Financial Daily from THE HINDU group of publications
Tuesday, Sep 21, 2004
Birla Corp embarks upon Rs 280-cr capex programme To set up 2 captive power units; expand cement capacity
Kolkata , Sept. 20
BIRLA Corporation Ltd, the flagship company of the MP Birla Group, has embarked upon a Rs 280-crore capital expenditure programme.
According to Mr K.C. Mittal, Managing Director, Birla Corporation, the company is setting up two thermal power plants of 27 MW capacity each at its factories at Satna in Madhya Pradesh and Chanderia in Rajasthan.
The power plant would be used for captive purposes. It would help the company to reduce its annual power cost. The total cost of setting up these power plants would be Rs 190 crore. Birla Corporation is also expanding its cement capacity at the Durgapur plant by 10 lakh tonnes. Currently, the installed capacity of the plant is 47.80 lakh tonnes. In 2003-04, it produced 47.7 lakh tonnes.
The new cement unit in Durgapur will produce Portland pozzolona cement. The cost of the project is estimated to be Rs 90 crore. Hence, the total capital expenditure cost is Rs 280 crore.
"Out of the total cost of Rs 280 crore, we are seeking a debt of Rs 180 crore from the banks and financial institutions and the rest Rs 100 crore will be generated from internal accruals," Mr Mittal told Business Line.
While the power plants are likely to be commissioned by June 2005, the cement capacity is scheduled for completion by April, next year. "We are already going full steam on the cement project," he said.
Birla Corporation ended 2003-04 with a 10.58 per cent growth in turnover at Rs 1,243.18 crore against Rs 1,124.20 crore in the previous financial year. Net profit jumped to Rs 41.57 crore from Rs 4.19 crore.
For the current year, Mr Mittal is expecting a 10-12 per cent growth in turnover. He was, however, non-committal on the profitability of Birla Corporation.
"It is too early to make any prediction because more than half the year is still left. Moreover, everything depends on the market price of cement," he said. Though Birla Corporation is a multi-product company, 87 per cent of its revenue is generated by the cement division.
Birla Corporation is also working on enhancing the clinker capacity at the Chanderia cement works by three lakh tonnes a year.
Regarding the proposed power plant, Mr Mittal said it would reduce its cost of resourcing power. "It would give better cost efficiencies which, in turn, will give the company a definitive edge," he said.
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