chapter 4 profile of major market...

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CHAPTER 4

PROFILE OF MAJOR MARKET PLAYERS

4.1 Ultratech cement

4.2 Ambuja cement

4.3 Jaypee cement

4.4 Binani cement

4.5 J.K. lakshmi cement

4.6 Gujarat sidhee

4.7 Saurashtra cement

4.8 Sanghi cement

4.9 Cement plants in India

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CHAPTER 4

PROFILE OF MAJOR MARKET PLAYERS

4.1 ULTRATECH CEMENT

4.1.1 Top 10 Cement companies in the World

After the merger of Samruddhi Cement with UltraTech Cement, the

latter's capacity has increased to 48.75 million tonnes, the market share to

about 18 per cent, captive power capacity to 504 MW and annual turnover to

Rs 13,210 crores, which has made the company India's single largest cement

company. In addition, UltraTech has acquired Dubai based ETA Star Cement

with its five plants having an aggregate capacity of 3 million tonnes.

Consequent to these developments, UltraTech's capacity stands augmented

to 52 million tonnes, placing it among the top 10 cement companies in the

world.

In July 2010, the Mumbai based $35 billion Aditya Birla Group merged

its Samruddhi Cement Limited (demerged Cement Division of Grasim

Industries Ltd) with Ultra Tech Cement Limited. With this, UltraTech's annual

cement capacity has increased to 48.75 million tonnes, making it the single

largest cement company in India with a market share of about 18 per cent.

UltraTech is also the country's largest exporter of cement clinker and its

export markets span countries around the Indian Ocean, Africa and the

Middle East.

Further, the year of 2010 also witnessed UltraTech's entry into foreign

markets. The company's wholly owned subsidiary- UltraTech Cement Middle

East Investments Limited acquired the management control of Dubai-based

ETA Star Cement together with its operations in the UAE, Bahrain and

Bangladesh. At the time of acquisition, the ETA Star Cement had five cement

plants – one clinkerisation unit and four grinding units with a combined

capacity of 3 million tonnes.

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Today, Ultra Tech has an aggregate annual capacity of about 52

million tonnes, comprising domestic capacity of 48.75 million tonnes and

overseas capacity of 3 million tonnes. This capacity is contributed by 22

cement plants in India, 11 each of integrated plants and grinding units; five

plants abroad comprising of one clinkerisation plant in UAE, two grinding units

in UAE, one grinding unit each in Bahrain and Bangladesh.

UltraTech's integrated cement plants are well equipped with captive

thermal power plants with an aggregate capacity of 504 MW. The company

meets around 78 per cent of its power requirement through captive power

generation.

In addition, the company has one white cement plant of 0.6 million

tonne capacity in Rajasthan; 92 ready mix concrete (RMC) plants across the

country with an aggregate capacity of 9.5 million cubic metres; five bulk

packing terminals - four in India and one in Sri Lanka; and four subsidiary

companies, namely: Dakshin Cements Limited, Harish Cements Limited,

Ultratech Ceylinco (P) Limited and UltraTech Cement Middle East

Investments Limited.

4.1.2 Grasim to UltraTech

Grasim Industries Limited, a flagship company of the Aditya Birla

Group, ranks among India’s largest private sector companies. Starting as a

textiles manufacturer in 1948, six years later Grasim pioneered the production

of viscose staple fibre (VSF), a man-made biodegradable fibre with

characteristics akin to cotton. Today, Grasim is the country’s largest producer

of VSF and the largest manufacturer of caustic soda, which is used in the

production VSF.

In mid 1980s, with the opening up of the cement industry, Grasim

diversified into cement. In 1998, Grasim acquired from its group company –

Indian Rayon & Industries Ltd., a cement capacity of 3.2 million tonnes. In

1999, it acquired Shree Digvijay Cement Company Ltd. (SDCCL) from the

Kolkata based Bangurs. SDCCL had a cement plant of 1.1 million tonnes

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capacity at Sikka in Gujarat. In March 2008, Grasim sold off SDCCL to cimpor

of Portugal. Over the year, Grasim’s cement business had become the major

contributor of Grasim’s revenues, ranging between 70 to 75 per cent.

In early 80s, the Mumbai based engineering giant L & T had diversified

into cement and in the next two decades, it built up a capacity of 17 million

tonnes with a market share of over 11 per cent in India. On November 18,

2001, Grasim acquired 10 per cent of Reliance's stake in L&T for Rs 766.50

crores. By June 2002, Grasim raised its stake in L&T to 14.5 per cent. In

2003, L&T de-merged its cement business into a separate company-

UltraTech CemCo Ltd in a composite scheme of arrangement with Grasim

Industries, resulting in Grasim acquiring control of Ultra Tech.

Narmada Cement Company Ltd. (NCCL), which was an ailing

subsidiary of L&T, automatically became the subsidiary of Ultra Tech. In fact,

L&T had acquired NCCL on April 24, 1999, from Chowgule group. NCCL had

three port based cement plants with a capacity of 1.5 million tonnes,

comprising one integrated plant at Jafrabad in Gujarat and two grinding units -

one each at Magdalla in Gujarat and Ratnagiri in Maharashtra. UltraTech

merged NCCL with itself, effective May 1, 2005.

L&T divested its remaining stake in UltraTech in a phased manner and

by September 2009, it had completely quit the company withdrawing its two

directors on the board. By fully taking over Ultra Tech, Grasim had not only

gained a toe hold in the cement industry but it had also effectively shut out

MNCs from walking away with a huge chunk of cement capacity in India. In

fact, three cement MNCs - Cemex, Holcim and Lafarge were in the running to

pick up 37.5 per cent stake in L&T's de-merged cement entity.

Grasim, after getting the full control of Ultra Tech, on October 6, 2009,

decided to demerge its cement business into a wholly-owned subsidiary

company - Samruddhi Cement Limited in a cashless transaction. Accordingly,

in May 2010, the Grasim's cement division was demerged and vested in

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Samruddhi Cement, which was later in July 2010, fully merged with UltraTech

Cement Limited.

4.1.3 Cement Plants

At the time of merger in July 2010, Grasim had 11 cement plants,

comprising six integrated cement plants and five grinding units with a total

capacity of 25.65 million tonnes. Similarly, Ultra Tech too had 11 cement

plants, comprising five integrated cement plants and six grinding units with a

total capacity of 23.10 million tonnes.

After merger, as on March 31, 2010, UltraTech's number of cement

plants has increased to 22 and the aggregate capacity to 48.75 million tonnes.

Table-8

Pre and Post Merger Financial Status of Grasim and UltraTech

Particulars

*Financials of H1 FY – 2010 April 2009 to

September 2009

Unit Grasim UltraTech Combined

Net Sales Rs. Crs. 4193 3494 7687

EBIDTA Rs. Crs. 1423 1252 2675

EBIDTA Margin % 34 36 35

Depreciation Rs. Crs. 195 190 385

EBIT Rs. Crs. 1228 1062 2290

Net Worth Rs. Crs. 4798 4271 9069

Capital Employed Rs. Crs. 8183 6742 14925

Debt. (Net of Surplus

Funds) Rs. Crs.

2502 621 3123

ROCE (PBIT / CE) % 30 31 31

Source : Labour and Industrial Chronical, Survey of Cement Industry &

Directory 2012 :3rd Edition

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Table - 9

UltraTech’s cement plants at a glance – alphabetically listed

Sr.

No. Cement Plants District State

Capacity

MTPA

Jan 2010

Capacity

MTPA

Jan 2012

Year

1. Aditya Cement Works Chittorgarh Rajasthan 5.00 5.00 1995

2. Aligarh Cement

Works (G)

Aligarh UP 1.30 1.30 2009

3. Andhra Pradesh

Cement Works

Anantpur AP 5.60 5.60 1998

4. Arakkonam Cement

Works (G)

Vellor Tamilnadu 1.10 1.10 2000

5. Awarpur Cement

Works

Chandrapur Maharashtra 3.60 3.60 1983

6. Bhatinda Cement

Works (G)

Koppal Karnataka 1.75 1.75 2001

7. Gujarat Cement

Works

Amreli Gujarat 1.30 1.30 2009

8. Hirmi Cement Works Raipur Chhattisgarh 1.30 1.30 2009

9. Hotgi Cement Works

(G)

Solapur Maharashtra 5.80 5.80 1996

10. Jafrabad Cement

Works


11. Jharsugada Cement

Works (G)

Jharsuguda Orissa 1.80 1.80 1995

12. Jafrabad Cement

Works


13. Jharsuguda Cement

Works (G)

Jharsuguda Orissa 1.00 1.00 1993

14. Kotputli Cement

Works

Jaipur Rajasthan 3.10 3.10 2009

15. Magdalla Cement

Works (G)

Surat Gujarat 0.70 0.70 1982

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16. Panipat Cement

Works (G)

Panipat Haryana 1.30 1.30 2009

17. Rajashree Cement

Works

Gulbarga Karnataka 3.20 3.20 1984

18. Ratnagiri Cement

Works

Ratnagiri Maharashtra 0.40 0.40 ----

19. Rawan Cement

Works

Raipur Chhattisgarh 2.50 2.50 1995

20. Reddipalayam

Cement Works

Ariyalur Tamilnadu 1.40 1.40 2000

21. Vikram Cement

Works

Neemuch MP 3.00 3.00 1985

22. WB Cement Works

(G)

Burdwan West Bengal 1.20 1.20 2002

Total 48.75 48.75

Source: Labour and Industrial Chronical, Survey of Cement Industry &


4.1.3.1 Bulk Cement Terminals

UltraTech has five bulk cement terminals, four in India and one in Sri

Lanka. The four domestic terminals are located at Doddaballpur and

Mangalore in Karnataka, Navi Mumbai in Maharashtra and Shankarpally in

Andhra Pradesh. The Mangalore and Navi Mumbai bulk packaging units are

port -based and they were commissioned in September 1998 and in October

1998, respectively. The port based terminals source cement from the

company's port based Gujarat Cement Works through special chartered

ships.

The Sri Lanka terminal was set up through UltraTech Lanka (Pvt) Ltd, a

subsidiary of UltraTech. Located at Colombo, this terminal is in operation

since January 2000.

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Table - 10

UltraTech’s operational performance at a glance

Particulars Unit 2010-11

Reported

2009-10

Recasted

2009-10

Reported

Cement Capacity Mn Tons 48.75 48.75 23.10

Cement Production Mn Tons 32.92 32.11 17.64

Effective Capacity

Utilisation*

Per Cent 81 86 88

Sales Volume -

Domestic

Mn Tons 32.76 32.26 17.78

Sales Volume-

Exports

Mn Tons 1.90 2.42 2.42

Tota1 Sales Volume Mn Tons 34.67 34.68 20.21

Average Sales

Realisation

Rs Per

Ton

3323 3414 3311

Effective capacity utilization: cement production + Clinker sold, based on

period of new capacity in operation.

4.1.3.2 Captive Power Plants

Pre merger, Grasim had a total thermal captive power capacity of 268 MW

and UltraTech 236 MW Post merger; the combined captive power capacity

became 504 MW.

4.1.3.3 Waste as Fuel

UltraTech was the first cement company to set up a Municipal Solid

Waste (MSW) plant at Jaipur to process municipal waste and use it as a

substitute for conventional fuels at its Vikram Cement plant in Madhya

Pradesh.

