Chettinad Cement to set up new plant in Karnataka

Chennai: Chettinad Cement Corporation Ltd plans to set up a 2.5-million-tonnes a year cement plant and a 30-MW captive power plant in Gulbarga district of Karnataka, it has informed the stock exchanges today.

Company officials said the cost of the project or the funding pattern have not yet been worked out. The investment is expected to be in excess of Rs 600 crore.

The company also informed the stock exchanges that it has decided to put on hold its proposed rights issue of shares. It has said that favourable market conditions (in terms of cement prices) will enable the company to generate sufficient internal resources to fund the second line of 2 million tonnes a year that the company will put up near Tiruchi in Tamil Nadu.

The promoters hold 85 per cent of the equity and financial institutions 7.4 per cent.

In January 2008, the company had approved a rights issue of shares in the ratio of one new share for every six shares held to raise about Rs 250 crore to part-finance the second line at Ariyalur, near Tiruchi. The second cement line was estimated to cost Rs 450 crore and it proposed to meet the balance from its own funds.

Chettinad Cement Corporation is putting up a greenfield 2-million-tonnes a year plant at Ariyalur and a 30-MW captive power plant, at a total cost of Rs 660 crore. It had said this project would be funded through bank loans for Rs 540 crore and the balance from its own funds. The greenfield plant is expected to go on stream by March 2009. For the year ended March 31, 2008, the company has posted a net profit of Rs 163.77 crore on sales of Rs 930.18 crore against a net profit of Rs 114.71 crore on sales of Rs 725.30 crore for the previous year.

The board of directors has recommended a dividend of Rs 10 a share (100 per cent). The company’s shares closed 3.8 per cent up on the NSE today, at Rs 501.