India Cements eyes coal mine in Indonesia

Written by fe Bureau | Chennai | Updated: Jun 28 2009, 07:41am hrs
Cement major India Cements Ltd has decided to acquire a coal mine in Indonesia in the next few months. To meet its captive requirement, the company is also looking at acquiring a major gypsum producer abroad even as it is chalking out plans to enter the power sector in a big way over a period of time to become an integrated cement producer in India, said India Cements vice-chairman and managing director N Srinivasan.

The company has earmarked Rs 1,500-crore capital expenditure to be spent over two years on the acquisition of a coal mine in Indonesia, its 1.5-million-tonne greenfield project in Rajasthan, two power projects (2x50 mw) and capacity expansion at various plants in India.

At a press conference to announce the companys results here on Saturday, Srinivasan said, We are in advanced talks with a private coal mine player in Indonesia. We hope to finalise the deal in the next few months. India Cements has floated a 100% wholly owned subsidiary in Indonesia a few months back towards the same.

The companys annual net profit has come down sharply to Rs 432.18 crore in the 2008-09 fiscal as against Rs 637.54 crore posted during the previous fiscal due to higher tax provisions, increased raw materials cost and under capacity utilisation across a few plants. However, its total income grew 10% to Rs 3,954.53 crore compared with Rs 3,595.48 crore in the previous fiscal. The company has also been able to maintain a better Ebitda margin with better realisation of cement.

The initial estimate of the coal mine was expected to be around 15 mt which could scaled up to 30 mt, Srinivasan said, adding the company wanted to utilise it for captive purpose only. It is currently importing close to 900,000 tonne of coal.

The company is also looking at acquiring a gypsum producer in the overseas markets. Gypsum, one of the main raw material for cement, has become a scarce commodity in India. With millions of tonnes of cement capacity is expected to be added over a period of time, it is important for us to have a continued supply of gypsum. We have identified some companies abroad but will the deal will take time to finalise, Srinivasan said.

The company is also setting up two power plants of 50 mw capacity each in Tamil Nadu and Andhra Pradesh for captive purpose with an estimated investment of Rs 500 crore to take it to 160 mw. We want to bring all our power assets under a new subsidiary which eventually would look at becoming a major player in the power sector, he added.

To part-finance the Rs 1,500-crore capital expenditure, the company is looking at raising $100 million through various options, including issuing additional shares while the remaining will be met through internal accruals. On Saturday, the board passed a resolution towards the same.

In the pipeline

The company is looking at acquiring a gypsum producer abroad

It will set up two power plants of 50 mw capacity in Tamil Nadu & Andhra Pradesh

It is also planning a 1.5-million tonne greenfield project at Rajasthan