Dalmia Bharat Enterprises will invest INR25bn (US$554m) to set up two cement plants of 2.5Mt each in about 2.5 years, a top official said on Friday.
The plants will be set up in Karnataka and Meghalaya, Puneet Dalmia, managing director, Reuters reported.
Formed following its demerger in September from the listed Dalmia Cement (Bharat) Ltd, Dalmia Bharat Enterprise Ltd will be listed by December 15, Dalmia said.
Dalmia Cement (Bharat) has been renamed Dalmia Bharat Sugar and Industries Ltd since the demerger and houses sugar business, while Dalmia Bharat Enterprise holds cement and power businesses.
"Given that the short term is a little turbulent, I think this industry requires patient capital and with KKR deal and partnership, we have deep pockets and we have patient capital," Dalmia said.
He expects India’s fast-paced growth to drive cement consumption in the long term.
Private equity firm KKR had announced in May that it would invest up to INR7.5bn in Dalmia’s cement business.
Dalmia said the expansion will be funded through 70 per cent debt and 30 per cent equity and the company has already acquired land and obtained mining leases and environmental clearance for the two plants.
The expansion is part of the company’s plan to add 10Mt capacity announced before the global downturn in 2008 that slowed corporate India’s expansion as funds became scarce and expensive.
Dalmia said plans for adding another 5Mt will be announced "shortly".
At present, Dalmia Bharat Enterprises operates 9Mt cement plants and also owns 45.4 per cent in group company OCL that has a cement capacity of 5.3Mt.