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ACC plans Rs 120-cr
capex to set up captive power plants
Papiya De & Subhadip Sircar
Mumbai, May 17: THE Rs 3,031-crore cement major, ACC has
chalked out a capex programme of Rs 120 crore to set up captive
power plants of 15 MW each at Chanda in Maharashtra and Madukkarai
in Tamil Nadu. This is a part of the company’s ongoing exercise
to increase its cost efficiency.
| ...generates Rs 80 crore savings through cost reduction |
| ACC has generated Rs 80 crore in savings
on account of cost reduction measures, according to Mr Nambiar.
This has been primarily due to better efficiency, cheaper source
of purchase, pruned manpower costs and reduced dependence on
grid power. In power alone, the company has saved around Rs
42 crore in the last fiscal and it is likely to come down further
once the power plants at Chanda and Madukkarai are commissioned
by 2002. Fuel costs have also been reduced by Rs 7 crore. The
cost of manpower has come down by Rs 14 crore due to the impact
of the reduction of over 4,000 employees over the last three
years. The company was able to achieve this despite various
increases in cost of major inputs beyond its control, which
were compensated by improving operational efficiencies. Mr Nambiar
added: “Despite a 20 per cent reduction in staff strength, there
is still scope to reduce it further as the company has not yet
achieved optimum utilisation of manpower.” |
Speaking to The Financial Express, ACC managing director (MD) TMM
Nambiar said: “We plan to fund it partly through internal accruals
and the rest through debt, depending on our financial position.”
The captive thermal power plants are likely to be commissioned by
2002 and bring down the cost of power substantially. Mr Nambiar
added: “Grid power is almost 100 per cent more expensive than captive
power, and even if we take the capex into consideration, price per
unit of power will come down from Rs 4.5 to Rs 3.”
With these two power plants, ACC will have captive power in all
of its 16 plants except at Gagal in Himachal Pradesh (HP), where
the availability of hydel power makes grid power cheaper compared
with the rest of the states. Also, freight cost of coal to the hilly
terrain of the state makes a captive plant unviable, said Mr Nambiar.
The MD said that the sale of the two captive power plants at Jamul
and Kymore to Tata Power had been put on the backburner following
the delay in getting government clearance.
The sale, through which ACC was to raise around Rs 300 crore, was
planned in lieu of a preferential allotment to the Tatas in 1999,
which the financial institutions did not allow.
The company was planning to mop up the amount to part finance its
Rs 750 crore capital expenditure plan drawn up to enhance its capacity
by 3 million tonne. ACC and Tata Power had already had a similar
agreement over the Wadi unit power plant which was transferred to
Tata Power for Rs 90 crore.
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