VRL Group plans foray into cement business

VRL Group plans foray into cement business

BUSINESS STANDARD Mahesh Kulkarni|2010-03-29 01:10:00

Hubli-based transport tycoon, Vijay Sankeshwar, who operates India’s largest road transport company, VRL Logistics Ltd, is foraying into cement manufacturing business. He has formed a new company, VRL Cements Ltd, with his son Anand Sankeshwar and other family members to set up the cement unit. The company has proposed to set up a 2 million tonne per annum greenfield cement plant for an investment of Rs 954 crore in north Karnataka.

"We have submitted a proposal to Karnataka government which is developing a cement zone in the Gulbarga and Bagalkot region. We have sought land from the state government. Once the project is approved by the high level clearance committee and the land is allotted, we will prepare a detailed project report for the path ahead," Vijay Sankeshwar, Chairman, VRL Group told Business Standard.

He said, to begin with, he along with his son, will put in the promoters’ equity contribution of Rs 100 crore to start the project. The balance funds will be raised from the market to set up the greenfield cement plant. VRL Cements has sought 300 acres from the state government in Badami taluk of Bagalkot district which has abundant reserves of limestone, a key raw material for the cement industry.

The company’s proposal is presently awaiting the nod from the high-level clearance committee. The cement facility is expected to create 180 jobs. As part of the project, VRL has also proposed to set up a 50 Mw coal-based captive power plant.

Sankeshwar said VRL Cements plans to manufacture cement clinkers, Portland cement, Portland slag cement, white cement among others. Initially, the company plans to market its products in Karnataka, Goa, Maharashtra and Kerala.

"The key requirement to succeed in the cement business is a good logistics network and we already have a vast network across the country. VRL is an extremely well known brand in the whole of south India and we will leverage the strength of our brand name to establish cement business," he said.

As regards sourcing of limestone, VRL Cements plans to form a joint venture with MML, a state-owned mining company, he said.

VRL Logistics is India’s largest road transport company, which operates 1,620 vehicles (232 buses and 1,388 trucks). The company, which reported a turnover of Rs 600 crore in 2008-09, is likely to end the present fiscal with a growth of 15 per cent.

Karnataka is the seventh largest producer of cement in the country. There are 16 cement plants in the state producing around 11 million tonnes per annum, which is about 6.5 per cent of India’s production.

The state has limestone deposits of about 17,253 million tons, about 22.5 per cent of India’s reserves.

The Karnataka government has approved 19 cement projects in the last three years with a total capacity of 44 million tonnes per annum, including those of Lafarge of Switzerland and Heidelberg from Germany. The state government expects to add at least 20 million tonnes of cement by the end of 2011.