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Table-11

UltraTech’s consolidated financial performance for first two years

Particulars Unit 2010-11

Reported

2009-10

Recasted

2009-10

Reported

Turnover Rs Crs 13210 13442 7050

Domestic Rs Crs 12821 12957 6589

Exports Rs Crs 389 485 461

Other Income Rs Crs 287 179 122

Total Expenditure Rs Crs 10688 9602 5078

Operating Profit

(PBIDT)

Rs Crs 2829 4019 2094

Operating Margin Rs Crs 21 30 30

Depreciation Rs Crs 766 700 388

Profit Before

Interest and Tax

(PBIT)

Rs Crs 2063 3319 1706

Interest Rs Crs 277 ----* 118

Profit Before Tax Rs Crs 1746 ----* 1588

Tax Expenses Rs Crs 382 ----* 495

Net Profit after Tax Rs Crs 1404 ----* 1093

*Recasted figures not available

Rajasthan, lead zinc slag, which is a low effect waste of

pyrometallurgical operations of Hindustan Zinc Smelter, is used as an

alternate raw material (additive) in raw mix.

4.1.3.4 CDM Footprint

UltraTech's CDM project was the world's first to receive CERs amongst

the cement companies, worth Rs 3.5 crores, for the year 2007-08. This was

the culmination of the journey after successfully substituting conventional fuel

by agro-based alternative fuels and waste tyres and the subsequent venture

to claim for carbon credit.

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4.1.3.5 Operations

In the financial year of 2010-11, UltraTech produced 32.92 million

tonnes of cement as against 32.11, million tonnes in previous year. The

effective capacity utilisation was 81 per cent as against 86 per cent in

previous year on an expanded capacity.

The aggregate sales volume of 34.67 million tonnes was at par with the

previous year sales volume of 34.68 million tonnes. The previous year figures

have been recasted by the company so as to include Samruddhi's figures for

the period 1st July, 2009 to 31st March, 2010.

4.1.3.6 Financial Performance

In the financial year of 2010-11, the company's net turnover stood at

Rs 13,210 crores as against Rs 13,442 crores (recasted) achieved in the

previous year. Profit before interest and tax stood at Rs 2063 crores as

against Rs 3319 crores (recasted).

The share of Ready Mix Concrete (RMC), White Cement and other

related products in the company's turnover was 9 per cent and 6 per cent,

respectively. Both RMC and White Cement have recorded a splendid

performance with turnover for RMC reflecting a growth of 26 per cent and that

of White Cement 16 per cent. White Cement business growth is linked with

the higher sale of Wall Care Putty and other White Cement based products.

4.1.3.7 Capex Plans

In the year of 2010-11, the company incurred a capital expenditure of

around Rs 1242 crores towards capacity expansion at Rawan Cement Works

and Rajashree Cement Works, setting up of captive power plants at Awarpur

Cement Works, Andhra Pradesh Cement Works, jetty expansion at Gujarat

Cement Works bulk packaging terminals and normal modernisation projects.

To accelerate the pace of growth over the next three years, the

company has earmarked a capital outlay of Rs 11,000 crores. Adds the

company's Chairman - Kumar Magalam Birla: "We are investing in the setting

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up of additional clinkerisation plants at Chhattisgarh and Karnataka together

with grinding units, bulk packaging terminals and ready mix concrete plants

across the country. These expansions are expected to be operational in FY14

and will augment our cement capacity by 9.2 million tonnes.”

4.2 AMBUJA CEMENT

Founded by Narotam Sekhsaria and Suresh Neotia, Ambuja Cements -

formerly Gujarat Ambuja is today the top third cement company in India.

Holcim acquired the company's management control in 2006 and now it holds

50.29 per cent equity in Ambuja.

Beginning operations in 1986, in the last 25 years, Ambuja Cements

has increased its capacity from a mere 0.7 million tonne to 27 million tonnes;

the number of cement plants from 01 to 13; and expanded operations from a

single State to nine States. It has also added captive power capacity of about

420 MW.

The Mumbai based Ambuja Cements Limited is today one of the

leading, most profitable and innovative cement companies in India.

Incorporated in 1981 as Gujarat Ambuja Cements Ltd (GACL), the company

was promoted by Narotam Sekhsaria, Suresh Neotia and their associates as

a joint venture with the State owned Gujarat Industrial Investment Corporation

(GIIC). Two years later, in 1983, it was converted into a public limited

company and in November 1985, it went for its first IPO. During the years

1987-1990, GIIC sold its 26 per cent equity stake to Sekhsaria and his

associates. Sekhsaria's business acumen and leadership skills led the

company on a fast track to growth and under his leadership; the company has

set several new benchmarks for cement industry in India.

In the last 25 years, the company added integrated green-field plants,

grinding units, acquired two major cement companies - Modi Cements and

DLF Cement, formed two subsidiaries - Ambuja Cement Eastern Ltd (ACEL)

and Ambuja Cement Rajasthan Ltd. (ACRL) for managing the acquired

companies, merged ACEL and ACRL with itself, launched an investment

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company - Ambuja Cement India Ltd. (ACIL), bought stake in ACC Ltd, got

acquired by Holcim – a cement multinational of Switzerland, promoters sold

their equity to Holcim, financial year changed from April- March to calendar

year of January to December, and the company quit the membership of

Cement Manufacturers' Association (CMA).

Under the management of Holcim, the company enhanced its cement

capacity to 27 million tonnes, increased the captive power capacity to about

420 MW, entered the renewable energy sector beginning with wind energy

and made a few strategic acquisitions.

It bought substantial stakes in Alcon, Dang Cement and Dirk India.

Further, with Alcon, it has formed a joint venture - Counto Microfine Products

Private Limited.

4.2.1 Early Acquisitions

Ambuja Cements acquired two major cement companies - Modi

Cements and DLF Cement, which enabled the company to expand its

capacity and markets in new areas. The Modi Cements, which had a 1.8

million tonnes integrated cement plant at Bhatapara in Chhattisgarh, was a

BIFR case with accumulated losses of Rs 300 crores. In June 1997, Ambuja

acquired Modi Cements from BIFR for Rs 191 crores and injected about Rs

166 crores as equity, which increased its stake to 93.55 per cent. The plant

was restarted in December 1997. Modi Cements was renamed as Ambuja

Cement Eastern Ltd (ACEL) and Harshavardan Neotia was appointed its

Managing Director. In September 2001 ACEL's capacity was reduced from

1.8 million tonnes to one million tonne and in the same year, ACEL set up a

grinding unit with a capacity of one million tonne at Sankrail in West Bengal

involving an investment of Rs. 122 crores. Finally, in January 2006, ACEL

was merged with the parent company - Ambuja Cements.

In March 2000, Ambuja Cements took over the management control of

the Delhi based DLF Cement Ltd for Rs 82.61 crores and rechristened it as

Ambuja Cement Rajasthan Ltd (ACRL). Ambuja Cements, which held a 49

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per cent of share holdings in ACRL, merged it with itself, effective from June

1, 2004. At the time of its acquisition, ACRL had a cement plant of 1.5 million

tonnes capacity at Rabriyawas in Rajasthan and a captive power plant of 21

MW.

4.2.2 Formation of ACIL

In 2000, Ambuja Cement India Limited (ACIL) was promoted as a joint

venture of Ambuja Cements and two foreign investors-American International

Groups (AIG) and Government of Singapore Investment Corporation (GIC).

Ambuja Cements held major stake of 60 per cent in ACIL, while AIG and GIC

had the remaining 40 per cent. In 2001 ACIL raised Rs 461 crores by issuing

'foreign currency convertible bonds and Warburg Pincus, a private equity

player, alone contributed Rs 360 crores.

4.2.3 Stake in ACC

The year 2000 also witnessed a historical event at Ambuja Cements as

it acquired a major stake in ACC from the Tatas through its investment

subsidiary - Ambuja Cement 'India Limited (ACIL). Initially, ACIL had

purchased 11.4 per cent equity of ACC at Rs 732 crores from Tatas and a

year later, it acquired the remaining three per cent of equity for Rs 196 crores,

held by Tata companies. These two transactions raised ACIL's total stake in

ACC to 14.4 per cent and investment to Rs 925 crores. At the time of

acquiring the major stake, ACC had a capacity of 16.1 million tonnes, the

largest cement company in the country.

4.2.4 Holcim's Entry

In January 2005, Holcim acquired Ambuja Cements' entire 40 per cent

shareholding in ACIL for Rs 897 crores, which was held by two foreign private

equity investors, namely: AIG and GIC. It also subscribed to the share capital

of ACIL by investing Rs 1834 crores by way of equity shares and Rs 810

crores by way of preference shares aggregating to an investment of Rs 3541

crores, making it one of the largest Foreign Direct Investment (FDI) in India.

Post capital infusion, Holcim's total share holding in ACIL increased to 67

percent, whereas Ambuja Cements' share got diluted to 33 percent from the

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original 60 percent. Consequent to this, ACIL had ceased to be a subsidiary of

Ambuja Cements. Further, in February 2007, Ambuja Cements divested 11

percent equity in ACIL for a consideration of Rs 526.5 crores, which further

stepped up Holcim's share to 78 per cent.

Later Holcim along with ACIL made an open offer to acquire ACC's

equity shares at Rs 370 per share and shares of Ambuja Cement Eastern Ltd.

(ACEL) at Rs 70 per share. Both the open offers received a good response.

Consequently, ACIL's holdings in ACC increased from 13.8 percent to

34.7 percent and in ACEL from 94.1 percent to 96.9 percent. Consequently,

ACEL was merged with Ambuja Cements.

In May 2006, Holcim Group got the management control of Ambuja

Cements and it reconstituted the company's board. Holcim inducted its three

representatives as additional directors.

In November 2006, Holcim bought another 3.67 per cent of the equity

from the founding promoters and others. With this and post merger of ACEL,

the aggregate shareholding of Holcim in Ambuja Cements increased to 26.44

percent in December 2006. To further increase its stake, Holcim Group made

a second open offer in December 2007 to acquire up to 20 percent stake at

Rs 154 per share. This enabled Holcim to enhance its holdings in Ambuja

Cements to 45.68 percent. By January 2012, Holcim's stake in the company

was further enhanced to 50.29 percent.

Effective from April 5, 2007 the company's original name was also

changed to Ambuja Cements Limited (ACL) from Gujarat Ambuja Cements

Ltd (GACL) to present a pan India image of the company.

4.2.5 Strategic Acquisitions

In the last two years of 2010 and 2011, the company made three

strategic acquisitions. It bought substantial stakes in Alcon, Nepal's Dang

Cement Industries Pvt Ltd and Dirk India Pvt Ltd.

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Ambuja Cements has formed a joint venture with Alcon Cement

Company Pvt. Ltd., known as Counto Microfine Products Private Limited to

introduce market innovation and offer a solution to large buyers. In fact, Alcon,

which has a clinker grinding and cement packing unit in Goa, is already

having a technical and marketing collaboration with ACC.

Ambuja Cements has expanded its presence to South Asia region by

acquiring about 90 percent stake in Nepal's Dang Cement Industries Private

Limited by investing over Rs 20 crores. With this, Dang Cement has become

a subsidiary of Ambuja Cements. Dang holds limestone mining lease in

Nepal.

