HeidelbergCement Group on Monday announced that it is looking for acquisitions, taking up some brownfield expansions and giving a stronger push for ‘Zuari’ brand in the South.

The Group, which comprises two cement companies — BSE-listed HeidelbergCement India which has a capacity of 5.4 million tonnes and primarily operates in Central India, and the unlisted Zuari Cement, which has a total capacity of 7.2 million tonnes — is scouting for acquisitions, particularly outside South India.

“We are a growing company and we will look for companies having a capacity of over 5 million tonnes. Since South demand is sluggish now and we have enough headroom in our existing capacity, we may look at other regions,” J N Cooper, Managing Director of HeidelbergCement India and Zuari Cement, said here.

Acquisition vs new plant

When compared with a Greenfield expansion, acquisitions may not be cheaper. He said that setting up a new project takes a long time due to delay in clearances from the government despite talks of ease of doing business and support to industry. “We will run out of time and hence we look for acquisition route,” he said.

Cooper added that the Heidelberg Group had the bandwidth to turn the companies around like it did in the case of Mysore Cements, which has now become a dividend-paying company.

Debottlenecking

As HeidelbergCement India’s capacity utilisation is about 94 per cent, it is taking up de-bottlenecking to increase the grinding capacity at an investment of ₹50 crore.

Zuari’s capacity utilisation is 60-65 per cent due to subdued demand in the South and the company intends to increase to 70-75 per cent next year, supported by new promotional campaigns and other initiatives. “We want to take the Zuari brand in the region to next level,” he said.

Zuari is putting up a waste heat recovery power plant at its Yerraguntla factory (Andhra Pradesh) at an investment of about ₹200 crore. The project, which is expected to be completed by next year, will meet about 40 per cent of the unit’s power requirements.

Cooper said that Heidelberg’s proposed ₹4,000-crore project for setting up a 3-million-tonne factory in Gujarat was awaiting government approval. Zuari also planned to invest ₹1,600 crore in its Sitapuram unit (in Andhra Pradesh) to add three million tonnes capacity. But the company may take a decision by the end of 2020.

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