India Cements says Indonesia mine buy delayed beyond June

India Cements, the South-based cement major which had initially planned to start mining from its Indonesian coal mine by May 2010 is still awaiting environmental clearances from the government there.

N Srinivasan, chairman and managing director of the company said in the conference call, “We are waiting for some forest clearances which will take 6-8 weeks more. It will be definitely beyond June.”

The company had announced the acquisition of the Indonesian mine in October 2009 and has since then extended the target to commence operations to March 2011.

It expects to import monthly 350,000-4 lakh tonnes to be utilised for cement which would be blended with higher grade coal, and 4 lakh tonnes for its captive power plant.

India Cements had acquired the mine for Rs100 crore, of which only Rs50 crore has been paid as of now. In the third quarter of the current fiscal, the company imported coal at $116 per tonne. 

The southern region which has seen a few price hikes in the recent past saw sales falling by 2.2%; Andhra Pradesh and Kerala saw a sales drop of 15%, while only Karnataka and Tamil Nadu witnessed growth by 2%.

India Cements’ new plant in Rajasthan that started sales since November is selling 71,000 tonnes per month. It is supplying 50% in Gujarat and 25% each to Madhya Pradesh and Rajasthan. 

Srinivasan is expecting the sales to increase to 90,000 tonnes by the end of this month. The company has a debt of Rs2,490 crore, including the foreign currency convertible bonds (FCCBs).

The company has already lined up substantial portion of the repayment. It had raised money through issuance of FCCBs of $75 million at Rs350 per share which has to be repaid by May.

Due to the refinancing, analysts expect the company’s interest outgo to increase from its present rate of Rs40 crore per quarter.