Kesoram Ind eyes stronger foothold in cement market

Kesoram Industries, the diversified flagship entity of B K Birla group, is planning to expand its cement capacity spread over Karnataka and Telangana catering to the markets of South and West.

Located near the limestone deposits of Sedam at Gulbarga district of Karnataka and Basantnagar in Telangana, Birla Shakti brand's two cement manufacturing plants have a total combined capacity of 7.5 million metric tonne.

Kesoram now plans to acquire up to 700 acres of land at Gulbarga where its existing limestone mines are located on which it has mining rights. And considering the current consolidation in the cement industry, Kesoram would also take a call on whether it needs to put in manufacturing plants like grinding units there, Tridib Kumar Das, whole-time director & CFO said after the annual general meeting of the company.

"Gulbarga has one of the finest limestone deposits in our country. We have a definite plan to get enough limestone mining area and around 700 acres of land on which we have mining rights can be acquired," Das told reporters.

Availability of high-quality limestone enables higher blending ratio thereby resulting in higher cement production.

"Kesoram sources limestone from its two leasehold mines, one each at both the locations, against royalty payment. Limestone reserves at both the mines extend beyond economic life of the respective plants and are located in proximity of the clinker plants, thereby enabling the company to optimise cost pertaining to its mining activities," a credit rating report said.

"Once you expand limestone mining capacity, the life of the cement plant on which it depends goes up and so does the valuation. We are currently observing the developments in the cement industry including the consolidation that's happening to take a call as to whether we need to make investments in setting up grinding units or some other capacities there," Tridib said.

Kesoram also has expansion plans for its biodegradable transparent paper business which, along with its rayon business, was earlier transferred to a wholly-owned subsidiary Cygnet Industries.

"Main use of biodegradable paper has traditionally been the fire cracker industry. But it has potential to find wide use in storing vegetables, processed foods. We are doing a lot of research in improving and adding values to this product. Currently we have two lines of which only one is working. So, we can double production to achieve greater acceptability and usage of transparent paper," the CFO said.

Kesoram has so far invested Rs 30.05 crore and extended loan of Rs 530 crore to Cygnet till March 2017 to revive the business.

Concrete plans

Kesoram now plans to acquire up to 700 acre of land at Gulbarga where its limestone mines are located 
It would also take a call on whether it needs to put in manufacturing plants like grinding units there