NEW DELHI: Set to start production from its five million tonnes per annum (mtpa) cement plant in Madhya Pradesh by the this month-end, Reliance Cement Co (RCC) today said it is confident of achieving the 20 mtpa target in the next three-four years.
A wholly-owned subsidiary of Anil D Ambani-led Reliance Infrastructure, RCC is also open to acquisition for enhancing capacity provided that ensures business sense, a Reliance Infrastructure spokesperson told PTI.
"We are going to achieve 20 mtpa capacity in 3-4 years via execution. We are open to acquisitions, but only if it makes business case. But, we should be able to achieve the 20 mtpa target by ourselves," he said.
The commissioning of the 5-mtpa Madhya Pradesh unit would mark the emergence of Reliance Infrastructure in India's present over-capacity cement market, which is the result of a rapid capacity expansion by almost all players in the previous five years.
India's cement-making capacity has increased from 219 MT in FY'09 to 325 MT in FY'13. Consequently, the bridge between demand and supply has increased substantially.
On the contrary, demand growth was dismal due to slowdown in real estate sector and delay in takeoff of infrastructural projects.
"In the period FY'11-13, cement consumption grew at CAGR of mere 5.6 per cent compared to CAGR of 9.9 per cent in the period FY'07-10. The multiplier of cement demand growth to the GDP growth declined below one in FY'11 & FY 12," according to a CARE report on the sector.
The official said RCC's Madhya Pradesh plant would cater to the needs of the markets in eastern Uttar Pradesh, Bihar, Jharkhand, West Bengal and Chhattisgarh among others. RCC has built the facility at a record time of 22 months with just Rs 3,000 crore investment.
Going by the average investment that the company has put in for the creation of the plant, RCC would have to make an additional Rs 9,000 crore to take its capacity to 20 mtpa. However, the Reliance Infrastructure offcial did not comment on that.
The official said RCC has some leases for limestone, an important ingredient for cement-making, and is in the process of getting more.
RCC now produces 0.5 mtpa cement in its Butibori plant which mostly caters to the Maharashtra market.