Dirk India, a Dirk Group of UK Company, came to India in 2000 and

has a unit in Nashik to produce Pozzocrete from fly ash to replace cement in

concrete. In 2001, the company obtained 30 years contract for the exclusive

recycling of all pulverized fuel ash (PFA) from Nashik Thermal Power Station,

belonging to Maharashtra State Electricity Board (MSEB).

4.2.6 Cement Plants

Starting with a single cement plant in 1986 at Ambujanagar in Gujarat,

over the years, Ambuja Cements has increased the strength of its plants to

13, comprising five integrated plants and eight grinding units. Similarly, its

installed capacity has risen from a mere 0.7 million tonne per annum to 27

million tonnes, registering about 40 fold growth. Now, the company has

cement manufacturing operations in nine States, namely: Chhattisgarh,

Gujarat, Himachal Pradesh, Maharashtra, Punjab, Rajasthan, Uttrakhand,

Uttar Pradesh and West Bengal.

Of the company's five integrated plants, the three were set up by the

company itself and the other two were added through the acquisitions and

mergers of two companies – Modi Cements and DLF Cement. The integrated

plants are Ambuja Nagar - Gajambuja plant, Bhatapara plant, Darlaghat plant,

Chandrapur plant and Rabriyawas plant.

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4.2.6.1 Gajambuja Plant

Ambuja Cements' first integrated cement plant was set up at Ambuja

Nagar, adjacent to Vadnagar village, Kodinar taluka in Junagadh district of

Gujarat. It was commissioned in October 1986 with a capacity of 0.7 million

tonne. A decade later, in 2006, its capacity was increased to 1.5 million

tonnes.

The company's second integrated cement plant, known as

Gajambujam, is also located on the same premises of Ambuja Nagar.

Gajambujam plant was commissioned in March 1993 with a capacity of one

million tonnes and since then its capacity has been increased to four million

tonnes. Thus, the company's Ambuja Nagar complex has a combined

capacity of 5. 5 million tonnes, which makes it the country's one of the largest

capacity plants and second biggest in Gujarat, the first being UltraTech's

Gujarat Cement Works, which has a capacity of 5.8 million tonnes.

The Ambuja Nagar complex is well equipped with captive power plants

having capacity of 90 MW. Initially, a 60 MW captive power plant was installed

and in 2010, an additional capacity of 30 MW was added.

4.2.6.2 Bhatapara Plant

Originally, the Bhatapara Cement plant was set up in 1987 by Modi

Cements and in 1997; the Ambuja Cements acquired the same and renamed

it as Ambuja Cement Eastern Ltd (ACEL), which was ultimately merged with

Ambuja Cements in January 2006. The Bhatapara plant was restarted in

December 1997 and was also expanded. Its present cement capacity is 2.9

million tonnes. In 2010, a 33 MW captive power unit was commissioned at

Bhatapara.

4.2.6.3 Chandrapur Plant

Located at Chandrapur in Maharashtra, the Chandrapur plant is Ambujas'

fourth integrated cement plant with a cement production capacity of 2 million

tonnes along with a 40 MW captive thermal power plant. The unit commenced

production on June 1, 2002 and the total cost of the project was over Rs 700

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crores including the power plant. At present, Chandrapur plant has a capacity

of 4.5 million tonnes.

4.2.6.4 Darlaghat Plant

Located in Solan district of Himachal Pradesh, the Darlaghat plant was

commissioned in September 1995 with an initial capacity of 0.5 million tonne

and three years later, its capacity was increased to 1.16 million tonnes. At

present, Darlaghat plant has a capacity of 1.6 million tonnes and also a

captive power plant of 24 MW.

4.2.6.5 Rabriyawas Plant

Commissioned in 1996, originally Rabriyawas plant was set up by DLF

Cement Ltd. In March 2000, Ambuja Cements acquired DLF's management

control and renamed the company as Ambuja Cement Rajasthan Ltd (ACRL),

making it an associate company. At the time of its acquisition, ACRL had a

capacity of 1.5 million tonnes and a captive power plant of 21 MW. As ACRL

was a loss making company, it was merged with the parent company –

Ambuja Cement, effective from June 1, 2004. Located in Pali district of

Rajasthan, Rabriyawas' present capacity is 1.8 million tonnes.

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Table-12

Ambuja Cements’ plants at a glance – alphabetically listed

Sr.

No.

Cement

Plants District State

Capacity

MTPA

Jan 2010

Capacity

MTPA

Jan 2012

Year

1 Ambujanagar

Cement Plant

Junagadh Gujarat 5.50 5.50 1986

2 Bhatapara

Cement Plant

Raipur Chhattisgarh 1.80 2.90 1987

3 Bhatinda

Grinding

Plant

Bhatinda Punjab 0.50 0.50 2001

4 Chandrapur

Cement Plant

Chandrapur Maharashtra 3.60 4.50 2002

5 Dadri

Grinding

Plant

GB Nagar Uttar Pradesh ---- 1.50 2010

6 Darlaghat

Cement Plant

Solan Himachal 1.60 1.60 1995

7 Farakka

Grinding

Plant

Murshidabad West Bengal 1.00 1.00 2007

8 Magdalla

Grinding

Plant

Surat Gujarat 1.20 1.20 2008

9 Nalagarh

Grinding

Plant

Solan Himachal 1.50 1.50 2010

10 Rabriyawas

Cement Plant

Pali Uttarkhand 1.80 1.80 1996

11 Roorkee

Grinding

Plant

Haridwar 1.00 1.00 2007

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12 Ropar

Grinding

Plant

Ropar Punjab 2.50 2.50 1995

13 Sankrail

Grinding

Plant

Howrah West Bengal 1.50 1.50 2001

Total 23.50 27.00


Directory 2012:3rd Edition

MTPA – Million Tonnes per Annum,

4.2.7 Grinding Units

Besides setting up integrated cement plants, the company opted for

grinding units to make an entry into new States, beginning with Punjab in

1995 and since then, it has set up a total of eight grinding units. Of these, two

are in Punjab at Bhatinda and Ropar, two in West Bengal at Farakka and

Sankrail; one each in Gujarat at Magdalla; in Himachal at Nalagarh; in

Uttrakhand at Roorkee and in Uttar Pradesh at Dadri.

The Ropar and Bhatinda grinding units in Punjab are located in the

vicinity of thermal power plants, mainly for manufacture of fly ash based

cement. The first grinding unit at Ropar was commissioned in 1995. In the

year 2003-04, its capacity was expanded from 1.34 million tonnes to 2.5

million tonnes. It also has a 12.5 MW dedicated power line from the adjacent

Ropar Thermal Plant. It was the first grinding unit in the country to use fly ash

in large quantities for cement manufacturing. The second grinding unit at

Bhatinda was commissioned in 2001 with a capacity of 0.5 million tonne.

In West Bengal, the Sankrail grinding unit has a capacity of 1.5 million

tonnes, while the Farakka grinding unit's capacity is one million tonne. They

were set up by the company's erstwhile subsidiary – Ambuja Cement Eastern

Ltd in 2001 and 2007, respectively.

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4.2.8 Captive Power Plants (CPP)

Over 40 percent of the production cost of cement is power, so

gradually the company is reducing its dependence on grid power by installing

captive power plants at its various cement plants (CPP). In 2010, the

company's captive power capacity has increased to about 420 Mw.

Further, it sources a cheaper and higher quality coal from South Africa

and better furnace oil from the Middle East. The cumulative result of this

strategy is that today the company is in a position to sell its excess power to

the local State governments. ACL has also pioneered the development of the

multiple bio-mass co-fired technology for generating greener power in its

captive plants.

Recently, the company has opted for renewable energy sources and

has made its first investment in a wind power project at Gujarat.

119

Table-13

Ambuja’s Captive power plants

Sr.

No. Captive Power Plants

MW Jan

2012

1 Ambujanagar-Gajambuja 128.20

2 Bhatapara Cement Plant 77.00

3 Bhatinda Grinding Unit ----

4 Chandrapur Cement Plant 70.54

5 Dadri Grinding Unit 1.00

6 Darlaghat Cement Plant 36.00

7 Farakka Grinding Unit 1.00

8 Magdalla Grinding Unit 8.90

9 Nalagarh Grinding Unit 10.00

10 Rabriyawas Cement Plant 39.70

11 Ropar Griinding Unit 30.00

12 Roorkee Grinding Unit 1.25

13 Sanskrail Grinding Unit 16.00

Total 419.59



4.2.9 Market Developments

Cement is a commodity, which is sold largely on price but Ambuja

Cements was the first company to create a brand out of cement and

command a premium. The company has a nationwide reach with strong

footprints in the West, North and East India. Its cement plants cover strategic

locations in all these regions. The company maintains a strong position of

about 16.5 percent market share in its primary markets and around 10 percent

on an all-India basis. In the last 25 years, it has built a large network of over

7500 dealers and 20,000 retailers across 18 States in the country. Its wide

network of dealers and retailers nurtured on empowered partnership enables

the company to reach even the tiniest village.

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4.2.10 Bulk Cement Transportation

Almost all the cement companies in India transport 90 percent of their

cement in bags by rail or road but Ambuja Cements has earned the distinction

of being the country's first cement company to move bulk cement by sea. This

capability has brought many coastal markets within the company's easy

reach. This has also enabled the company to become the country's largest

cement exporter.

In 1993, the company built up a dedicated all weather captive port at

Muldwarka with three terminals along the country's western coastline to

facilitate timely, cost effective and environmentally cleaner shipments of bulk

cement to its customers. The Muldwarka port is just 8 kms from the

company's Ambuja Nagar plant and is capable of berthing 40,000 DWT

vessels.

For serving the coastal markets, the company today has four bulk

cement terminals at Surat, Panvel, Kochi and Galle (Sri Lanka) with

unloading, storage and packaging facilities. Galle terminal is managed by the

company's subsidiary - Ceylon Ambuja Cement (Private) Ltd. In fact, the

company had launched its marketing in Sri Lanka initially with bagged cement

during the year 1999.

In the year 2010, the company's fleet of ships increased from seven to

nine for ferrying the bulk cement to the terminals. One more ship is under

construction and the same will be added soon.

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Table-14

Capacity Production and Profitability of Ambuja Cement

Particulars Unit 2011 2010 2009 2008

Total Capacity Mn Tons 27.00 25.00 22.00 18.50

Cement Production Mn Tons 20.97 20.13** 18.80 17.75

Total Sales, Volume Mn Tons 20.91 20.30 18.00 17.70

Cement Sales, Value Rs. Crs. 8515 7390 7077 6235

Total Income Rs. Crs. 8833 7638 7333 6410

Net Profit Rs. Crs. 1229 1264 1218 1402

Net Worth Rs. Crs. 8069 7330 6468 5669

EPS Rs. 8.02 8.28 8.00 9.21

Profit After Tax Rs. Crs. 1229 1264 1218 1402

Dividend Per Cent 160 130 120 110



4.2.11 Performance

In the last four years, the company's total installed cement capacity has

increased from 18.50 million tonnes in 2008 to 27 million tonnes in 2011.

Similarly, the company has recorded an impressive growth in its sales from

Rs 6235 crores to Rs 8515 crores.

