Shree Cement To Set Up New Plant For Rs 3,500 Crore
Shree Cement Ltd. plans to set up an integrated plant with capacity of 3.5 million tonnes per annum to manufacture the construction material at Nawalgarh Tehsil in Rajasthan.
The plant, which will also have clinker capacity of 3.8 MTPA, will entail an investment of Rs 3,500 crore and be funded through internal accrual and debt, the cement maker said in an exchange filing. The proposed capacity will be added by the quarter ending March 2024.
Shree Cement also plans to set up a solar power plant with capacity of up to 106 MW to meet the cement plant’s captive power requirements. The investment for the power plant is estimated at Rs 500 crore and will be set up by the quarter ending September 2022.
The power plant will enhance the proportion of clean energy usage in total energy consumption, the company said in a statement, adding it would also help reduce its carbon footprint.
The capex for the 3.5 MTPA plant works out to a little above $100 per tonne, which is higher than company’s own standard of $70 per tonne, according to Rakesh Arora, managing partner of Go India Advisors. He also highlighted the plant’s relatively higher clinker capacity against its cement capacity.
Managing Director HM Bangur told BloombergQuint over the phone that the plant's higher clinker capacity is aimed at serving the cement maker's excess grinding capacity. Shree Cement has nine grinding units across India.
He also said the plant's enterprise value per tonne is expected to range between $100 and $110. That's higher than the company’s standards, as prices of raw materials needed to set up the plant, including steel, have risen, he said.
Separately, the company’s wholly owned subsidiary Shree Cement East Pvt. Informed the exchanges that it will set up a clinker grinding unit with capacity of 3 million tonnes per annum at Digha village in Parbatpur district of West Bengal for Rs 750 crore. This will be done via equity contribution from Shree Cement, Chattisgarh.
As of March 2021, Shree Cement had four integrated units with total capacity of 43.4 MTPA and 244 MW renewable power generation capacity.