Orissa Cement plans expansion

According to The Times of India, Orissa Cements (OCL) has embarked on a Rs 400-crore expansion plan to emerge as a dominant player in the eastern region. The plans include enhancement of brownfield capacity at its existing unit, and acquisition of a unit in the east. Presently, most of OCL’s capacity is consumed in Orissa. The Dalmia-controlled company plans to invest Rs 160 crore in its existing unit to increase capacity to 1.5m tonnes per annum from a little over a million tonnes at present. The company has also created a war chest of around Rs 250-300 crore for acquiring an existing facility outside the state. The expansion will further strengthen OCL’s position in Orissa and it will provide it with surplus capacity for entry into the neighbouring markets in West Bengal, Jharkhand & Chhattisgarh. The company has also created a war chest of around Rs 250-300 crore for acquisition outside the state. It plans to buy at least one existing unit within six months.

"We are seriously planning to buy out one of the loss-making units and have begun negotiations with a couple of players in the region," said OCL’s president Gaurav Dalmia. The expansion plan will be financed through a mix of internal accruals and long-term debts. The company is also exploring the option going for an External Commercial Borrowing (ECBs). "We have adequate cash reserves and our cash flow is very comfortable.  Earlier OCL has put in bids to acquire Orissa government controlled IDCOL Cement. However OCL was outbid by ACC which took over IDCOL in December last year to emerge as a leading player in Orissa. Eastern India’s lucrative cement market comprising the states of West Bengal, Bihar, Jharkhand, Orissa and Chattisgarh is presently dominated by ACC and Lafarge, who together account for over half of the cement sales in the region. With one of the highest price realisations in the country, Eastern is presently India’s most profitable cement market and accounts for 16-18% of all-India cement sales.