Birla Corporation Limited to invest around Rs 2,400 crore for 4 mtpa greenfield cement plant at Mukutban near Nagpur.
Birla Corporation Limited to invest around Rs 2,400 crore for 4 mtpa greenfield cement plant at Mukutban near Nagpur. Funding of the project would be a mixture of debt and internal accruals. Birla Corporation had acquired the cement plants of Reliance at a consideration of Rs 4,800 crore. To fund this acquisition, Birla Corporation had taken a loan of Rs 1,000 crore on its books. As Reliance’s plants did not have a captive power plant, Company is in the process of setting up a waste heat recovery system at a cost Rs 125 crore This would provide it power to meet a portion of the total demand, 45 MW, free of cost
Why is this important
After the completion of the new plant, the total cement production capacity of the company would touch 20 mtpa from the present 15.5 mtpa (after acquisition of Reliance Cement). Considering that the demand for cement is rising in central India and no new capacity is coming up in the region, the Company is well—poised to take advantage of the situation.
How will the stock be impacted
Installing new plants and improving the efficiency of the recently acquired plants is expected to delve positively for Birla Corporation (CMP Rs. 734, M Cap Rs. 5,655 Cr, EV/Ebitda 7.1x FY20E)