Dalmia Bharat Cement is investing around Rs. 3,500 crore to achieve its target of expanding its installed production capacity to 34 million tonne per annum (mtpa) by March 2020 from the existing 26 mtpa.
The company is increasing its production capacity in the eastern market at a consolidated investment of around Rs. 3,000 crore which will add 5 mtpa to its existing capacity. The brownfield expansion in east India involves increasing the capacity in its West Bengal plant from 1.3 mtpa to 4 mtpa and in its Rajgangpur plant by another 3 mtpa.
On the other hand, after the NCLT sanctioned its plans for acquisition of Murli Cement with certain riders, the company hopes to complete the acquisition by the end of the current fiscal year, which will add another 3.2 mtpa to its installed capacity.
“We have asked the government to continue the incentives Murli Cement used to enjoy and re-issue the mining leases to us," Ujjwal Batria, chief operating officer at Dalmia Bharat Cement told Business Standard.
Although the NCLT Mumbai bench approved Dalmia’s acquisition plan, it rejected a clause that allowed the company to call off the deal at any stage and instead asked it to prevent the liquidation of Murli Cement. Dalmia’s offer for Murli Cement is about Rs. 400 crore while the firm's liquidation value is around Rs 230 crore. Out of a total debt of Rs. 2,783 crore, the banks will get around Rs. 380 crore as per the resolution plan.
“Our expansion in east India, on the other hand, will be ready by March next year which will help us improve our market standing. We are also willing to look at good opportunities for acquisition," Batria told this newspaper.
Dalmia is also one of the companies in talks with Emami Cement for acquisition of the latter’s assets of around 8 mtpa. The acquisition will not only strengthen Dalmia’s total capacity in West Bengal, Odisha and Bihar, but will also help it get access to mining leases in Chhattisgarh, Rajasthan, and Andhra Pradesh. Transfer of the mining leases in the latter two states might help Dalmia set up greenfield projects in future.
Dalmia have bid for mining reserves in the past auctions and have already secured leases in Odisha and Chhattisgarh.
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