Shree Cement plans to bid for 2-3 limestone blocks in Assam
Informist, Wednesday, Apr 3, 2024
--Shree Cement chairman:Plan to bid for 2-3 limestone blocks in Assam
--CONTEXT: Govt to auction 7 limestone blocks in Assam
--Shree Cement: Limestone block could mark foray into northeast India
--Shree Cement chairman: See cement industry sustaining 9-10% growth
By Avishek Rakshit
KOLKATA - Shree Cement Ltd plans to bid for two-three limestone block leases in Assam at the upcoming auctions, Chairman H.M. Bangur told Informist. Successful bidding could see the country's third-largest cement group foray into India's northeast.
Seven limestone blocks in Umrangso in Assam's Dima Hasao district are expected to be auctioned by the government in the coming fortnight, industry officials said. Limestone is the primary raw material used to manufacture cement.
"We are eyeing to bid for two-three blocks, but let's see as the auctions open. As of now, I don't know when the auctions are going to start," Bangur said. "But we are interested in the region."
The seven limestone blocks to be auctioned have deposits of 492 mln tn with quicklime content of 44-52%, according to officials familiar with the issue. The quality of limestone deposits depends on the percentage of quicklime, also known as calcium oxide, in the deposits – a higher percentage of calcium oxide ensures a higher quantity of raw material can be mined from the ore.
Several large cement companies have been eyeing the northeastern region as a potentially high-growth area but have been deterred by the region's ecological sensitivity. Bangur said the growth potential in Assam was in tune with the scenario across the country, and he expects the cement industry to sustain the current growth of 9-10% year-on-year.
Star Cement, the market leader in northeast India with a market share of 23%, registered 18% volume growth in the financial year ended Mar 31 at a little over 4 mln tn, according to an investor presentation by the company. The previous year, its volumes had increased 28% to 3.4 mln tn.
"No state will remain poor or underdeveloped, and Assam will register good growth. It will become at par with other developed states. It makes sense to enter a market or a region where growth potential is good," Bangur said.
As of now, only Dalmia Bharat Ltd and Star Cement Ltd are the major players in the northeast, making the region duopolistic in nature. Dalmia Bharat has three plants in Assam and one in Meghalaya, which account for 14% of its total installed capacity of 38.6 mln tn a year. Star Cement has one plant each in Assam and Meghalaya, which account for 80% of its total installed capacity of 5.7 mln tn per annum.
In February, JK Lakshmi Cement Ltd acquired Agrani Cement for a cash consideration of 3.3 bln rupees to foray into Assam. As part of a consortium, Agrani Cement has joint mining rights in Assam for limestone reserves of around 335 mln tn. JK Lakshmi Cement will use this consortium to set up a 1 mln tn clinker unit and a 1.5 mln tn grinding unit.
Asked about the potential competition and presence of strongly grounded cement players in and around Assam, Bangur said, "Competition will be there – one cannot help it. They have their own growth plans and strategies, and we have our own. I cannot comment on what others are doing in the region or how they are eying it."
Shree Cement, which has installed capacity of 56.4 mln tn, has been keen to expand its presence across the country and evolve into a pan-India player. On Tuesday, the company commissioned a 3 mln tn per annum plant in Andhra Pradesh's Guntur, built at an investment of 25 bln rupees. So long, the company had been focussing heavily on the north and southern regions of the country, and was on the lookout to increase its presence in west and east India.
The company aims to increase its installed capacity to 80 mln tn a year by 2028. At 1243 IST, shares of Shree Cement were down 0.3% at 26,452.5 rupees on the National Stock Exchange. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
