Ramco Cements Limited told media that the company has plans for total capital expenditure (capex) of Rs 1,200-1,300 crore over the next two years to expand capacity.
Net debt was Rs 3,800 crore as of FY22, and it plans to repay Rs 500 crore debt in FY23. The company aims to be net debt free by FY26 if no other major investments are planned.
The company told the media that pilot production of clinker is underway at its plant in Kurnool and that clinker capacity has increased to 13.65 million tons per year (mtpa). The cement mill, including 6 MW waste heat recovery system (WHRS) and 18 MW thermal power plant (TPP), will be commissioned in the second quarter (Q2) of FY23. Another milling capacity of 1-1.5 million tons per year is coming in Karnataka with an investment amount of Rs 300-305 crore, with ongoing land acquisition process.
The company won the limestone mine in Karnataka at a premium of 25% to the base price, lower than recent bids. These mines can be used for the integrated factory to be built in the state. The mine can be used to feed the grinding unit in Maharashtra.
The company said the near-term scenario could sharply increase inflation costs and lag behind cement price increases. Average earnings before interest, taxes, depreciation and amortization (EBITDA) per tonne over the past 10-12 years can be sustainable profitability.
It said the price increase in the east continues, while in the south prices have fallen from peak levels. The company is proposing to take Rs 20-25 per bag with the price increase in the south in June due to the rise in fuel prices.
In April and May, the company faced strong demand on a low base as a result of the second wave of the Covid-19 pandemic. However, demand started to improve as infrastructure projects gained momentum in recent months. The industry could grow 10%, while it is likely to reach 15% volume growth in FY23.