Birla Corporation spurts on plan to double cement capacity

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Birla Corporation will increase its annual cement production capacity to 30 million tons (mt) by 2027, said Harsh V Lodha, chairman of the MP Birla Group, at the annual general meeting of the company on 29 September 2021. The company had earlier said it would raise its production capacity to 25 mt by 2025. Dalal Street gave a thumbs up to companies expansion plan as the stock rallied 6% to Rs 1,438.80 apiece.

Birla Corporation’s current production capacity is 15.6 mt, which will go up to almost 20 mt by the end of the current fiscal year, when its greenfield 3.9 mt plant at Mukutban, near Nagpur, is commissioned.

Plans are afoot to reach a target of 30 mt by 2027, Lodha told shareholders, adding that details of the plans are to be announced when they are firmed up and approved by the board. The aggressive expansion plan is reflective of the company’s improving profitability and cash flow, he added.

Birla Corporation will expand in markets where the company has an edge over competition and demand for cement is projected to get stronger, Lodha said. Compared with legacy assets of the company, new plants are going to be more efficient and profitable.

Lodha said the plants of RCCPL (the erstwhile Reliance Cement Co. which was acquired in 2016), subsidiary of Birla Corporation, are among the best in India judged by operating parameters.

Even as it seeks to grow aggressively and faster than the industry average in the past few years, Birla Corporation will as a policy, remain conservative on borrowings, Lodha said.

Talking about raw materials, Arvind Pathak, the company’s newly appointed managing director and chief executive Officer, said Birla Corporation has enough limestone reserves to last decades at its current scale of operations.

Pathak said the company’s plan to expand the capacity of its Kundanganj unit to 3 mt from 2 mt remains unchanged, only the capex (capital expenditure) has reduced.

The company has recently concluded a project to expand capacity of its New Chanderia Cement Works in Rajasthan by close to half-a-million tons. On a consolidated basis, net profit of Birla Corporation rose 115.16% to Rs 141.51 crore on 43.14% rise in net sales to Rs 1749.11 crore in Q1 June 2021 over Q1 June 2020.

Birla Corporation, the flagship Company of the MP Birla Group, has an interest in cement and jute goods industries. The company and its subsidiary, RCCPL, have 10 cement plants spread across the country, with an annual installed capacity of 15.6 million tons. A 3.9 mtpa cement plant is under construction at Mukutban, Maharashtra.

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