4.2.12 Subsidiary Companies

At present, Ambuja Cements has three subsidiary companies, namely:

Chemical Limes Mundwa Pvt Ltd; Kakinada Cements Ltd; and MGT Cements

Pvt Ltd. As on December 31, 2010, the company held 100 per cent equity in

all the three subsidiaries. However, none of them is in operation.

Besides the three subsidiaries, the company also has two joint

ventures, namely: Wardha Vaalley Coal Fields Pvt Ltd and Counto Microfine

Products Pvt Ltd. In Wardha Valley Coal Fields, the company has equity of

27.27 per cent, while Count Microfine is the latest joint venture with Goa's

Alcon Group.

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Future Cement Project

In October 2010, the company signed an agreement with the

Rajasthan State Industrial Development and Investment Corporation for

setting up a 2.2 million tonne clinkerisation unit in Nagaur district. The pre-

project planning is at an advanced stage and construction is expected to start.

This project will support the company's objective of maintaining long term

market share at around 10 per cent.

4.2.13 Knowledge Initiative

In 2009, the company launched its knowledge initiative – Ambuja

Knowledge Center, to enable industry professionals get a first-hand feel of the

world of cement and concrete. During the year, three centers became

operational in the cities of Ahmedabad, Jaipur, and Kolkata.

4.3 JAYPEE CEMENT

Jaypee Cement is part of Noida based Rs.18, 000 crores JP group. In

the last eight years, the Jaypee Groups flagship company – Jayprakash

Associates Limited (JAL) has increased its cement capacity from a mere 4.8

million tonnes to about 24.50 million tonnes, registering a five fold growth.

This makes JAL the country’s 4th largest standalone cement producer. It also

has 278 MW of thermal captive power capacity.

JAL has two joint venture companies – Bhilai Jaypee Cement Ltd

(BJCL) and Bokaro Jaypee Cement Ltd (BoJCL) with combined capacity of

4.30 millon tonnes. With these two JVs, JP Groups capacity goes upto 28.80

million tonnes. Further, the Group is poised to have a cement capacity of

42.40 million tonnes with 22 cement plants and 700 MW captive power

capacity by the end of 2013-14.

JAL is a flagship company of Jaypee Group with four business

segments, namely engineering, cement, star hotels and real estate. Today,

JAL is the fastest growing cement company in the country with a capacity of

24.50 million tonnes, contributed by 14 cement plants, comprising six

integrated plants and eight grinding units. This makes JAL the country’s fourth

123

largest cement producer, the three others being UltraTech Cement 48.75

million tonnes; ACC 30.08 million tonnes and Ambuja Cements 27.00 million

tonnes.

JAL’s promoters were never deterred by the slow growth in cement industry,

while expanding their cement capacities. In 2004, while spaking on the

company’s cement expansion plans, the then Chairman – Jaiprakash Gaur

observed: “It is a cyclical business but the demand is ongoing and we will

definitely go ahead with our expansion plans”

JAL along with its subsidiaries and joint venture companies is continuing to

add capacities to take Jaypee Group’s tally further to over 38 million tonnes

by the year 2013-14. By doing so, JAL is scripting the fastest organic growth,

which has not been achieved by any other Indian company in such a short

period of less than a decade. JAL is also positioning itself amongst the world’s

top 15 cement manufacturers.

The Jaypee cement is a leading brand in the markets of Bihar, Delhi, Gujarat,

Haryan, Himachal, Madhypradesh, Utarpradesh and Uttarakhand. It has been

the largest consistent exporter of cement to Nepal for several years now.

Jaypee Group is driven by the vision of its founder Chariman Jaiprakash

Gaur, 82, a government employee turned most successful enterprneur. He

entered into business in 1958 starting as a civil contractor and in the last five

decades, has build up a multi product Jaypee Group. Now his sons – Manoj

Gaur, Executive Chairman and Sunny Gaur, Managing Director – Cement

Divison, alongwith a team of dedicated senior managers are steering the

Group to newer heights.

4.3.1 Cement Business in retrospect

After being highly successful in the construction business, JAL diversified into

cement manufacturing in 1983. Initially, it created a cement division under

Jaiprakash Industries Limited (JIL), which later in 2003, merged with

Jaiprakash Associates Limited (JAL). JAL’s first cement plant of one million

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tone capacity was set up at Jaypee Nagar; 14 km form Rewa City in Madhya

Pradesh. Commissioned on Decemeber 2, 1986, the Jaypee Rewa Cement

Plant was the most modern plant with dry process single rotary kiln and 4

stage pre-heater and calciner. In Januuary 1992, Unit II of 1.5 million tonnes

was added at Rewa Plant, which increased to its capacity to 2.5 million

tonnes. Now Rewa Plant has capacity of 3.2 million tonnes.

In October 1996, JAL commissioned its second cement plant – Jaypee Bela

at Jaypeepuram with capacity of 1.7 million tonnes. Jaypee Bela, an ultra

modern plant of international starndards, is situated within the vicinity of 5 km

from Jaypee Rewa Plant and now its capacity is 2.2 million tonnes.

Further to achieve better economies of scale and to take advantage ot the

market opportunities, JAL sett up its third plant – Jayppe Cement Blending

Unit ( JCBU) at Sadwa Khurd village on the Allahabad Rewa Road, about 28

kms from Allahabad city. Commissioned in December 2002, this plant has a

capacity of 0.6 million tonne.

With a view to use locally available fly ash from TPC – Tanda, the company

commissioned its first grinding unit – Jaypee Ayodya Grinding Unit (JAGO) in

August 2004, Located at Tanda in Uttar Pradesh, JAGO has a capacity of one

million tonne and it receives clinker from Jaypee Rewa and Jaypee Bela

plants.

125

Table 15: JAL’s cement plants in operation at a glance- alphabetically

listed

Sr

No

Cement Plants District State Capacity

MTPA

Jan 2010

Capacity

MTPA

Jan 2012

Year

1 Chunar Cement

Factory

Mirzapur UP 2.50 2.50 2008

2 Dalla Cement

Factory

Sonebhadra UP 0.50 0.50 2009

3 Jaypee Ayodhya

Grinding

Operations

Ambedkar

Ngr

UP 1.00 1.00 2004

4 Jaypee Bela

Cement Plant

Rewa MP 2.20 2.20 1996

5 Jaypee Gujarat

Cement Plant

Kutch Gujarat 2.40 2.40 2009

6 Jaypee Himachal

Cement Plant

Solan HP - 2.00 2012

7 Jaypee Himachal

Cement G&B unit

Solan HP 2.00 2.00 2010

8 Jaypee Panipat

Cement Grinding

Unit

Panipat Haryana 1.50 1.50 2008

9 Jaypee Rewa

Cement Plant

Rewa MP 3.20 3.20 1986

10 Jaypee Roorkee

Cement Grinding

unit

Haridwar UK 1.20 1.20 2010

11 Jaypee Sadwa

Cement Blending

unit

Allahabad UP 0.60 0.60 2001

12 Jaypee Sidhi

Cement Plant

Sidhi MP 2.00 2.00 2009

13 Jaypee

Sikandrabad

Cement Grinding

Unit

Bulandshahar UP - 1.00 2011

14 Jaypee Kheda Gujarat 2.40 2.40 2009

126

Wanakbori

Cement Grinding

unit

JAL TOTAL 21.50 24.50 Source: Labour and Industrial Chronical, Survey of Cement Industry &


MTPA- Millon Tonnes Per Annum, Year - Year of first commissioning, G -

Grinding Unit

4.3.2 Acquisitions & Mergers

JAL has accomplished a massive growth in its cement business during the

period of 2005-2011 through acquisitions and mergers of cement companies,

brown-field expansions, green- field projects, joint ventures and special

purpose vehicles (SPVs). No other Indian cement company has adopted such

a multi- faceted approach so far for the kind of growth achieved by JAL.

JAL’s first acquisition was the state owned Uttar Pradesh cement

Corporation Ltd (UPCC), which was a BIFR case. It was on October 11, 2006,

that the Allahabad High Court confirmed the sale of assets of the closed

UPCC in favour of Jaiprakash Associates as it had quoted the highest price of

Rs 459 crores against the reserved proce of Rs 271 crores. There were three

other leading companies as bidders, viz., Dalmia Cement, Grasim Industries

(now UltraTech) and Lafarge India, but all of them had quoted the same set

proce of Rs 271 crores.

UPCC was incorporated in early 50s by the Government of Uttar

Pradesh for manufacture of cement and it had set up three plants in Mirzapur

district at Churk, Chunar and Dalla. Churk was the first cement plant in public

sector to go on stream in 1954 with 0.48 million tonne cement. The Chunar

plant had a distinction of being the biggest and the first split location planbt

with its kiln at Dalla (at a distance of 116 Kms from Chunar). Owning to

various reasons, UPCC became sick and remained closed for about 15 years

till the intervention of the Court.

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JAL has already revived the Chunar and Dalla units by infusing fresh

capital, morddenizing old machinery and adding new equipments. First,

Chunar Cement Factory was re-commissioned in February 2008 with a

capacity of 2.5 million tonnes, followed by Dalla Cement Factory with a new

kiln and now it has a capacity of 2 million tonnes. The Dalla plant is also

equipped with a 38 MW captive power plant.

In 2006, JAL acquired a second company – Gujarat Anjan Cement

Ltd., which was implementing a 1.2 million tonnes plant at Kutch in Gujarat.

The Gujarat Anjan was promoted by the Ahmedabad based Sumeru Group

and its acquisition enabled JAL to have a foothold in the western India

markets, particularly in Gujarat. Later in April 2008, Gujarat Anjan Cement Ltd

was merged with JAL.

Table 16: JAL’s cement plants under implementation (including

subsidiaries)

Sr

No


Planned

MTPA

To be

Commissioned

in

1 Andhra Cement-

Nadikude

Guntur AP 2.00 -

2 Andhra Cement GU Vizag AP 1.50 -

3 Jaypee Balaji Cement

Plant

Krishna AP 5.00 2012

4 Jaypee Sidhi- II,

Expansion

Sidhi MP 1.00 2012

5 Jaypee Super Cement

Plant

Sonebhadra UP 1.10 2012

6 JCCL- Shahabad Gulbarga KAR 3.00 2013-14

TOTAL 13.60



MTPA- Millon Tonnes Per Annum, G - Grinding Unit

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4.3.3 New plants added

Between the years of 2008 to 2010, JAL has commissioned seven green-field

cement plants, comprising three integrated plants and four grinding units.

The three integrated plants include: JAypee Sidhi in Madhya Pradesh,

September 2008; Jaypee Gujarat at Bhuj in Gujarat, March 2009; and Jaypee

Himachal at Baga in Himachal, January 2010.

The four grinding units are: Jaypee Panipat in Haryana, March 2008;

Jaypee Wanakbori in Gujarat, November 2009; Jaypee Roorkee in

Uttrakhand, December- 2009; and Jaypee Bagheri in Himachal, January

2010.

JAL has set up green-field cement plants in Chattisgarh, Jharkhand,

and Madhya Pradesh through an innovative approach of joint ventures with

prestigious Central owned public sector undertaking like SAIL, retaining the

management and operational control with itself. It has successfully launched

two such joint venture companies, namely: Bhilai Jaypee Cement Limited

(BJCL) and Bokaro JAypee Cement Limited (BoJCL), which are now already

in commercial operations.

Incorporated on April 11, 2007 in Chhatisgarh, Bhilai Jaypee Cement

Limited (BJCL) is the first joint venture of JAL with Steel Authority of India Ltd.

