced earlier. The company will have a total annual capacity of 12 million tonnes by the end of the year.
“The cost of missing the opportunity will be too large. The cost of putting the unit and keeping it idle...I think there is a low chance. Even it is there, the cost will only be nominal. Because after one year if I put the capacity, 5% will be the increase in cost. And with the present cost of capital at around 9-10%...additional cost of putting things one year early will only be 5%. For this cost of 5% I don’t want miss any opportunity,” managing director H.M. Bangur said.
With an eye on long-term benefits accruing from the additional cement capacity, the company has also set sights eye on increasing its power generation capacity. It expects to generate 150MW power, all of which will be sold to state grids. According to Bangur, selling power will lend some stability to the firm’s revenues.