Faced with challenging circumstances amid the Covid-19 outbreak, Cement maker Birla Corporation on Tuesday said it will have to prioritise some of its planned expansion projects but will pursue most of them full steam, subject to availability of workers.
The firm further said it had started witnessing some green shoots of recovery from the second half of May, but it was too early to predict how the rest of the year will pan out.
Speaking at the company’s 100th annual general meeting here, Birla Corporation chairman Harsh V Lodha said the 3.9-million-tonne cement plant under construction at Mukutban in Maharashtra is facing delays due to worker shortage and stoppage of construction due to the lockdown. While construction is being stepped up progressively as workers return to the site, total remobilisation would take some time.
“Based on the current projections, we are still endeavouring to complete the project by August 2021,” Lodha told shareholders.
Till the end of the last fiscal, the company spent Rs 1,085 crore on the Mukutban project, which had initially been envisaged for completion by June 2021.
He further said the company will complete the 400,000-tonne kiln capacity expansion at Chanderia in Rajasthan in the current year, but it has decided to temporarily put on hold the plan to increase the capacity of its Kundanganj unit in Uttar Pradesh by investing Rs 250 crore. Out of the total outlay for the Chanderia project of Rs 150 crore, the company spent Rs 70 crore till the end of March.
Earlier, the Kolkata-based company was planning to expand its cement manufacturing capacity to 25 million tonne per annum (mtpa) by 2025.
“Considering the widespread disruption, June was a good month and we hope to build upon that, but it is still too early to predict how the rest of the year will pan out. Much depends on how soon restrictions are lifted and workers return to construction sites, apart from how much the government spends on infrastructure creation. People in the construction sector are of the view that workers will return only after Diwali,” he said.
The company said, in the three months till June, it had managed to tighten the credit cycle and optimise its freight and borrowing costs. For the June quarter this fiscal, its borrowing cost was 8.08% compared with 8.6% a year earlier. “We are looking to refinance and prepay our debts with the aim of further reducing our borrowing costs,” Lodha said.
“The company should be in a very comfortable position in terms of its gross and net debt in the next couple of years once the Mukutban unit achieves one full year of operations,” he added.
Responding to a shareholder’s query on the extent of the impact of Covid-19 on business, Lodha said the company is “much more Covid-ready today” than it was in March. “It is difficult to ascertain the future impact of Covid. But we expect things to normalise soon barring any unforeseen circumstances moving forward,” he said.
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