(SAIL). JAL holds a stake of 74 percent in BJCL, while the remaining 26

percent is held by SAIL. SAIL has given the required land on a long term

lease at its Bhilai Steel Plant site. It also provides slag for the grinding unit at

Bhilai.

BJCL has set up two slag cement plants, one is a million tonnes clinkerisation

plant at Babupur in Satna district of Madhya Pradesh and other is a split

location grinding unit of 2.20 million tonnes capacity at Bhilai in Chhattisgarh.

The clinkerisation unit was successfully commissioned in December 2009,

while the grinding unit commenced commercial operations from June 2010.

129

Bokaro Jaypee Cement Limited (BoJCL) is the second joint venture

between JAL and SAIL with management control vested in the JAL. BoJCL

has set up a 2.1 million tonnes slag based cement grinding unit at Bokaro in

Jharkhand. Incorporated on March 13, 2008, it sources slag from SAIL –

Bokaro and clinker from JAL’s cement plants. Bokaro Jaypee Grinding Unit

commenced commercial production in May 2011.

Table 17: BJCL and BoJCL cement plants at a glance

Sr

No

Cement Plants State Capacity

MTPA

Jan 2010

Capacity

MTPA

Jan 2012

Year

1 Bhilai Jaypee Cement Plant-

Clinkerisation, JV

MP - - 2010

2 Bhilai Jaypee Grinding Unit, JV CHG 2.20 2.20 2010

3 Bokaro Jaypee Grinding Unit, JV JHK 2.10 2.10 2011

TOTAL 4.30 4.30



MTPA- Millon Tonnes Per Annum, Year - Year of first commissioning, JV

– Joint Venture

4.3.4 under Implementation

The Jaypee Group has two more companies, comprising one joint venture,

namely: Gujarat Jaypee Cement & Infrastructure Limited (GJCIL) and one

subsidiary – Jaypee Cement Corporation Limited (JCCL). These two ventures

are in the process of implementing their cement plants in the states of

Gujarat, Andhra Pradesh and Karnataka.

Gujarat Jaypee Cement & Infrastructure Limited (GJCIL) was

incorporated on June 20, 2007, as a joint venture between Jaiprakash

Associates Limited (JAL) and Gujarat Mineral Development Corporation

Limited (GMDC) for setting up a 2.4 million tonnes capacity integrated cement

130

plant at Kutch in Gujarat. Originally, JAL had a 74 percent stake in GJCIL but

later, the same was increased to 100 percent effective December 26, 2007.

GJCIL will also have a lignite based captive power plant and captive jetty for

cement exports and serving coastal districts.

In February 2011, JAL acquired 100 percent stake in Zawar Cement

Private Limited (ZCPL) and renamed it as Jaypee Cement Corporation

Limited (JCCL), which is a wholly owned subsidiary of JAL. JCCL is setting up

a 3 million tonnes integrated cement plant at Shahabad aling with a 35 MW

captive power plant at a cost of Rs 1400 crores. The orders for main plant and

machinery have already been placed and the project is scheduled to be

commissioned during the financial year of 2013-14.

In fact, the Zawar Cement had a cement plant at Bankur village in

Chittapur tehsil of Gulbarga district of Karnataka.This plant was originally

known as ACC-Shahabad Cement Works, which was first acquired by the

Kolkatta based HMP Ltd in 1990 and later in 2006, HMP divested the plant to

pune based Zawar Cement. Set up in 1926, Shahabad Cement was India’s

fourth cement plant.

Further, JCCL is also getting the cement plants located in Andhra Pradesh

and Gujarat into its fold. For this, on November 14, 2011, the JAL’s board

accepted the recommendations of the Committee of Directors to demerge the

company’s cement plants in Andhra Pradesh and Gujarat into JCCL.

In Andhra Pradesh, JAL is setting up one 3.5 million tone integrated

cement plant along with a 50 MW captive power plant. This plant, known as

Jaypee Balaji Cement, is being set up at Budawada village in Jaggatapeta in

Krishna district of Andhra Pradesh.

According to a report in Times of India, in November 2011, JAL has

acquired Andhra Cement Limited from GP Goenka Group in an all cash deal

for Rs 235 crores. Andhra Cements incurred a loss of Rs 35.50 crores on net

sale of Rs 65.48 crores last year while two of its units have been non

131

operational since June 2010. Andhra Cements had accumulated losses of

over Rs 200 crores in the past two years.

Andhra Cements is a 73 years old cement company and before

becoming non operational in the year 2010, the company had a cement

capacity of 1.42 million tonnes per annum.

Andhra Cements was also in the process of augmenting its cement production

Capacity to 3.5 million tonnes by 2010, but owing to several problems, the

expansion has not yet been completed. The Nadikude integrated plant’s

capacity is being increased from 0.86 million tonnes to 2 million tonnes and

Visakhapatanam ginding unit’s from 0.56 million tonnes to 1.50 million tonnes.

In Gujarat, JAL already has two cement plants in operation since 2009

with an aggregate capacity of 4.8 million tonnes. In addition, JAL’s JV

Company – Gujarat Jaypee Cement & Infra Ltd (GJCIL) is setting up a

cement unit with a capacity of 2.4 million tonnes. With this, JAL’s total cement

capacity in Gujarat will be increased to 7.2 million tonnes, making it the

largest cement producers in the Gujarat State, the other two comparable

producers being ultra Tech Cement – 7 million tonnes and the Ambuja

Cement – 6.7 million tonnes.

4.3.5 Captive Power Plants

Power is the lifeline for cement manufacturing and its uninterrupted availability

at economical cost is a critical success factor for a cement company. JAL has

strategically set up its own thermal captive power plants (CPP) to support

cement production.

JAL’s first CPP- a 22.5 MW thermal plant, was set up at Jaypee Rewa

plant in November 2003. The second one, commissioned in November 2004

at Jaypee Vela, was also a 22.5 MW power plant. In August 2006, the

company added the third CPP at Rewa complex with a capacity of 38.5 MW,

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raising the CPP’s capacity to about 83.5 MW. This made the Rewa complex

self reliant in meeting its entire power requirements at reduced energy cost.

By January 2010, JAL’s total CPP capacity was increased to 223.5 MW

and by January 2012, to 278 MW. Further, the Group is poised to increase its

captive power capacity to over 700 MW. This will make Jaypee to have the

largest thermal captive power facility among the Indian cement companies.

Table 18: Captive Power Plants (CPPs) at a glance- alphabetically listed

Sr

No

Power Plants at Capacity

MW

Jan 2010

Capacity

MW

Jan 2012

Year

1 Jaypee Rewa Cement Plant 62 62 2003

2 Jaypee Bela Cement Plant 27 27 2004

3 Jaypee Chunar Grinding Unit 37 37 2009

4 Jaypee Dalla Cement Plant 27 27 2009

5 Jaypee Sidhi Cement Plant 35 35 2009

6 Jaypee Gujarat Cement Plant 35 65 2009

7 Jaypee Wanakbori GU - 25 2011

TOTAL 223 278



Year - Year of first commissioning

4.3.6 Operational Performance

JAL’s cement division has emerged as the second largest revenue earner for

the company after the construction division, which was its first business

segment.

The company’s cement production has increased to 14.68 million tonnes in

2010-11 from 6.78 million tonnes in 2007-08. Cement dispatches including

133

clinker sale has also increased to 15.09 million tonnes from 6.76 million

tonnes and net sales stood at Rs 4852.06 crores from Rs 1902.39 crores.

Table 19: Cement Division’s operational performance for four years

Particulars Unit 2010-11 2009-10 2008-09 2007-08

Cement Production Mn Tons 14.68 10.52 7.63 6.78

Clinker Production Mn Tons 11.53 8.35 5.55 5.14

Cement Sales,Volume Mn Tons 15.09 10.55 7.61 6.76

Cement Sales, Value Rs Crs 4852.06 3940.36 2195.86 1902.39



4.3.7 JAL’s Financial Results

In the last four years, JAL has achieved a steady growth in its financial

results, which have increased from Rs 4261.20 crores in 2007-08 to Rs

13831.87 crores by 2010-11. Similarly, the company’s profit after tax has

jumped from Rs 609.67 crores to 1167.78 crores.

4.3.8 Fastest growing company

“Jaypee Group’s learning of the past has given it a good understanding of the

cement sector. With continued emphasis on improving productivity, creating

capacity before demand and focusing on customer satisfaction has in turn

helped Jaypee Group to emerge as one of the fastest growing Groups to

expand through the organic route”, quoted by Manoj Gaur, Executive

chairman of JAL.

134

Table 20: JAL’s financial results for four years at a glance

Particulars Unit 2010-11 2009-10 2008-09 2007-08

Gross Revenue Rs Crs 13831.87 11671.78 6147.93 4261.20

Profit before Tax Rs Crs 1754.51 2381.67 1250.98 843.35

Profit after Tax Rs Crs 1167.78 1708.36 897.01 609.67

Total Assets Rs Crs 32325 27365 20524 13474

Dividends Percent 40% 54% 30% 50%

Earning per share

(Face value Rs 2)

Rs 5.49 8.08 6.46 5.42

Segment Revenues

Cement Rs Crs 4852.06 3943.07 2167.51 2240.51

Construction Rs Crs 6029.24 5575.61 2890.55 1730.19

Real Estate Rs Crs 1705.23 651.13 439.43 255.83

Hotel/ Hospitality Rs Crs 177.31 151.99 153.17 30.58

Power Rs Crs 118.31 87.46 45.03 18.11

Asbestos Sheets Rs Crs 82.89 87.99 68.49 51.65

Others Rs Crs 866.83 1582.87 383.75 276.43



4.4 BINANI CEMENT

Binani Cement, a subsidiary of Binani Industries Ltd, has two cement plants in

Rajasthan with capacity of 6.25 million tonnes. It is the third largest in

Rajasthan, the first and second being Shree Cement and Ultra Tech with

capacities of 11.70 million tonnes and 8.1 million tonnes, respectively. The

company also has operations in China and Dubai with a combined capacity of

2.50 million tonnes.

The Mumbai based Braj Binani Group is a multi- deimensional

business conglomerate with a 139 years history. It has business interest in

cement, EPC projects, fibre, glass composite products, media, minerals,

readymix concrete, Zinc, etc. The Group has extended its reach well beyond

Indian shores to UAE, China and is in the process of expanding to Mauritius,

135

Tanzania, Africa and other countries. At present, the Group has a net global

asset value of $521 million, net income of $ 603 million and 1700 strong

professionals, committed workforce. Braj Binani heads the Group as

chairman.

Binani Industries Limited (BIL) is the Group’s flagship enterprise. BIL

was founded following the restructuring of the Braj Binani Group, from 1996-

2004, to serve as the holding company for Binani Cement Limited, Binani Zinc

Limited, Goa Glass Fibre Limited and BT Composites Limited.

4.4.1 Evolution of Binani Group

The group traces its beginning to 1872, when Seth Pragdas Binani – a trader

in metal utensils, began an enterprise with his son Seth Mathuradas to

engage in the import and export of metals. The year 1941 marked an

important phase in the evolution, when Seth Mathuradas’ son Seth

Govardhandas made a bold, but significant move from trading to

manufacturing. His venture – Binani Metal Works got rolling with a plant at

Howrah. In 1953, the company went public for the first time. Taking on the

mantle from his father, it was during the reign of son – Ghanshyam Binani,

that Binani Zinc was born.

