Dalmia Cement coal requirement to double

by Rakesh Dubey

September 16, 2009: Southern India's leading cement manufacturer, Dalmia Cement (Bharat) Ltd, is set to commission its 2.5 million tons per annum (mtpa) greenfield cement plant at Ariyalur in Tamil Nadu and that will double the company's monthly requirement of thermal coal to about 1,00,000 tons per month, the company's managing director, Puneet Dalmia, told Coal Insights.

"We have already started the grinding unit at Ariyalur and will ramp up our cement making capacity in a phased manner to 2.5 mtpa. The plant, which was conceived around two and a half years ago and is being set up at a cost of about Rs 800 crore, will also have a coal based captive power plant of 27 MW," Dalmia said.

Dalmia said the company, which is a pioneer in cement manufacturing since 1939, is currently using around one vessel load (Supramax) or about 50,000 tons of imported coal per month at its cement plants in Dalmiapuram in Tamil Nadu and Kadapa in Andhra Pradesh.

Dalmia Cement's current cement production capacity at the plants in Dalmiapuram and Kadapa is 6.5 mtpa and once the full capacity at Ariyalur comes on stream, the total capacity will increase to 9.0 mtpa. Power generation capacity will increase from the current level of 160 MW of thermal and renewable energy to 187 MW after addition of 27 MW of coal-based plant at Ariyalur.

Dalmia said the company does not have any linkage for domestic coal and has to depend solely on imported coal. "However, efforts are on to get linkages for domestic coal, besides making available domestic coal from captive mine," he said.

The company was in May 2009 allocated a captive coal block - Khappa and Extn.- jointly with Sunflag Iron Steel Ltd. The block is situated at Kamptee in Maharashtra and has estimated geological reserve of about 84.72 million tons, Dalmia said.

He said the block has been only partially explored and the proven reserve might go up after full exploration. "We plan to bring the block to production stage as early as possible," he added.

Production

Dalmia said the company's cement production between April and July this financial year increased to 13.70 lakh tons from 11.91 lakh tons in the corresponding period of 2008-09 and despatches stood at 13.56 lakh tons compared with 12.02 lakh tons last year.

Commenting on the production target for 2009-10, he said, "Depending on the demand, we will ramp up capacity. Most likely it will be in the range of 80 percent of the capacity this year," he said.

He, however, did not elaborate on what will be the production capacity by the end of the current financial year as it plans to bring Ariyalur plant to full capacity in phases.

Market share

The leading multi-spectrum cement player and a pioneer in super specialty cements like oil well, railway sleeper and air strip, with a market share of around 15 percent is confident that it will retain the share at any cost, if not raise it, in the coming years.

"Our efforts will be to place all production in the market and increase our market share. However, we will continue to retain our market share irrespective of the demand supply situation," Dalmia said.

He said what makes the company unique is its constant ability to innovate, which has fuelled the development of specialty cements for special needs.

"On the key efficiency parameters, we rank right up there with the best in the industry. We have set up over 53 windmills in Muppandal (Tamil Nadu) to generate inexpensive and eco-friendly captive power for our plant. This power is wheeled through the state utility transporter for consumption at the plant," Dalmia said.

Cost advantage

Dalmia said with the company's plants located close to its source of raw materials, it is in a position to keep freight and transport costs low, giving it an edge over competition.

Over 65 percent of the cement consumption in India is catered to by the retail segment where branding and distribution are the critical drivers for leadership. And it is in this that the company enjoys an edge over its competitors.

"We were the only cement manufacturer to successfully market our brands in core markets at prices on par with those of large consolidated national players," he said.

Source: Coal Insights