With a view to infusing efficiency and thereby cutting the overall cost of production, India Cements is embarking on a refurbishment plan for all its old plants which will entail an outlay of around Rs 1,500-1,600 crore.
The company has appointed international consultants FLSmidth and Krupp Polysius to make reports on how to go about the refurbishment plan.
India Cements will be meeting the funding requirement internally by selling its large land parcels to the tune 26,000 acres spread across various states.
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The company has eight integrated cement plants – two plants in Andhra Pradesh at Chilamkur and Yerraguntla, two in Telangana at Vishnpuram and Malkapur, one at Banswara in Rajasthan and three in Tamil Nadu at Sankarnagar, Sankari and Dalavoi. Besides, it has two grinding units – one near Chennai and the other at Parli in Maharashtra. They have a combined capacity of nearly 16 million tonnes per annum.
N Srinivasan, MD & vice-chairman, India Cements told media persons on Friday that the company is embarking on a programme for complete refurbishment of its old cement plants for improving their efficiency on par with competition. The programme is estimated to cost Rs 1,500-Rs 1,600 crore and will take about 15-18 months for completion.
“We have asked the experts to submit their report as how to make these plants as efficient to be on par with the competition. They are expected to submit the report soon,” he said. The company will monetise its land parcels to the tune of Rs 1,500-Rs 1,800 crore.
Since India Cements has a basket of vintage plants and technology with varying operating parameters it has pushed the cost of production against its peers, he said.
In terms of consumption of fuel (coal and oil) and power, the company has found it is incurring an additional cost of Rs 500 per tonne of cement produced compared to the most efficient players in the industry. The revamp programme is aimed at addressing this cost difference and improve the operational parameters of plants. The refurbishment programme will start with Malkapur and Vishnupuram plants in Telangana. It will not cover its modern plants like Sankari in Tamil Nadu and Banswara in Rajasthan.
Srinivasan said the company has also planned to increase volume of cement and sell more blended cement. “ So far we have not been focussing on volume play, as we were focussing on prices. Now, after the refurbishment programme, we will focus on volumes in big way,” he said.
For the company, the third quarter was severely impacted by the unprecedented rise in fuel and power costs, which could not be compensated in the market place due to huge supply overhang. Besides, the company also lost some volume due to monsoon and high landed cost of products in commercially unviable markets of east and north east.
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India Cements reported a profit after tax of Rs 90.73 crore for the third quarter of FY23 as compared to Rs 3.30 crore in the same period of last fiscal. Total income stood at Rs 1,223.40 crore (Rs 1,114.22 crore earlier). The net profit has been arrived after taking into account an exceptional income from the sale of investments made in Madhya Pradesh for setting up a new cement plant.