In 1962, Binani entered into a technical and financial collaboration with

Cominco Limited of Canada to form Cominco Binani Zinc Limited. It was the

first Indian Company to manufacture high grade electrolytic zinc at

Biananipuram in Kerela in 1967. About 14 years later, in March 1991, the

Cominco Binani Zinc was re-christened as Binani Zinc Limited. This was

followed by two public issues, one in February 1994 and the other in February

1995 and both issues were oversubscribed. The funds so raised were

invested in the implementation of two new projects – namely: glass fibre and

cement. Located at Colvale in Goa, the glass fibre plant commenced

production in March 1996, while the cement plant was commissioned in

November 1997 at Pindwara, Rajasthan.

136

But it was with the advent of the company’s preset youthful chairman –

Braj Binani, 51, that the Group truly began to prosper and exploring uncharted

horizons. First, the Binani Zinc was re-christened as Binani Industries Limited

in 1996, reflecting its status as a multi- divisional, multiproduct and multi-

locational company driven by technology and professionalism. This was

followed by restructuring of the Binani Industries Limited and its cement and

glass fibre product divisions were hived off into separate independent

subsidiaries.Thus Binani Cement Limited was formed in November 1997 and

Goa Glass Fibre Limited in October 1998.

Braj Binani is a pioneer in every sense. He has been the architect of

the growth and development of the Group. His rich entrepreneurial skills with

long years of industrial experience and knowledge in commodity business

have taken the Braj Binani Group to unfathomable heights and are set to keep

rising higher.

4.4.2 Cement Business

Binani Cement, a flagship subsidiary of Binani industries, is today one of the

leading cement companies in India. It has two cement plants in Rajsthan –

one at Sirohi and Neem ka Thana with a combined capacity of 6.25 million

tonnes. This makes Binani Cement the third largets cement capacity in

Rajasthan, the first and second being Shree Cement and Ultra Tech having

capacity of 11.70 million tonnes and 8.1 million tonnes, respectively.

4.4.2.1 Binanigram Cement Plant

Strategically located at Binanigram at pindwara in sirohi district of Rajsthan, it

is an integrated cement plant. It was commissioned in July 1997 with a

capacity of 1.65 million tonnes and 25 MW captive power plant at a cost of Rs

500 crores. In 2005, following de-bottlenecking efforts, Sirohi plant’s capacity

was raised to 2.25 million tonnes. Later in 2009, through a brown-field

expansion, its capacity was further increased to 4.85 million tonnes.

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4.4.2.2 Neem ka Thana Plant

To tap the growing demand in the markets of Rajasthan and other regions of

northern India, the company added one grinding unit of 1.4 million tonnes

capacity at Neem Ka Thana. This unit was commissioned in September 2008

and with this, the company’s total capacity has increased to 6.25 million

tonnes.

Table 21: Binani’s cement plants at a glance

Sr

No


MTPA

Jan

2010

Capacity

MTPA

Jan

2012

Year

1 Binanigram Cement Plant Sirohi Rajasthan 4.85 4.85 1997

2 Neem Ka Thana Grinding Unit Sikar Rajasthan 1.40 1.40 2008

TOTAL 6.25 6.25



MTPA- Millon Tonnes Per Annum, Year- Year of first commissioning

4.4.3 Gujarat Project

The company has planned to set up a 5 million tonnes green field integrated

cement plant in Gujarat along with a captive power plant as well as a captive

jetty at an estimated cost of Rs 825 crores. For this, the company has already

signed an MOU with the Gujarat Government in January 2009. The orders for

the long delivery major equipments and the engineering of the project have

been initiated. The Gujarat plant will come up at Lodhva village in Sutrapada

in Junagadh district on 188 hectares.

4.4.4 Odisha Project

The company has plans to install one million tonne split grinding unit in

Odisha. The order for project pre planning has been given to Group’s own

company- BIL Infratech Limited. In principle approval for the acquisition of

land has been granted by the Government. Acquisition of land is under

138

progress. Process for EIA study and other statutory compliance is under

progress. Basic system engineering has been done and finalization of

technical specification is under progress.

4.4.5 Captive Power Plants

In view of the severe shortage of power in Rajasthan, the company had set up

a 25 MW captive thermal power plant at Binanigram Cement Plant in 1997.

Later in March, 2008 and May, 2009, two captive power plants, each with a

capacity of 22.3 MW were commissioned. These additions raised the

Binanigram plant’s total captive power capacity to 69.6 MW, making the plant

self sufficient in meeting its power requirements.

4.4.6 Lignite Project for Power Plant

In February 2007, the Government of India allocated a lignite block of

56.4 sq Km to Binani Cement at Nimbri Chandrawatan in Nagaur district of

Rajasthan for using the lignite as captive raw materials for power generation.

The company has acquired 72 hectares of private land within the mining lease

area. The company has obtained most of the government clearances and has

almost finalized the site for the location for a 120 MW pit head power plant.

The public hearing for the mine and the power plant has been completed.

4.4.7 Domestic markets

The company’s products are marketed under the premium brand “Binani

Cement”, which enjoys a significant market share of 13.9 percent in

Rajasthan, 10.2 percent in Gujarat, 5.7 percent in Haryana and 4 percent in

Delhi. The company has a large distribution network in place with more than

68 depots and 2808 dealers, and 76 market organizers.

After well establishing in the North India and Gujarat, the company

entered the lucrative markets of West Bengal in the year of 2008-09. It

transports the cement bags through railways to a hub in Burdwan and

eventually they reach all the markets including Kolkatta and Greater Kolkatta,

Durhapur, Asansol, Bankura and Purulia. The company has also planned to

enter the newer markets of Punjab, Western UP and Maharashtra.

139

4.4.8 Operational Performance

The company has been continuously improving its capacity, operational

efficiency and continues to increase the productivity. In the year 2010-11, the

company’s production and sales figures have surpassed all the previous

highs. The company produced 5.46 million tonnes of cement compared to

5.28 million tonnes in 2009-10, registering an increase of 3.4 percent over the

previous year.

In line with the industry trends, the company registered a much lower

profitability compared to previous year due to lower cement price, increase in

costs of fuel, raw material and logistics. During 2010-11, the company has

registered a net profit of Rs 90.51 crores compared to Rs 281.92 crores in

previous year.

4.4.9 Entry in RMC

Moving a step ahead in supporting the construction industry, Braj Binani

Group had made yet another strategic move by entering into Ready Mix

Concrete (RMC) Business. Binani Ready Mix Concrete, a subsidiary of Binani

Industries Ltd, has been recently floated with its bare at Mumbai.

The objective of forward integration inti the RMC business is to

maximize the Group’s share and optimize returns at a lesser investment.

Managed by highly experienced professionals from the industry, the company

is set up in to penetrate the Maharashtra markets. The RMC Company has

adapted state-of-the-art technology for optimal production at a minimal cost

with logistic process in place.

Ready Mix Concrete industry is perhaps among the fastest growing

sector in India. Over the next 5 years, the size of the RMC industry is

estimated to grow at 20 percent, from Rs 155-160 billion in 2009-10 to Rs

395-400 billion in 2014-15. During the same period, demand in volume terms

is estimated to increase at a CAGR of 18 percent, from 48-50 million cubic

metres to 105-110 million cubic metres.

140

4.4.10 Future plans

The company has plans to expand its capacity to 20 million tonnes by 2015.

In addition, the company has also initiated action for developing of 10 million

tonnes reserves lignite mine at Nimbari Chandawatan in Rajasthan.

Companies chairmain Braj Binani said “It is with pride I would like to highlight

that we have strengthened our position in the cement sector with continued

growth and shall continue to do so in the future as well. While strengthening

our domestic base beyond 6 million tonnes of cement per annum, we are

consolidating our presence across the seas- in Dubai at 2 million tonnes and

China at 0.5 million tone. Our focus is to expand further in the specific

emerging markets of Africa and Mauritius including enhancing capacities in

UAE by one million tonne and explore potential in establishing our presence in

Europe as well. The company is poised to attain a cement production capacity

of 20 million tonnes in the specifically focused countries emerging across the

globe by 2015 if not earlier.”

Table 22: Binani’s Performance for Four years at a glance

Particular unit 2010-11 2009-10 2008-09 2007-08

Cement Capacity MTPA 6.25 6.25 6.00 4.80

Cement

Production

Mn Tons 5.46 5.28 4.29 2.96

Capacity

Utilisation

Percent 87.36 84.48 71.50 61.66

Power

Generation

Mn Units 305.67 244.90 187.64 151.15

Total Income Rs Crs 1743.45 1872.16 1502.70 991.81

Profit before Tax Rs Crs 82.27 408.00 154.56 244.84

Profit after Tax Rs Crs 90.51 281.92 108.67 175.82

Dividend Percent 25 35 21 25



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4.5 J.K. LAKSHMI CEMENT

JK Lakshmi Cement is one of the few cement companies, which have

opted for 'green practices'. The company has initiated examplary measures

for energy and water conservation, emissions and effluents reduction, waste

heat and material utilization. Its Sirohi plant has been rated as the third

greenest cement plant in India. The US based Frost & Sullivan has honoured

the company with "Green Manufacturing Excellence Award-2011", leaving 44

other contenders for the same. The company is also the first to introduce

green colour coding for cement bags.

At present, JK Lakshmi has three cement plants with an annual

capacity of 5.30 million tonnes. The company has planned to double its

capacity by 2013-14.

The Delhi based JK Lakshmi Cement Limited is a part of the century

old eminent industrial group – JK Organization. The Rs 10,500 crore JK

Group has multi-business, multiproduct and multi-location operations. The

Group's half a dozen companies, namely: JK Tyre & Industries Ltd, JK Paper

Ltd, JK Lakshmi Cement Ltd, JK Agri Genetics Ltd, Fenner (India) Ltd, JK

Sugar Ltd, are well known entities in the country. They are having leadership

position in their product lines like automotive tyres and tubes, paper and pulp,

cement, hybrid seeds, v-belts, oil seals, power transmission systems, sugar

etc. The group's exports span over 80 countries across six continents.

4.5.1 Origin

In 1982, the group diversified into cement business and setup

J.K.Lakshmi. Cement, which today is a blue chip company with an annual

turnover of about Rs 1900 crores. Originally, the company's cement business

was under the aegis of JK Corp Limited, a multi-product company, but in

2005, it de-merged its paper and investment business and became a cement

focused company with a new name – JK Lakshmi Cement Ltd. Over the

years, the company has emerged as a leading player in the Indian cement

industry.

142

The company split its equity share of Rs 10 into two equity shares of

Rs - each in 2009. Its market capitalization has grown to about Rs 800 crores

in March 2012 from Rs 342 crores in March 2005. Padma Bhushan Hari

Shankar Singhania presides over the company as Chairman, Bharat Hari

Singhania – Vice Chairman cum Managing Director, and Mrs. Vinita

Singhania – Managing Director. It also has two Whole Time Directors –

Shailendra Chouksey and Sushil Kumar Wali.

