Orient cement to spend Rs 1,600 crore to expand capacity in Karnataka

Orient Cement is eyeing brownfield expansion in the Karnataka region for an investment of Rs 1,600 crore. The company is expecting to start the construction of the expansion project in the next six-seven months. The expansion will take around 18 months before the capacity kicks in. This move will help the company meet the growing demand for cement in the southern region of the country.

While sharing company’s plans for the near future, Deepak Khetrapal, MD and CEO of the company, in a recent interview with CNBC-TV18, said, “In our Karnataka plant we have operated, last year, on 100 percent capacity. That part of the market is still growing and we do not have more cement to sell in that market. So the Karnataka plant expansion comes on the front burner.”

“We are working very hard so that we can start the construction in about six-seven months now. The total capex, from that particular expansion, should be about Rs 1,550-1,600 crore, out of which we expect to be able to spend Rs 500-600 crore within this financial year. Besides that, the capex that we will do to prepare our Telangana expansion and the new Greenfield plant in Rajasthan. Total capex during this year is expected to be around Rs 1,000-1,050 crore,” he added.

Khetrapal also mentioned that the FY24 capex for the brownfield expansion would be around Rs 1,000-1,050 crore. He further added that the Rs 1,000 crore of capex would not have any equity dilution. The company is planning to finance the project through a mix of internal accruals and debt.

The brownfield expansion project in the Karnataka region will not only increase the company's production capacity but also help in improving its operational efficiency. This will also enable Orient Cement to cater to the growing demand for cement in the southern region of the country.

The company has been making steady progress in the cement industry and has established itself as a reliable and innovative player. The expansion project in the Karnataka region is in line with the company's growth strategy and will help it consolidate its position in the market.

The company reported its results for the quarter four of FY23. Revenue from operations as well as volumes saw a healthy growth. EBITDA per tonne has improved sequentially.

“We had a solid quarter four. In terms of next year forecast, we believe we should be targeting between 6.3 million tonne (mt) and 6.5 mt of volumes against about 5.8 mt that we did last year,” he said.

Shares of Orient Cement has gained 2 percent in last week and around 10 percent in past month.