Ramco Cements Unveils ₹1403 Crore Capacity Expansion Plan for AP and TN Facilities

The Ramco Cements Ltd has set ambitious plans for expansion, aiming to double the capacity at its Kalavatala integrated cement manufacturing complex in Andhra Pradesh. The proposed investment stands at ₹1250 crore for this expansion alone. Additionally, the company plans to enhance its environmental sustainability efforts by investing ₹153 crore in setting up a waste heat recovery system (WHRS) of 10 MW capacity at its Ramasamy Raja Nagar Plant in Tamil Nadu.

The company's Board, in a recent meeting, gave the green light to establish Line II at the Kalavatala Plant located in Kolimigundla Mandal, Nandyal District, Andhra Pradesh. This expansion initiative includes the setup of a second line to double the clinker capacity to 6.3 MTPA and cement capacity to 3 MTPA, alongside an additional waste heat recovery system (WHRS) capacity of 15 MW.

Explaining the rationale behind this move, the company stated, "Considering the successful operation of Line I and demand potential, it has been proposed to establish Line II." The total outlay for this expansion, pegged at ₹1200 crore, will be financed through a mix of internal accruals and bank borrowings. The timeline for commissioning this expansion is set for FY26. Once completed, the company's aggregate installed capacity is projected to reach 19 MTPA for clinker and 26 MTPA for cement by FY26.

Simultaneously, the company plans to set up a 10 MW WHRS plant at the Ramasamy Raja Nagar factory complex in Tamil Nadu, with a target completion date of March 2025, subject to necessary permissions. This move aligns with Ramco Cement's commitment to reducing greenhouse gas emissions and minimizing the environmental footprint in cement production. With these expansion plans, the company's aggregate installed capacity for WHRS is expected to increase from 43 MW to 68 MW by FY26.

In terms of financial performance, the company reported a 39% increase in net profit at ₹93 crore for the quarter ended December 31, 2023, compared to ₹67 crore in the corresponding period the previous year, despite some impact on cement demand due to cyclone Michaung. The EBIDTA also saw a healthy growth of 37% to ₹402 crore, aided by a decrease in fuel prices. Blended fuel consumption per tonne of cement and power and fuel costs per tonne also witnessed favorable trends.

Furthermore, the company's net revenue experienced a 5% growth, reaching ₹2113 crore in Q3FY24, supported by increased cement volumes. However, the cement capacity utilization rate dipped to 74% in the December 2023 quarter compared to 82% in the September 2023 quarter. Despite this, the company remains optimistic about its expansion plans and future prospects in the cement industry.

HBL