Economy & Market
Emami Cement finalises expansion plans, introduces new brand
Emami Cement, which began operations at its integrated cement manufacturing plant in Chhattisgarh in July this year, expects to clock revenues of around Rs 500 crore for a full year of operations ending March 2017.
Its Chhattisgarh plant, with a capacity of around 5.5 MTPA, was set up in addition to two separate grinding plants that are to come up in West Bengal and Odisha at a total cost of Rs 3,500 crore.
Emami Cement, which also has a limestone mine in Andhra Pradesh, plans to set up a plant in that state with a capacity of 2 MTPA at a cost of Rs 1,500 crore.
The plant in Rajasthan, where it also has a mine, would come up with a capacity of 6 MTPA entailing a cost of another Rs 3,500 crore.
Manish Goenka, Director of Emami Group, said that the company is open to acquisitions. Initially, the company plans to cater to the markets of Chhattisgarh, West Bengal, Odisha and eastern Maharashtra´s Vidharbha region. The Bengal grinding unit would become operational in January 2017.
The company has started selling cement under the brand ´Double Bull´, Goenka said. -¦We are bullish on the cement business, which will help boost both our top-line and bottom-line. We aim to be among the top three players in the cement industry. We expect our cement division´s turnover to touch Rs 2,500 crore in 2018-19,´ Aditya Agarwal, director of the Rs 10,000 crore Emami group, said.
´Today´s consumers use two-three types of cement in building a single property. There are product varieties like pre-casted, pre-mix or ready-mix, too. We want to equip ourselves technologically and logistically to cater to this new-age requirement,´ said Goenka.
The company is using the latest German equipment and robotics in its Chhattisgarh plant and has roped in global consulting giant McKinsey to advise it on the marketing strategies for its cement business.
Emami says it has budgeted Rs 9,000 crore for the proposed expansion of its cement production capacity under the new brand ´Double Bull´.
The Odisha unit near Balasore, with a production capacity of 1.5 MT, will be ready in about 12-15 months.
Historically, Emami has grown its flagship business of consumer goods through acquisitions. The decision to diversify into cement manufacturing was taken after at least five years of deliberation, said Agarwal. Now, the company wants to scale up rapidly.
The business has certain entry barriers, Agarwal said, adding that despite being a commodity, cement offers opportunities in product differentiation. The biggest challenges are access to limestone deposits and large tracts of land to build factories, he said.
Speaking about the Emami Double Bull brand, Goenka said the group chose the bull as a symbol of strength, promising in its cement ´double (compressive) strength´. Initially, Emami will focus on selling in eastern India and the eastern parts of Maharashtra, according to Agarwal.
The eastern Indian market has a number of new entrants fighting for market share, which has kept prices depressed for the past year, said Rajesh Kumar Ravi, an analyst at Centrum Broking Ltd. The challenge for Emami as a new entrant is to strike a balance between shoring up sales and selling at remunerative prices, he added.