Binani Cement Ltd, which imports $100 million worth of coal each year to power its production, expects to slash its fuel bill by switching partly to lignite for its mother plant, and buying coal mines in Indonesia.
Vinod Juneja, managing director of the Braj Binani group outfit, said the company is setting up a new project in Gujarat that will have two plants — one near Veraval Port to feed clinker to its cement plant in Dubai and the other in Surat, with a combined capacity of 2.8 million tonne.
The project, expected to be ready by 2010, will try to use lignite from the Ambamata mine straddling the Rajasthan-Gujarat border.
“We are going to acquire coal mines in Indonesia at a cost of $50-60 million (around Rs 200 crore),” Juneja said.
“We spend $100m a year on buying coal in the international spot market, and coal accounts for 18-20% of total costs,” he said. The Indonesian mine’s reserves of 30 million tonne will be enough to feed Binani entire needs.
Binani’s current capacity at its sole domestic location, at Sirohi in Rajasthan, is 6m tonne. The completion of the Gujarat project and the expansion of its facilities in China and Dubai to 2.5m tonne each will take its global capacity up to 13m tonne a year, with 8m tonne in India alone.
The Sirohi plant, which has its own limestone mines, is the single-largest cement facility in India.
For the Gujarat cement project, the company will be investing around Rs 825 crore.
Earlier, at the 12 th annual general meeting of the company here today, shareholders cleared a dividend of 25% or Rs 2.50 per share. For the year to March 31, 2008, Binani Cement reported a profit after tax of Rs 176 crore on net sales of Rs 979 crore, against a PAT of Rs 96 crore on net sales of Rs 680 crore.