Orient to cut costs, add capacity

Orient to cut costs, add capacity
Published: 02 October 2007

India’s Orient Paper and Industries Ltd (OPIL), a C K Birla group company
with interest in cement, paper and electric fans, has embarked on a
cost-cutting exercise to enhance profitability.

The company is setting up a 50MW coal-fired captive power plant for its
cement business. Slated to go on stream by March 2009, the plant will result
in a per-unit saving of Rs 1 and overall savings of Rs 33 crore at the
operating level in FY09.

OPIL is also expanding the cement and clinker capacity in phases. In the
first phase, it is focusing on augmenting cement grinding capacity by 1Mta
to improve the blending ratio, with commissioning scheduled for March 2008.
In the second phase, it will increase clinker and cement grinding capacity
by 1.4Mta and 1.6Mta, respectively. The new capacity would be commissioned
by March 2009.

OPIL sees a total capital expenditure of Rs 590 crore for the expansion, of
which, Rs 430 crore would come from internal accruals and the rest through a
rights issue. L Pachisia, managing director, OPIL told DNA Money reporters,
"The company is in a position to tap southern and western region markets due
to our location advantage. We are selling 58 per cent of our cement in
Maharashtra and 33 per cent in Andhra Pradesh."

On hiking cement prices, Pachisia said, though OPIL has kept cement prices
stable over the last few months, the increasing cost of raw material like
coal may force it to take a decision once the monsoon is over. OPIL also has
a split grinding unit at Jalgaon in Maharashtra. The present annual capacity
of its cement division is 2.4Mta.