Sajjan Bhajjanka, managing director of Indian cement producer, Century Plyboards, has recently spoken about the company’s latest investment. Below is a transcript of his interview with CNBC-TV18.
Q: Take us through the expansion plan, where exactly is it located?
A: Our main plant is in Meghalaya. Present capacity is of 1.2Mt. Now, we are expanding our clinker capacity by another 1.75Mt which will feed two grinding plants, one at Guwahati and another at Bihar. So, both the plants are 1.6Mta each.
Q: How much will it cost and how will you pay for it?
A: The total project cost is INR1,100 crore. Out of which, Rs 745 crore, we are borrowing from financial institutions. Rest is being funded by our own internal accrual.
Q: Given that cement is looking at overcapacity at the moment, do you think you would want to look at the demerger subsidiary and invested separately or unlock value through a possible demerger at any point in the future?
A: Yes, we are planning it…. We have called our board meeting this Saturday and maybe we shall be taking a decision on that.
Q: Would you be looking to divest some of your stake going forward in that cement subsidiary later, raise capital and fund the project that you are looking?
A: By and larger, we are self-sufficient. Our internal accruals are more or less enough to take care of this. But we are not averse to divesting strategic part of this to raise some fund to comfort our expansions.
Q: So, in that case, is it 1:1 division? How large is the cement unit compared to your ply unit?
A: At the moment, we are evenly balanced. Our profit is more or less balanced between both cement and plywood equally. But with the growth and expansion, cement group would increase in the size.