By now, the company's cement business has completed about 30

years of its existence but in the last nine years, it has registered a remarkable

growth. During this period, the company has become an independent

company, increased its cement plants to three from one and doubled the

capacity to 5.30 million tonnes from 2.40 million tonnes in 2003. The company

has planned to invest Rs 1800 crores to double its production capacity to 10

million tonnes. Adds Mrs Vinita Singhania – Managing Director: “At present,

our installed cement production capacity stands at five million tonnes, which

we would expand to 10 million tonnes."

4.5.2 Cement Plants

At present, JK Lakshmi has three cement plants, comprising one

integrated plant at Sirohi in Rajasthan and two grinding units, one each at

Kalol in Gujarat and Jhajjar in Haryana, with a combined capacity of 5.30

million tonnes. Further, it has one 2.70 million tonnes integrated Greenfield

project under implementation in Chhattisgarh. This plant is scheduled to

commence operation in December 2013.

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Table-23

JK Lakshmi’s cement plants at a glance – alphabetically listed

Sr.

No.

Cement

Plants District State

Capacity

MTPA

Jan 2010

Capacity

MTPA

Mar-2012

Year

1 Jhajjar

Grinding Unit

Jhajjar Haryana ---- 0.55 2012

2 Kalol

Grinding Unit

Gandhinagar Gujarat 0.55 0.55 2009

3. Sirohi

Cement

Plant

Sirohi Rajasthan

4.20 4.20 1982

Total 4.75 5.30

Under Implementation

4. Drug

Cement

Plant

Drug CHG

----- 2.70 Oct

2013



Million Tonnes per Annum

4.5.2.1 Sirohi Cement Plant

Located at Jaykaypuram on Sirohi Road in Rajasthan, a remote area in

the zero-industry district of Sirohi, JK Lakshmi's Sirohi Cement Plant is an

integrated cement plant. It was commissioned in 1982 with an initial capacity

of 0.5 million tonne and now it has a capacity of 4.20 million tonnes.

Sirohi manufacturing facility has been rated amongst the greenest

cement plants of India by CSE GRP 2005, thus highlighting the company's

commitment to the environment even while ensuring the highest standards of

quality for its products.

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4.5.2.2 Kalol Grinding Unit

It is JK Lakshmi's first split location grinding unit at Kalol in Gujarat.

Commissioned in January 2009 at a cost of Rs 72 crores, the Kalol Grinding

Unit has a capacity of 0.55 million tonnes.

4.5.2.3 Jhajjar Grinding Unit

Jhajjar Grinding Unit is the company's second split location grinding

unit with a capacity of 0.55 million tonne. It was set up at a cost of Rs 80

crores in Jhajjar district of Haryana and completed in March 2012.

4.5.2.4 Durg Integrated Plant

The company is setting up a 2.7 million tonnes green-field cement plant

at Durg in Chhattisgarh at an investment of Rs 1250 crores. This capacity

includes two grinding units one each in Odisha and in West Bengal. The work

on Durg cement plant is progressing smoothly and will be completed by

March 2014.

4.5.3 RMC Plants

The company has also forayed into the ready mix concrete (RMC)

business and has set up eleven fully operational state of the art plants in cities

of Gujarat, Punjab Rajasthan and Uttar Pradesh. RMC is marketed under the

brand name of "JK Lakshmi Power Mix". The RMC business contributes over

Rs. 150 crores to the company’s total turnover.

4.5.4 Plaster of Paris

‘JK Lakshmiplast’ is another value added product, which was launched

by the company in the year 2006. It is the first premium branded plaster of

Paris (POP) and is being marketed in Northern India.

4.5.5 Captive Power

In 2007, the company installed a 36 MW thermal captive power plant at

its Sirohi plant by investing Rs 152 crores. Later in 2010-11, the company

added one 18 MW thermal power plant at a cost of Rs 81 crores and another

12 MW green power plant involving an investment of Rs 125 crores. This has

145

increased the company's thermal captive power capacity to 54 MW and the

total power capacity, inclusive of 12 MW green powers, to 66 MW from 36

MW. Additionally, the company has also entered into a long term agreement

on private partnership basis for supply of 21 MW power at substantially lower

rate compared to the power supply by the State grid. This raises the

availability of captive power to company further to 87 MW.

4.5.6 Green Power

JK Lakshmi Cement is among the first few in Indian cement

companies, which have realized the potential of energy loss through hot air

being exhausted to atmosphere. Experts in this field expressed difficulty to

design a system for waste heat recovery from such pre-heaters where the

waste gases are emitted comparatively at lower temperature. The company in

collaboration with Taiheiyo Engineering Corporation and Thermax Limited

developed a custom built waste heat recovery plant for power generation from

the pre-heaters and clinker coolers.

The 12 MW waste heat recovery plant (green power) was

commissioned in 2011 at a capital outlay of Rs 125 crores. It generates power

at substantially lower cost and also helps in reducing the greenhouse gas as

no coal is used for this power generation.

To make it further green, the air-cooled condenser technology was

installed in the green power plant to conserve the water, which is a very

scarce resource in Rajasthan. In fact, all the company's power plants in its

cement plant have been using air-cooled condenser technology since 2007,

thereby saving 20 lakh liters of water every day.

4.5.7 Market Development

The company markets its cement under brand of "JK Lakshmi

Cement", which is one of the most preferred brands in North India, Gujarat

and Mumbai. It is also the first cement manufacturer to use colored bags to

help the customer in segregating different products. Over the years, the

company has built up a strong network of 70 cement dumps and over 2200

146

dealers spread over 10 States, namely: Rajasthan, Gujarat, Delhi, Haryana,

Uttar Pradesh, Uttaranchal, Punjab, J&K, Himachal Pradesh and Maharashtra

(Mumbai).

It also has a vast pool of highly trained and dedicated marketing and

technical service team to help the customers at their doorstep.

The company's rural marketing campaign, launched in 2010-11, is

serving its objective of reinforcing the brand “JK Lakshmi” in the minds of its

rural customers. During the year, its rural penetration has increased from 25

percent to 30 percent.

It has regular contact programmes with masons, dealers and architects

to keep in tune with their needs and requirements. One of the many

innovative initiatives the company took was to have a mason's club that now

has over 15000 members. Under this programme, the masons are given an

insurance cover against accidents absolutely free of cost, besides educating

them on the latest in construction activities.

J.K. Lakshmi Cement has received" "Star Brand-2011 Award", which

was chosen based on research across India on three parameters: product

innovation, recall and impact by Indian Council for Marketing and Research

(ICMR). It is a pioneering project on India's 100 most impactful brands across

all industries and sub-industries.

4.5.8 Performance

Year after year, the company is improving its performance consistently.

In the last four years, it has increased its annual capacity from 4.74 million

tonnes to 5.30 million tonnes and sales from Rs 1404 crores to Rs 1900

crores.

4.6 GUJARAT SIDHEE

Gujarat Sidhee, a subsidiary of Saurashtra Cement, is a BIFR case

since 1990 and continues to be under rehabilitation.

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The Gujarat Sidhee Cement Limited and Saurashtra Cement Limited

are part of the Mumbai based Rs 2000 crores Mehta Group. Founded in 1900

by Late Nanji Kalidas Mehta, today the Group has presence in four continents

- Africa, Asia, Europe and North America. The Group has business interests

in sugar, cement, building materials, packaging, electrical cables, engineering,

consultancy, management, financial services, international trade, floriculture,

horticulture, etc.

The Gujarat Sidhee Cement and Saurashtra Cement have two cement

plants in Gujarat with a combined capacity of 2.7 million tonnes. Incidentally,

both companies are registered with BIFR and are under rehabilitation. Jay

Mehta heads both companies as Executive Vice Chairman.

4.6.1 Gujarat Sidhee in retorspect

Gujarat Sidhee Cement Limited has a 1.2 million tonnes capacity

cement plant in Gujarat and is registered with BIFR since 1990. It has been

getting the rehabilitation schemes modified from time to time to make the unit

viable.

Originally, the Gujarat Sidhee was promoted by Gujarat Industrial

Investment Corporation (GIIC) as a subsidiary company, known as Cement

Corporation of Gujarat Limited. Incorporated in 1973, the project’s

implementation remained dormant for seven years. In 1980, GIIC obtained a

letter of intent for setting up one million tone of cement plant. A year later,

Mehta International Limited joined hands with GIIC as a co-promoter making

the company – Cement Corporation of Gujarat Limited, a joint venture

enterprise. The company went public in 1987 to raise funds.

The original plan was to set up a split location plant with clinkerisation

at Veraval and cement grinding unit at Rajkot. But ultimately, only the

integrated plant was set up at Veraval with a capacity of one million tonne at a

cost of about Rs 170 crores, which included a cost over run of Rs 46.50

crores. Located at Sidheegram in Veraval taluka of Junagadh district Gujarat,

148

the plant was commissioned in 1988 with dry process calcination technology.

As the plant is closely located to Porbandar Pipavav ports, it has advantage

accessing large export markets in the Middle East countries, Sri Lanka

Bangladesh via the economical sea route: The company markets cement

under the brand name "Sidhee".

Table-24

Mehta Group’s Cement Plants at a glance

Sr.

No. Cement Plants District State

Capacity

MTPA

Jan 2010

Capacity

MTPA

Jan 2012

Year

1 Gujarat Sidhee

Cement

Junagadh Gujarat 1.2 1.2 1988

2 Saurashtra

Cement

Porbandar Gujarat 1.5 1.5 1959

Total 2.7 2.7



MTPA Million Tonnes per Annum

Since Gujarat Sidhee’s plant had no balancing equipments, it had

frequent breakdowns. This was further aggravated by the adverse market

conditions resulting into low capacity utilization and poor price realisation. As

the company failed to generate adequate operating profits to service the debt,

there was a large erosion of its net worth and it became sick. In 1990, the

company was registered with BIFR as a sick company. In 1992, as per the

MOU entered into by GllC and Mehta International, the management of the

company was vested with the Mehta Group. In 1994, the Mehta Group

changed the company's name from Cement Corporation of Gujarat Limited to

Gujarat Sidhee Cement Limited.

149

Table-25

Gujarat Sidhee Cement's performance for four years at a glance

Particulars Unit

2010-11

Apr-Mar

12

Months

2008-10

Oct-Mar

18

Months

2007-08

Apr-Sep

18 Months

2006-07

Apr-Mar

12

Months

Cement Capacity MTPA 1.20 1.20 1.20 1.20

Cement

Production

Mn

Tons

1.21 2.05 1.75 1.28

Total Income Rs. Crs. 355.64 652.52 581.57 402.86

PBID Rs. Crs. 0.37 100.66 69.70 80.38

Interest Rs. Crs. 2.55 2.26 1.73 11.72

Net Profit / Loss Rs. Crs. (3.01) 57.29 48.78 52.36



4.6.2 Rehabilitation Schemes

Gujarat Sidhee submitted a comprehensive plan for its modification in

the sanctioned scheme to reduce the cost of production. The State Bank of

India, operating agency, circulated their appraisal report on the proposal

submitted by the company to all the secured lenders and Government of

Gujarat stating that the scheme drawn under RBI parameters is a viable

scheme. However, in the meantime, the BIFR passed order on November 29,

2001, directing, and inter-alia, for issue of advertisement for change of

management and to prepare a Draft Rehabilitation Scheme (DRS). The

company challenged this order of BIFR before the Appellate Authority for

Industrial & Financial Reconstruction (AAIFR), which admitted the appeal and

stayed the order passed by BIFR.

