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Penna Cement on Rs 110-crore output, product base expansion

Our Bureau

CHENNAI, May 20

THE Andhra Pradesh-based Penna Cement Industries Ltd (PCIL) is expanding its production capacity and product base at a cost of Rs 110 crore.

Addressing a press conference here on Sunday, Mr P. Venugopal Reddy, Director, said that the expansion will help PCIL access new markets in the South. The cement production will double to two million tonnes by March 2002, he said.

The funding for the project is through a Rs 60-crore term loan from IDBI and the balance from internal accruals. As a part of funding, PCIL plans to dilute its stake in Andhra Pradesh Power Generation Corporation, in which it has a eight MW `saleable sha re', Mr Reddy said.

PCIL's power requirements, Mr Reddy said, will be met through the power generated from its sister concern, Sriba Power Systems which has an 18-MW facility.

As a part of the expansion, the company is setting up a nine lakh tonne per year capacity cement production facility in Nalgonda District, Andhra Pradesh. Production is expected to commence in March 2002.

In addition, it is increasing the capacity at its existing facility in Anantapur District by two lakh tonnes per year to produce 12 lakh tonnes cement annually. The expansion will be completed by end-June. In 1999-2000, PCIL had doubled this facility's p roduction capacity from five lakh tonnes to 10 lakh tonnes, he said.

The expansion will put the company on par with any other leading cement producer in south India, he said. The company will commence manufacturing of blended cements like P.P.C and slag. Currently, it manufactures P.P.C. 43 and 53 grade cements, he said.

According to Mr Ravinder Reddy, Chief of Marketing, PCIL sells its products in Rayalaseema in Andhra Pradesh, and parts of Tamil Nadu, Karnataka and Kerala. Once the expansion is completed, its market will expand to Telangana region, coastal districts an d twin cities in Andhra Pradesh and the whole of the South.

PCIL's cost-competitiveness lay in its captive power source and transportation infrastructure, he said. Compared to an industry average of 60 per cent dependence on rail transport and 40 per cent on road, the company transports 96 per cent of its product s by road using a captive fleet of trucks. The location of its production facilities makes this advantageous, and it uses rail transportation to access just the Chennai markets, he said.