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September 07, 2008


ADAG foray in cement set to start by June 2008

It is reported that Anil Dhirubhai Ambani Group’s proposed foray into cement business is set to start in June 2008 with operations commencing on the first of the four 5 million tonne plants it intends to set up in Madhya Pradesh.

Madhya Pradesh has been strategically selected as the location for all four units as the company’s first UMPP would come up at Sasan. As the Sasan project would also be partially operational by 2012, it would coincide with operationalization of the group’s cement venture.

It has secured a prospecting license for a limestone mine with reserves of 250 million tonnes to start the cement venture that would be undertaken by a new company called Reliance Cement. Mr Arvind Pathak from ACC will head the cement venture while another official from Binani Cement has been appointed as project head. With the core team in place, other operational managers would now be appointed.

The first phase, which entails an investment of about INR 10,000 crore for putting up manufacturing capacity of 20 million tonnes in MP, would complement the group’s Sasan ultra mega power project that would generate and supply fly ash for cement manufacturing. In the second phase, cement manufacturing units of identical capacities may be put up in Gujarat and Andhra Pradesh. The AP project would gain leverage from the group’s second UMPP at Krishnapatnam.

An official in ADAG said that "We have received prospecting license for one of the seven limestone mines for which our applications have been filed. The first mine in Satna area has enough reserves to support a 5 million tonnes cement plant. The license work on the project would be started immediately to bring the unit into operation by 2012."

It is understood that the project would be funded on a debt equity ratio of 80:20. When the 20 million tonnes capacity for cement goes on stream, Reliance Cement would become the third largest player in the sector after ACC and Grasim. At full capacity utilization, the company could command 10% market share at current levels of production. Installed cement capacity in the country is about 170 million tonnes.