AAIFR in its order of February 19, 2002, had concluded that in view of

the repayments made by the company and the scheme prepared by SBI

being viable, an opportunity should be given to Gujarat Sidhee's promoters to

implement the scheme.

150

The AAIFR directed the SBI to rework the DRS in accordance with the

decision taken in the hearing held on May 27, 2002. A rehabilitation scheme

was sanctioned for company's revival in November 2002, which had

envisaged construction of a Jetty with mechanised loading and unloading

facilities near the factory to reduce transportation cost, acquisition and setting

up of DG sets to reduce cost of power and granting necessary relief and

concessions by the banks financial institutions and Government of Gujarat.

Since the company could not implement the cost saving projects as

envisaged, in September 2008, the BIFR circulated a Modified Draft of

Revival Scheme (MDRS). Accordingly, the company had proposed to submit

the modification in sanction scheme (SS) involving reorganization of existing

share capital in the shape of de-rating of the shares and allotment of

additional shares on preferential basis.

According to Director's report 2010-11, the company has installed DG

sets at the factory and paid the dues of the banks, financial institutions and

government of Gujarat. However, the construction of jetty is pending and the

company had therefore submitted a proposal for a modification in the

sanctioned scheme to facilitate construction of jetty, re-organization of existing

share capital by de-rating of existing equity and allotment of shares at par on

preferential basis.

4.6.3 Performance

Earlier in the year of 2007-08, the company had changed its financial

year ending in March 31 to ending in September 30; therefore the year was

for 18 months. However, the company has decided to revert back to its

original financial year ending on March 31 and accordingly, once again its

financial year will be for 18 months, from October 2008 to March 2010. From

2010-11, it has restored the financial year from April to March.

151

In the last four years, the company has improved its performance by

working at 100 percent capacity utilization. However, it could not sustain its

profitability owing to bad market conditions.

Future Plans

The company has plans to add new production lines at Gujarat Sidhee

and also to install a captive power plant.

4.7 SAURASHTRA CEMENT

Saurashtra Cement Limited is part of the Mumbai based Rs. 2000

crores Mehta Group. It is the first company of the Group. Later, the company

added one more cement company – Gujarat Sidhee Cement Limited, which

was acquired as a sick company from its joint venture partner – Gujarat

Industrial Investment Corporation (GIIC). Jay Mehta heads the company as

Executive Vice Chairman.

Incorporated in 1956, Saurashtra Cement commenced commercial

production in 1959. Located at Ranvav in Porbandar district of Gujarat, the

company has a capacity of 1.5 million tonnes. Since it is in the proximity of the

Porbandar and Veraval / Okha ports, it enjoys competitive access to the large

export markets in the Middle East countries, Sri Lanka and Bangladesh

through the economical sea route.

4.7.1 under BIFR

The company is a sick company and is registered with Board for

Industrial and Financial Reconstruction (BIFR). At the last hearing, BIFR had

directed the company to submit revised Draft Rehabilitation Proposal and also

to the Government of Gujarat to expedite its decision on the proposal of one

time settlement field by the company. IFCI, the lead financial institution and

operating agency was asked to submit a duly tied up scheme to BIFR, after

conducting a joint meeting of persons.

Saurashtra Cement markets its cement under the brand name of 'Hathi

Cement'. Keeping in tune with the recent market trends, the company

152

launched cement packed in 1 kg, 2 kg, 5 kg and 10 kg bags in the retail

cement market under the brand name 'Chhotu Hathi'.

4.7.2 Performance Review

In the year of 2010 - 11, the company achieved a production of 1.16 million

tonnes of cement as against 1.61 million tonnes in the previous year of 15

months ended on March 31, 2010. The total sale of cement was 1.37 million

tonnes as compared to 1.87 million tonnes in the earlier period of 15 months.

4.7.3 Future Plans

The company has plans to add new production lines at Saurashtra Cement.

4.8 SANGHI CEMENT

In 2003, when Sanghi Industries set up its 2.6 million tonnes cement

plant in Gujarat, then the company was hailed as the third largest player in the

State, while the first and second being: L& T Cement {now Ultra Tech) and

Gujarat Ambuja (now Ambuja Cements). But with the entry of Jaypee Cement

in Gujarat, Sanghi Industries has been pushed to 4th place in the State, while

the first three being, Ultra Tech - 7 million tonnes; Ambuja - 6.70 million

tonnes; and Jaypee - 4.80 million tonnes. Sanghi Industries Limited, which

was originally set up by the Hyderabad based Sanghi Group, is now a Ravi

Sanghi Group Company. It has re-loacted its corporate office at Ahmedabad.

Founded in 1978 by the late Ramsharan Sanghi, the Hyderabad based

Sanghi Group was a multiproduct industrial conglomerate in Andhra Pradesh.

The Group had nine companies under its umbrella with major operations at

Sanghi Nagar, about 30 Kms from Hyderabad. The companies promoted by

the Group are managed by the founder's four sons - Anand Prakash Sanghi,

Sudhir Sanghi, Ravi Sanghi, and Gireesh Sanghi.

Over a decade ago, the Sanghi Group decided to diversify into cement

sector under the aegis of Sanghi Industries Ltd, headed by Ravi Sanghi as

Managing Director. Now the Sanghi Industries is a Ravi Sanghi Group

Company. Further, Ravi Sanghi has inducted his two sons - Aditya Sanghi as

153

Executive Director - Production, and Alok Sanghi as Executive Director -

Marketing.

As on September 30, 2011, the promoters holding in Sanghi Industries

stood at 51.06 percent, foreign financial investors (FFI’s) 17.01 percent and

foreign institutional investors (FIl’s) 1.42 percent. The remaining 30.51 equity

was held by others.

4.8.1 Cement Plant

Sanghi Industries strategically located its cement plant at Sanghinagar

in Motiber village, Abdasa taluka in Kutch district of Gujarat. By the time the

company completed its cement plant, the project cost got escalated to Rs

1300 crores from the revised cost of Rs 775 crores. The company spent over

Rs 1100 crores, while the FL Smidth had contributed Rs 26 crores till the end

of 2000 by picking up a 14 percent stake in the company.

The cement plant was commissioned in March 2003 with a capacity of

2.6 million tonnes. Then its kiln measuring 6 x 84, was considered to be the

largest in India. There was only one such other kiln at ACC's New Wadi Plant

in Karnataka. According to Alok Sanghi, the company's present capacity is 3

million tonnes.

The Kutch has vast limestone deposits, spread across hundreds of

miles in the desert. The company has limestone mining area of over 20

square kilometers. The limestone found here is very soft and chippable with

low overburden, obviating the need for blasting or drilling.

The Sanghi's plant is the country's first port-based mega cement plant.

The port is just 14 kilometer from the site of the plant. While its clinkerisation

plant is mine based, the cement grinding and packaging units are port based.

The packing and loading of cement into the ship is totally automated with

state-of the-art packers and ship loaders. This saves substantially to company

on cement transportation through sea routes, instead of road and railways as

done by others.

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Adds Ravi Sanghi: “The real advantage in cement business lies in

lower transportation expenses. It is not viable if cement is to be transported to

longer distances by road. The logistics never work out favourably. The captive

port that we have developed helps us to transport our cement from Gujarat to

any place in Maharashtra, Kerela, and such other places. Similarly, the

product can be exported to Middle East and South Asian markets. This may

not be possible for any other cement plant that depends either on road or

other transportation facalities.”

4.8.2 Captive Power Plant

The company has a captive power plant with a capacity of 60MW. The

company has pioneered the usage of lignite as fuel in place of coal. The use

of lignite reduces the cost of fuel by almost 70 percent and also saves the

precious foreign exchange on coal imports. The lignite deposits are 25 Kms

away from the plant site. The company also has a desalination plant with a

capacity of 5500 cubic meters per day, which was set up in technical

collaboration with IDE of Israel, costing Rs 22 Crores.

4.8.3 Expansion

The company has plans to expand its capacity to about 7 million

tonnes by adding a unit II with a capacity of 4 million tonnes at the existing

location in Gujarat. It also proposes to increase its captive power caoacity to

120 MW by adding one more plant of 60 MW capacities. At present, it already

has a 60 MW plant in operation.

With the expansion of capacity, the company has plans to enter into

new markets of neighbouring states of Maharashtra, Rajasthan and other

coastal states. Further, the company is also planning to strengthen the

alternate routes of supplies, rail and sea routes, in order to reach far

destinations with required operationsl economy.

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4.8.4 Performance

In the year of 2010-11, the cement production was 2.32 million tonnes

against 1.82 million tonnes in previous year. The capacity utilization was

marginally better at 71 percent compared to 69 percent in previous year.

The company sold about 81 percent of the cement volume in the

domestic market, which was 76 percent in the previous year. The international

markets have been affected by financial crises starting in Dubai and political

unrest. These circumstances have affected both demand and prices for

exports.

The company has registered gross sales of Rs 980.56 crores against

Rs 709.01 crores in the previous year. The average realization for the cement

sales in the domestic markets was Rs 208 per bag compared to Rs 200 in the

previous year.

4.8.5 Future Plans

According to media reports, Sanghi Infrastructure Limited, a subsidiary

of Sanghi Industries, has announced to set up a 3.8 million tonnes cement

plant along with a power plant at Sanghigram in Katni district of Madhya

Pradesh with an investement of Rs 1180 crores.

An another subsidiary – cemtech Sanghi is all set to put up a 1.2

million tonnes cement plant at Pokot in Kenya at a cost of $ 175 million. The

Kenya plant is to be implemented in two phases. Under the first phase, a

capacity of 0.6 million tonnes will be commissioned. Under phase II, the

remaining capacity of 0.6 million tone will be completed. The company has

already received all the clearances from the Government of Kenya and it has

also procured 650 acres of land for the cement plant.

Sanghi’s investement in Kenya is considered to be the single largets

investment. It will be joining the Mombasa cement in Kenya’s Athi River as a

new cement player.

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4.9 Cement plants in India

India is having total 206 cement plants having capacity of 358.64 million tons

per annum out of these plants Gujarat is having 14 plants of different

companies generating 27.49 million tons cement in a year. The detail of

cement plants across the country is as follow:

Table - 26

State wise1 cement plants and their capacities

Rank State Capacity

MTPA 2012 No. of Cement

Plants 1 Andhra Pradesh 79.45 44 2 Rajasthan 45.62 21 3 Tamil Nadu 38.89 20 4 Gujarat 27.49 14 5 Madhya Pradesh 26.16 10 6 Kamataka 24.40 13 7 Maharashtra 23.00 10 8 Chhattisgarh 16.11 10 9 Uttar Pradesh 13.83 11 10 Jharkhand 13.04 07 11 West Bengal 8.60 04 12 Odisha 9.61 09 13 Meghalaya 7.79 05 14 Punjab 6.77 08 15 Uttarakhand 4.75 03 16 Haryana 4.00 03 17 Assam 3.52 04 18 Bihar 2.73 04 19 Jammu & Kashmir 1.00 01 20 Kerala 0.76 02 21 Delhi 0.62 02 22 Delhi 0.50. 01

358.64 206 Source: Labour and Industrial Chronical, Survey of Cement Industry &


Note: This table also includes eight plants, which are not in

operation.

chapter 4 profile of major market...

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