Indian Cements is stepping up efforts to reduce production costs through plant modernization and improve liquidity by selling some land.
The Chennai-based cement maker has been battling high production costs as most of its plants are old. Due to the high cost of fuel in current market conditions, the efficiency of these units has become very low. When coal prices rose sharply, eroding profits across the industry, Indian Cements was affected more than its peers because its plants are very old.
On the other hand, southern cement companies, including India Cements, have been hit by huge overcapacity in the region.
“The company is seriously pursuing plans to monetize some of its non-core assets to improve liquidity and operational performance and meet some of the minimum capital expenditure requirements,” said N Srinivasan, vice chairman and managing director of India Cements, at the company’s 77th annual Shareholders’ meeting.
The company has now launched plans to address rising costs by refurbishment of its equipment. The company has now hired global consulting firm Boston Consulting Group to study the operations of its three plants in Andhra Pradesh and Telangana and recommend measures to improve operational efficiency.
The company has eight cement plants spread across the states of Tamil Nadu, Andhra Pradesh, Telangana, Rajasthan and Maharashtra.
The company has engaged FLSmith and ThyssenKrupp Industries to conduct a detailed study of the operating parameters of some of its other units for refurbishment/modernization to make them comparable to those of state-of-the-art modern cement plants.
The new cement plant at Sankar Nagar is expected to be operational by this quarter, replacing the old cement plant. Additionally, the waste heat recovery system at Chilamkur in Andhra Pradesh is expected to be completed this year. These projects are expected to help reduce future variable costs.
While every cement manufacturer in India has built (or established) waste heat recovery capabilities to reduce power costs, Indian Cements was a pioneer in this regard and was the first to build a plant in Vishnupuram (now Telangana State) company that builds waste heat recovery equipment. year 2004.
Meanwhile, India Cements will sell around 74 acres of land at Kantakapalle and Chinnipalem in Mandal Kothavalasa village in Vizianagram district of Andhra Pradesh for Rs 70 crore (excluding taxes, stamp duty and registration charges). It plans to raise funds in the short term to meet working capital, repay some debt and capital expenditures.
The company posted positive EBIDTA in the first quarter of this fiscal year after three consecutive quarters of negative EBIDTA.
“We are focused on improving the fortunes of our core business cement. The company has rich limestone deposits and rich experience in cement manufacturing. Although cyclical in nature, the industry has huge growth potential.” Srinivasan explain.