Shree Cement to set up clinker unit

Shree Cement to set up clinker unit

Mumbai: Cement maker Shree Cement plans to set up a Rs350 crore clinker unit in Rajasthan and aims to start production by Nov-Dec 2010, a top official said.

“It (new clinker unit) will be near our existing unit in Pali district of Rajasthan," Shree Cement managing director H M Bangur said over phone.

On Wednesday, Shree Cement had commissioned a 1.80-million-tonne per annum clinker-grinding unit in Sri Ganganagar district of Rajasthan.

The Pali unit is in addition to the grinding unit, he said.

The company would use internal accruals for funding the new plant, he said. With the addition of the new unit, the company expects total capacity to increase to around 13 million tonnes by the end of FY11, from the present 10 million tonnes.

For the March quarter, the company expects a 10-12% rise in total production on a year-on-year basis, and around 15% increase on a quarter-on-quarter basis.

By March-end, the company’s total clinker and cement production would be around 10.3 million tonne, he said.

On the capex for FY11, the company has proposed a capital expenditure of Rs4 00 crore per quarter, which also includes expenses for its power units in Rajasthan.

Shree Cement, which had announced its foray into commercial power business in October last year, expects to sell roughly 150 mega watt of power per day to various state governments and power exchanges.

However, he declined to comment on price and revenue expected from power business. The company expects revenue of over Rs3,500 in FY10, approximately 25% increase from the previous financial year, he said.

No price hike

“Some price hikes (in cement) have taken place, and it is in direct relation to what the excise duty has been increased...," he said.

India’s finance minister has proposed to hike excise duty on cement to 10% from the earlier 8% and to impose a clean energy cess of Rs50 per tonne on domestic and imported coal in the federal budget. Following this, cement companies had hiked prices by Rs5-6 per 50 kg bag, he said.

“Every time, the increase (in prices) cannot be passed to the consumer... Right now there is no mood to pass on (the hike in duties to the customer)," he added.

There is no fall in cement demand after the price hike, he said.

Shree Cement shares closed up 1.39% at Rs2,240 a share in a firm Mumbai market.