Shiva Cements in marketing alliance with ACC

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Shiva Cements in marketing alliance with ACC

RP Gupta, Managing Director of Shiva Cements has entered a marketing alliance with ACC and at an appropriate time would take their financial assistance to implement their expansion plan.

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RP Gupta, Managing Director of Shiva Cements has entered a marketing alliance with ACC and at an appropriate time would take their financial assistance to implement their expansion plan.

He further add that their plant has a potentiality to expand their capacity to 1 million tonne with a cost of Rs 145 to Rs 175 crores as against the cost of Greenfield plant of Rs 450-500 crore.

Excerpts from CNBC-TV18's exclusive interview with RP Gupta:

Q: Give us a background to this marketing alliance and is there a financial aspect associated with it?

A: This Company is about 22 years old and has got sufficient limestone reserves. Our plant has got a potentiality to expand upto 1 million tonne capacity with a nominal cost of Rs 150-175 crore as against Greenfield plant of Rs 450-500 crore but the company at present doesn't have matching resources to implement its expansion plans and hence as a strategy we have entered into marketing alliance with ACC and at an appropriate time we may seek their financial assistance to implement our expansion plans.

It is difficult for a new cement company to put up its Greenfield plant in eastern zone because eastern zone doesn't have enough limestone deposits and the gestation period and cost of a Greenfield plant is high.

Q: What is the total fund requirement for putting up this plant?

A: For a Greenfield plant it is Rs 450-500 crore but for our plant to expand to the same capacity, it will be Rs 150-175 crore because of the inbuilt capacity in the core equipment, surplus infrastructure etc.

Q: What will be the total cost for expanding your capacity from 1.5 lakh tones to 4 lakh per annum and when will the capacity reach to that level?

A: At present the company doesn't have the resources to put up the expansion plant and so as a strategy it has started a marketing alliance and at an appropriate time we will seek their assistance to expand the plant directly to 1 million tonnes.

Q: What prices are you currently selling cement at and in what regions?

A: The prices in the Eastern zone vary from Rs 190 to Rs 220 but these retail prices are on delivered basis and the freight component, tax component and deluxe margin is inbuilt.