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Joint venture partner to set up a 3 million tpa cement plant is sought in India

World Cement,

German cement major, HeidelbergCement and domestic giants including Ultratech and Reliance Cements have reportedly displayed interest in becoming a joint venture partner in state-run Rashtriya Ispat Nigam's proposed Rs.1000 crore, 3 million tpa cement plant at Vizag.

"We are looking for a partner to set up a 3 million tpa plant at Visakhapattanam. HeidelbergCement, Ultratech and Reliance Cements have shown interests to be our JV partner," RINL Chairman and Managing Director A.P. Choudhary said.

According to reports, Zuari Cements, Bhavya Cements, JP Cements and Binani Cements have also responded to the Expression of Interest issued by RINL earlier this year.

"The finalisation of the partner would not take more than 2 – 3 months from now. We will be able to establish the joint venture before the end of the current fiscal," Choudhary said.

The steel maker has not yet made a decision on how large a stake it would offer to its partner, but RINL is willing to give up to 74% since cement making is not its core business.

The proposed venture would use flyash and slag, generated from RINL's Vizag plant, which is undertaking a capacity upgrade from 3 million tpa to 6.4 million tpa.

An investment of around Rs.1000 crore would be required to set up the cement plant, Choudhary said, adding that the cost would be borne by the two companies according to the shareholding pattern. Production is likely to commence two years from the start date of construction, he added.

The Indian cement market is currently facing over-supply and the situation is unlikely to improve in the coming years.

"Over the next two years, while cement capacities rise by 60 million tpa, demand will increase by a mere 30 million tpa. Operating rates of the companies will, therefore, plunge to around 72% in 2012-13 from an already subdued 78% in 2010-11," Crisil Research had said in a recent report.

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