Ramco Cements’ capacity expansion programme at its two Andhra Pradesh units will position it favourably to capitalise on the upcoming demand, anticipated on the back of positive industry outlook, the company has said.
Expansion is under way at the company’s Jayanthipuram unit and its integrated unit at Kolimgundla. The Jayanthipuram unit has commissioned an 18-MW waste heat recovery system (WHRS) and the rest of the projects, involving 1.5 MTPA (million tonnes per annum) clinkerisation capacity and 9 MW WHRS, are expected to commence soon.
AV Dharmakrishnan, CEO, Ramco Cements, told shareholders in the company’s annual report that after the completion of these projects, the company will be able to grow in the southern and eastern markets and explore opportunities in other markets from FY 2021-22.
“A total of Rs 1,766 crore of capex was spent during the year. However, our debt has only increased by Rs 75 crore, as a substantial part of the requirements was met through internal accruals and we also continued to pay off debts. Over the next three years, our intent is to de-leverage the balance sheet alongside balancing growth opportunities by judiciously using our strong cash flows,” he said.
He said a focus on reducing overheads costs, cutting brand promotion expenses and working capital management also helped improve liquidity, which was essential during the pandemic. Its cash and bank balances increased to Rs 141.86 crore as on March 31, 2021, as against Rs 91.42 crore in the previous year.
“Despite lower production and revenue, we registered a strong growth in profitability due to decline in coal and pet coke prices and multiple cost optimisation initiatives undertaken. FY 2020-21 saw us posting highest ever Ebidta at Rs 1,583 crore as against Rs 1,174 crore in FY 2019-20, registering an increase of 35%,” he said.
PR Venketrama Raja, chairman and MD, Ramco Cements, said its new capacities, coupled with a strong and growing distribution network, will help the company foray into new markets, and penetrate the existing markets better. “Our new plants being strategically located in proximity to core markets will facilitate this. They are well connected with national and state highways and are also equipped with railway siding,” he said.
He said the company has shown determination to complete the capex projects despite migrant labour unavailability. During FY 2020-21, the company commissioned the greenfield grinding unit at Haridaspur in Odisha.