The Hindu Business Line : Madras Cements hiking production capacity

Chennai, May 31 Madras Cements Ltd, which has reported a nearly four times jump in net profit in 2006-07, expects to sustain and improve its output during the current year supported by a growth in demand.

Over the next two years it plans to add 40 lakh tonnes to its existing production capacity of 60 lakh tonnes.

According to a press release from the company, the performance can be attributed to a tight rein on costs.

The company is doubling its wind power generation capacity to 120 MW, which would substantially contribute to the control on energy costs.

Optimal use of rail and road transport and planning has also helped to keep the logistics cost under control. Interest costs have been kept down through a control on working capital and debt.

Its long-term debt as of March 31, 2007, stood at Rs 80 crore, according to company officials.

Madras Cements, which has a total production capacity of 60 lakh tonnes, will add 20 lakh tonnes by September, when it will commission a 4,000-tonne-a-day kiln at its Jayanthipuram factory.

The company is also setting up a 20-lakh-tonne a year cement project in Ariyalur, which is to be commissioned in June 2008.

This project, coming up at a cost of Rs 967 crore, includes 56.7-MW of wind electric generators to substantially meet the power requirements.

It also announced plans to set up grinding units in Tamil Nadu, Andhra Pradesh and West Bengal, where fly ash is available and markets are in the vicinity.

This would help to bring down the transportation costs for the company.

The capacity expansion comes at a time when the buoyancy in demand for cement is expected to sustain. On the prospects for the current year, the company has said that the demand is expected to grow at 10 per cent.

Output, sales

The total production during 2006-07 was 56.68 lakh tonnes, a capacity utilisation of 95 per cent against 79 per cent (47.11 lakh tonnes) in the previous year.

Sales touched 56.67 lakh tonnes (47.28 lakh tonnes) representing a 20 per cent growth against an industry average of 10 per cent. The growth in domestic demand has contributed to a reduction in exports, which stood at 76,107 tonnes of cement against 2.28 lakh tonnes of cement and 2.88 lakh tonnes of clinker previously.

The company has declared a total dividend of Rs 25 a share of Rs 10 for 2006-07.

On Thursday, the company's shares ended up 1.64 per cent at Rs 2,800 against its previous close of Rs 2,754.70 on the BSE.