Shree Cement is targeting a three-fold increase in the contribution of the power business to the company’s sales in the next year in a bid to boost operating margins, a senior official with the Kolkata-based cement manufacturer said.
"In the next one year, we expect the power business to contribute at least 20-25 per cent to our total sales from the existing 7-8 per cent. That would help the EBIT margins to remain or increase from the current 40% levels," K Singhi, executive director at Shree Cement, told DNA Money.
Singhi added that, while the cement business currently has 40 per cent operating margins, the power business operates at 40-50 per cent margins.
The company has lined up INR2000-crore capital expenditure plans for the power business and has already raised debt of INR300 crore. "We would be raising another INR1700 crore primarily through non convertible debentures (NCDs) and some other financial instruments as and when required. We would look for cheapest debt as we are a debt free company," Singhi said.
The company currently has 120MW capacity and uses 85MW for its personal consumption and sells the rest.
Shree Cement is setting up seven power units in Rajasthan in the districts of Beawer and Ras.