Key takeaways of the meet

The 1.52 mtpa greenfield cement plant at Muktyala, Krishan District, which has been partly commissioned in May 2011 has been fully commissioned as of now. The total cost is Rs 400 crore. With this expansion the total capacity of the company increased to 21 lakh tons annually.

The present scenario of seemingly excessive production of cement is bound to be corrected in the months to come with clearing away of certain political tangles and uncertainties. Already the realisation in AP market is improving.

Following the economic crisis in 2008 which was a volatile year for the Indian engineering and capital goods industry, there has been a positive pickup in industrial activity in the last year. However many companies still remain wary and cautious in terms of expansion plans and are revisiting their commitments. While growth cannot be permanently postponed, rephrasing of such plans is unavoidable as companies need time to overcome the effects of the liquidity crunch and its after effects to be able to invest further with the confidence of positive results. The company's engineering division though not lagging behind in its order book, did experience a fall out of the slow pick up in industrial demand. This has resulted in lower volume of despatches and turnover.

The engineering business which has for long focused on catering to Sugar and Cement sector is now more diversified to include sectors such as Power and Chemical capital goods as clients. The company has also been fairly successful with good order book from this new focus areas for quite some years. The company currently executes orders of large EPC players such as Larsen & Toubro, BHEL, Reliance Infra etc. The orders range from specialised castings, gears to large coal pulveriser components etc.

While the cement sector is going through tough time, the power sector too has also caught into project delays on account of environmental issues or coal linkage etc. The company is facing some delivery delays or client asking to go slow with projects getting delayed at his end.

Current order book of Engg division is to support the division's one year revenue.

The Engg division of the company being one of the most versatile in terms of engineering design capabilities has been in demand from many foreign firms for execution of part of the orders from their own customers. Besides the company's own customer base is returning to the execution of their plans for augmentation of production levels, expanding capacities etc.

Based on these inputs and to cater to the demand of a market which is getting into consolidation of activities, the Engineering unit has already completed its debottlenecking programme at a cost of Rs 16 crore and is well poised to take on the demand arising out of the present scenario when the economy is on the road to recovery.

Though the current foundry is not fully utilsed the process for capacity addition on foundry capacity is underway and will be taken up after certain statutory approvals are received. The expansion of foundry capacity is expected to cost Rs 60 crore. This will give the unit the capability to go in for larger castings to meet demands of customers.

The company proposes to set up a 2X18 MW power plant at the site of new cement plant at Muktyala for captive use. The project estimated to cost Rs 164 crore will be funded partly by term loan of Rs 115 crore. The company is not anticipating any problem in getting coal linkage for the CPP.

Both the foundry expansion and captive power plant will require a debt of Rs 160 crore. Part of it will be drawn this fiscal.

The Engg division of the company expect to capture about Rs 15-30 crore worth of order out the CPP put up by the cement division.

With the sugar industry doing well internationally, the company's Vietnam subsidiary is expected to post good results in the current year as well. The Vietnam subsidiary has declared its maiden dividend of Rs 4.97 crore last year.