Binani Cement, the Braj Binani-backed cement manufacturer, will set up an international subsidiary for its overseas operations
MUMBAI: Binani Cement, the Braj Binani-backed cement manufacturer, will set up an international subsidiary for its overseas operations and may list it at the London Stock Exchange’s Alternative Investment Market (AIM) later.
Vinod Juneja, the managing director of Binani Cement, said the international subsidiary would be floated in a year’s time.
Increasing focus on the overseas market, the company will set up two grinding units—one at South Africa and another at either Mauritius or Madagascar—with a capacity of 1 million tonne each.
Both projects are expected to be commissioned by December 2009 for a total investment of $200 million.
Juneja added, “They will be grinding units only and clinker will be exported from China and India. But we will sell the cement in the domestic market.” Binani Cement is also planning to buy a coal mine near Port City in Indonesia. For now, all its coal requirements are met by imports from Indonesia and South Africa. This year, the company spent Rs 150 crore extra on these imports.
“We have identified one mine, which we will acquire by September this year,” Juneja said, adding that the acquisition is likely to cost about $100 million. “The reserves will meet our coal demands for the next 30 years.”
With a domestic installed capacity of 6.25 million tonne per annum (mtpa), the company produces 5.25 mtpa of cement annually, which it is hopes to scale up by September 2010, when its Gujarat plant will start producing 2.25 mtpa. Its combined output from the China and Dubai operations will be hiked to 4 mtpa from 2.5 mtpa now.
In China, Binani Cement will expand its clinkering capacity to 2.5 mtpa from 0.8 mtpa by June 2009 with an investment of $100 million and in its Dubai unit, it will add 1 mtpa to the existing 1.5 mtpa by next year at an investment of $75 million.
Meanwhile, hike in cost of fuel, coal and logistics and the inability to pass on input costs to the end consumer dented the company’s operating margin by 10% in FY08. Net profit went up by a mere 5%.
In the April-June quarter, Binani Cement’s net sales surged to Rs 325.99 crore, an increase of 67% over Rs 195.62 crore last year. “The last quarter was bad for us but we expect to stabilise by the next quarter. We will be able to maintain profits due to capacity expansion,” Juneja said.
pooja_s@dnaindia.net
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