India Cements has acquired a coal mine in Indonesia, which is expected to go on stream by January 2012, for $20 million. The company is also in the process of setting up a 50 Megawatt power plant near Tirunelveli in Tamil Nadu.
The coal mine acquisition is part of its plan to integrate its supply chain and to reduce exposure to the fluctuating coal price internationally.
“The coal mine acquisition is a strategic decision, it will reduce our exposure to the fluctuating coal price internationally,” said N Srinivasan, vice chairman and managing director, India Cements.
The concern for the industry and for the company is sluggish growth of cement, increase in fuel and power cost, higher interest rate, he added. While the input cost have increased 7-8 per cent, output cost rose only two per cent.
At present 55-60 per cent of the coal requirement is being met by import.
India Cements is one of the country’s largest cement manufacturers with a capacity of around 15 million tonnes.
The company reported around 30 per cent increase in net sales to Rs 1,092 crore as against Rs 843 crore during the same quarter last year. Net profit increased 105 per cent to Rs 70 crore as compared with Rs 34 crore a year ago.
Srinivasan said despite a four per cent drop in demand across south India, the company managed to post good profit. Its capacity utilisation was around 68 per cent, due to the excess capacity in South India, which is currently around 100 million tonnes.
Between August and September 2011, the overall sales of the cement industry in Tamil Nadu dropped 0.42 per cent, while in Kerala it was 0.24 per cent, Karnataka 2.19 per cent. Andhra Pradesh recorded the highest drop at 17.06 per cent drop.
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