Shree Cement plans ₹3,500 crore capital expenditure this fiscal year
KOLKATA: Shree Cement Ltd, one of India’s top three, cement makers, has budgeted for a capital expenditure of ₹3,500 crore in the current financial year, which includes ₹2,000 crore to be spent to conclude the acquisition of a United Arab Emiratesbased (UAE) firm.
The Kolkata-based company is looking to close the acquisition of United Cement Co. PSC by July, a few months ahead of plans, according to Subhash Jajoo, Shree Cement’s chief financial officer.
The Abu Dhabi-based company has concluded a buyback programme and is to be taken private. The fully diluted cost of acquiring the overseas firm is expected to be around ₹2,000 crore. But that wouldn’t hobble Shree Cement’s plans to scale up production capacity within India: the company will spend at least ₹1,500 crore in the current financial year to acquire land to set up grinding units in Odisha, Jharkhand, Maharashtra and West Bengal, according to Jajoo.
An additional investment of ₹1,300-1,400 crore has been budgeted for to set up the grinding units in these states, which will ramp up Shree Cement’s production capacity by 7-8 million tonnes (mt) from 34.9 mt currently.
These new facilities are expected to be commissioned in fiscal year 2019-20, said Jajoo.
In the current year, Shree Cement expects to commission its integrated cement plant in Gulbarga in Karnataka with a production capacity of 3 mt in October. The investment is ₹1,800-1,900 crore to set up the unit, of which it borrowed ₹1,600 crore. Shree Cement is currently indebted to the tune of ₹2,200 crore.