Birla group to set up concrete plants

The Aditya Birla group is planning to set up 30 ready-mix-concrete (RMC) cement plants in several locations across the country in the next two years and one of it would be in Kolkata.  However, the group has not yet decided on which of its two cement companies - Grasim or UltraTech CemCo Ltd - would install and run these RMCs. According to O.P. Puranmalka, Group Executive President and Chief Marketing Officer of UltraTech, the final decision would be taken after studying the existing synergies between the two companies.

At present, the Aditya Birla group owns eight RMCs, but all belong to Grasim. The RMC business of the erstwhile L&T Cement, which has been renamed as UltraTech, was not sold off to the Birlas. It has remained with L&T. The RMC plants of Grasim are located in Bangalore, Chennai, Hyderabad, Pune, Gurgaon and Noida. The capacity of the proposed RMC plant in Kolkata is likely to be 6,000-7,000 cubic metre per month and would cost around Rs 8-10 crore. "We have decided to build a RMC unit in Kolkata, but final plans have not yet crystallised. It is still in the planning stage. By the end of March 2005 everything would be ready," Puranmalka said.

Meanwhile, the board of UltraTech has cleared a capital expenditure programme of Rs 200 crore. This is aimed at de-bottlenecking the plants, which in return would increase the total capacity by 2.5Mta.  At present, the Aditya Birla group’s total cement capacity is 31Mta, of which 17Mta is from the UltraTech units. This capital expenditure programme would be spread over two years.  When queried whether the investment would be made at the five composite plants or the five grinding units, Puranmalka said that most of it would be at the composite plants. "This investment would also help us in reducing our production cost," he said.

He also said that the cement brands of Grasim would not be renamed. He also ruled out any cannibalisation between the Grasim brands and the UltraTech. "Each brand has its own strengths in different markets," he said.

Regarding the domestic cement market, he said, its current consumption was at 125Mt , and is expected to grow at 8-9 per cent per annum.  "In the first half of 2004-05, the industry grew by only 4.6-4.7 per cent because of a poor response from southern India. In the second half, we are expecting higher growth rates," he said.