Orient plans cement unit in Rajasthan

Orient plans cement unit in Rajasthan
Published: 15 January 2007

The CK Birla group is betting big on cement. The Kolkata-based business conglomerate’s Orient Paper & Industries has recently won a limestone mining lease renewal case in Rajasthan and is planning to build a cement plant in that state. 
 
The group has about 3.4 million tonne of cement capacity through two units in Andhra Pradesh and Maharashtra under its flagship company Orient Paper. "Our board is scheduled to meet on January 30 to decide on this. I can’t comment anything more on this," managing director ML Pachisia told ET. 
 
The Rs 858-crore Orient Paper, which earns more than half its revenue from cement, also makes paper and fans and is a leading company of the Kolkata-based CK Birla group. 
 
Increased construction has fuelled demand for cement, leading local majors to expand their capacities and also prompting foreign majors to enter the market via acquisitions. 
 
The move to build a new plant in Rajasthan comes close on the heels of the company’s brownfield expansion. "We have spent about Rs 320 crore in expanding our cement capacity to 3.4 million tonne. We are planning a rights issue soon that will raise Rs 175 crore to part finance the expansion costs and also reduce the debt burden," said Mr Pachisia. 
 
With a real estate and infrastructure boom fuelling the demand in the country, cement makers are going all out to increase capacities. Also a buyout threat from MNC majors has ensured that Indian companies stay proactive by enhancing their existing capacities and consolidate their presence. 
 
India, the second biggest market for cement in the world, has attracted much interest from major MNC players. Four industry giants - Holcim, Heidelberg, Lafarge and Italcementi have already established a foothold in the domestic market. Holcim leads the pack with a substantial stake in both Gujarat Ambuja and ACC. Heidelberg acquired a majority stake in the SK Birla group company Mysore Cement in 2006 and is now looking around for other buyouts to enhance its presence. 
 
Others like Mexican cement major Cemex and French company Victa are also scouting for buyouts. With bigger domestic cement companies already having been snapped up foreign majors have now trained their eyes on smaller companies.