Tuesday, July 5, 2011

Reliance Cementation puts first step forward, enters into LOI with European companies

Reliance Cementation Private Limited (RCPL), the cement arm of Anil Ambani promoted Anil Dhirubhai Ambani Group (ADA), has put its first step forward to put its cement plant in place.
An official close to the development says, “Reliance Cementation has issued letter of intent (LoI's) for equipments for its Satna I unit in Madhya Pradesh. The LoI has been issued to European engineering majors Polysius, FL Smidth and Loesche.”
The European majors stole the show from Chinese equipment players as the price differential is not more than 5 per cent for European companies and also European insurance agencies charge 5 per cent of the debt raised as fees whereas the nodal insurance agency in China charges 7-8 per cent of debt raised.
RCPL, is at present a wholly owned subsidiary of reliance Infrastructure. The LoI has been signed for the Satna I unit where it has plans to put up a capacity of 5.08 million tonne per annum (mtpa) manufacturing unit. It has planned a clinker capacity of approximately of 3.6 mtpa. The game plan includes an integrated unit at Maihar, a blending unit at Gondavli and a grinding unit at Kundangang in Madhya Pradesh.
The source further says, “ A part of the site has received environmental clearance where work would start first and they have received Terms of Reference (ToR) clearance for the final stage. ToR is the first level of clearance from the environmental ministry before it gives the final nod for the project.”
Since the inception of the company in 2007, it has not yet placed any order for construction of cement units. The company has been focusing on setting up of two 5 million tonne (mt) greenfield plants in Mukutban in Maharashtra and in Maihar in Madhya Pradesh. The company website says that a grinding unit at Butibori, Maharashtra will be the first operational unit from the company's stable with an initial capacity of 0.6 mtpa. According to RCPL, this unit is slated for commissioning in March-April, 2012.
However the source adds, “Though the company has been saying the Butibori capacity will come first they have not placed any order for the same. So it would be difficult to say which one would come first. As of now they have just signed LoI, the final contract would be signed soon for the same.”
The first move from the company has come after joining of Sumit Banerjee, the erstwhile chief executive officer (CEO) of ACC cements. It is also looking at inorganic expansion and is in talks with Andhra Pradesh based Sree JayaJyothi Cements (SJJC). The group had an ambitious plan of setting up manufacturing plant of 50 mtpa capacity by both organic and inorganic route.

1 comment:

Sankoobaba said...

interesting bit..
!business journalism!