Anil bid to cement ties with Bengal

Anil bid to cement ties with Bengal
Published: 30 November 2011

Reliance Cement Company Limited (RCCL), a subsidiary of Reliance Infrastructure and part of Reliance Anil Dhirubhai Ambani Group, is planning to foray into Bengal. The company wants to set up a 3Mta cement plant at Raghunathpur, Purulia district.

According to sources, Reliance Cement plans to invest INR500 crore in the project and has submitted its letter of intent to the Bengal government. The Bengal unit would be the third plant of Reliance Cement as the company embarks on a capacity expansion plan to take production to 50Mta in the long run.

The first two projects of the company of 5Mtpa each would be established in Madhya Pradesh and Maharashtra. In September 2008, the company secured limestone-mining licences at Satna in Madhya Pradesh.

Reliance Cement was floated in 2007 as part of Reliance Infrastructure. Reliance Cementation, part of the erstwhile Reliance Natural Resources, was another cement manufacturing arm of Reliance ADAG. However, it was merged with Reliance Infrastructure in 2009-10.

Reliance Cement is set to follow in the footsteps of two other cement majors — ACC and UltraTech — which have expressed interest in setting up plants in Bengal. Both ACC and UltraTech are planning to set up 2Mt plants in Bengal and both the projects involve an investment of INR600 crore each. All the three projects are likely to set up grinding units.

“The focus is now on infrastructure development in Bengal. As a result, projects of ACC, UltraTech and even Tractors India have been fast-tracked,” a source said.

The consumption of cement across the country has dropped because of a slowdown in real estate. However, prices have been rising because of a higher input cost. Coal and logistics, which contribute 40 per cent to the total cost of producing cement, have gone up considerably. The landing cost of cement in the east has gone up on an average by INR15.

The current average cost per bag in the east is in the range of INR245-260 across different brands, while elsewhere in the country it is INR280 per bag.

With the Bengal government laying stress on the development of infrastructure in the state, coupled with the proximity of the limestone mines in the northeast, analysts feel the demand for cement in this region is likely to grow.

Tarachand Jain, senior joint president (marketing), Birla Corporation, told The Telegraph, “The per capita consumption of cement in the east is much lower at 110kg compared with 260kg in Gujarat and Rajasthan.”

Ajay D’Souza, head of Crisil research, said post monsoon, construction activity and cement demand was likely to grow.