Ambuja Cements plans to invest Rs 1,800 crore by December 2013 to expand its production capacity. The company proposes to fund the project through internal accruals.
It had surplus cash of Rs 7,700 crore as of December last year.
The company will set up a 2.2-million-tonne clinkerisation unit at Nagaur in Rajasthan. The feasibility study for the project is completed and environmental clearance has been obtained, said Ambuja Cements in its annual report.
Southern markets
To expand its footprint in the southern markets, the company proposes to set up a new bulk cement terminal at Mangalore. The terminal will be operational by September. A new brownfield expansion project to enhance capacity at its Sankrail grinding unit in West Bengal has also been initiated, it said.
The company, along with IST Steel and Lafarge India, was allotted a coal block in Maharashtra by the Ministry of Coal for captive use. Ambuja Cements holds a 27.27 per cent stake in the joint venture which is in the process of obtaining statutory clearances such as mining lease, and environmental and forest clearances.
The estimated cost of the coal project is Rs 350 crore, and Ambuja Cements will invest Rs 95 crore, said the company.
Securing energy resources, primarily coal, remains critical in view of availability, quality and cost impact. Besides a substantial increase in coal prices by Coal India Ltd, the largest domestic coal supplier, availability of linkage coal remains an important cost driver. Every effort is being made to maximise the quantity of linkage coal supplied, said the company. It added that opportunities to acquire captive fuel sources are being explored on a continuous basis.
From a longer-term perspective, it is important to continue developing alternative fuel sources, particularly industrial and agriculture waste materials. To mitigate fuel-associated risks, the company has taken up projects to increase use of alternative fuels and waste-heat recovery system. The company recently commissioned its first wind power project in Gujarat.
Ambuja Cements shares were down 0.36 per cent at Rs 167 on Wednesday.