Prism Cement Ltd, a Rajan Raheja Group promoted company, is all set to invest about Rs 1,800-Rs 2,000 crore to increase its cement capacity to 10 million tonne from the present 2.5 million tonne through its brownfield expansion in Madhya Pradesh (MP) and greenfield expansion in Andhra Pradesh, said a source close to the company.
The company has a manufacturing unit at Satna, MP and will be adding another 4.5 million tonne capacity to its existing plant there through a brownfield expansion, which will be commissioned by early 2010. It is also setting up a 3 million tonne greenfield plant in Kurnool district, Andhra Pradesh and it is expected to be operational by 2011.
It is learnt that Prism Cement currently has about Rs 250 crore of liquid investment. Going forward, the company is hopeful that it will generate Rs 350 crore every year for the next two years. Moreover, the company will borrow Rs 400 crore through external commercial borrowings (ECBs) for the machineries at each project (i.e., Satna and Kurnool). For the remaining amount, the company is depending on the cash generation of its brownfield expansion which will go on stream by 2010 and then decide the road ahead.
“There will be about Rs 800 crore of investment in Satna and about Rs 950 crore in Andhra Pradesh. Also, the company will invest Rs 100 crore in the coal block that has been allotted in Chindwara, MP,” the source added.
Prism Cement Ltd shares rose marginally on Friday to close at Rs 32.90 on the Bombay Stock Exchange.
The company is targeting the southern markets with its new plant in Andhra Pradesh. This will give Prism Cement exposure to markets not only in Andhra Pradesh but Karnataka, Tamil Nadu and some parts of Kerala as well. The firm is all set to take advantage of better realisation there.
Prism Cement’s sales for the year ended June 2008 grew 15% to Rs 1,020 crore and PBT grew 8% to Rs 317 crore compared to the last year.
For its coal requirements, the company currently has 80% linkage with Coal India and 20% it buys from the spot market. The coal block that has been allotted to the company in Chindwara is in the process of getting approval and will take care of the company’s Satna plant once operational.