India Cements plans to de-risk its business model by expanding operations beyond the south.
MP facility to come up early in FY09
MUMBAI: India Cements plans to de-risk its business model by expanding operations beyond the south.
The company is doing a feasibility study for setting up a cement plant in Madhya Pradesh early in the next fiscal.
Currently, the southern region accounts for 90% share of India Cements’ sales. However, the company sees itself as a pan-India player with a total capacity of about 18 MT by 2009-10; for this purpose, it has acquired mining leases in Rajasthan.
About the Himachal Pradesh project which was was planned earlier with the expansion objective in mind, a company official said on condition of anonymity: “A feasibility study is on for a plant though some issues need to sorted out.”
Sources said the Himachal project may face delays. India Cements is talking with the Himachal government for an approach road to the plant without which the 2 million tonne (MT) project won’t take off. The company had plans to commission the Himachal plant by the end of FY10.
Research Analyst Reena Verma Bhasin of DSP Merrill Lynch said in its report that India Cements sees room for margin expansion. It feels further price hikes will depend on the industry’s supply-demand scenario. It also sees room for positive surprise in demand growth. Overall, it expects FY09 performance to be as good as that of FY08.
Industry experts believe that the prices should maintain their upward trend for two quarters until some large greenfield projects go onstream. The demand for cement is expected to remain buoyant in line with the booming economy, which demands investment in infrastructure activities.
India Cements reported a net profit of Rs127.05 crore in the three months ended December 31, 2007, against Rs79.78 crore a year ago. Also, it has completed a fundraising exercise through issue of 2.08 crore equity shares at a price of Rs285 per share.
r_mithun@dnaindia.net
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