French cement firm Vicat to invest over Rs 1,700 crore

French cement giant Vicat SA, the euro 2.6 billion Paris stock exchange listed firm, which entered India a decade ago, is planning to raise its annual cement production capacity to 11 million tonnes (MT) over the next three years in the world’s second-biggest cement market.

“The parent company is investing €223 million or about Rs 1,735 crore over the next four years between 2018 to 2021 to expand production capacities to 11 MT per annum and strengthen the brand’s presence in the south and west,” Anoop Kumar Saxena, CEO at Vicat India told Financial Chronicle.

He said at present its Kalburgi cement plant at Gulbarga district of Karnataka and Bharathi Cement in Hyderabad together have an installed capacity to produce 7.75 MT of cement per annum.

The Kalburgi facility was acquired in 2014 after Vicat ran it as a joint venture with Sagar Cements for six years, while in April 2010, Vicat Group acquired 51 per cent stake in Bharathi Cement.

Saxena said the company would spend about Rs 1,225 crore (€153 million) in expanding its Kalaburagi factory from 2.75 MT per annum to over 5 MT.

It would also set up a greenfield factory at Vizianagaram in Andra Pradesh with an investment of over Rs 400 crore to take Vicat’s total capacity in India to 11 MT by 2021.

He said the company has already acquired 200 acres in Vizag for a grinding plant. It is being set up as part of its strategy to tap new markets like Odisha and West Bengal along with the existing market in Andhra Pradesh.

Vicat competes with French giant Lafarge, Indian cement brands such as UltraTech, ACC and Ambuja, among others. It has no plans of decreasing prices to sell more at the cost of profitability. The company recorded sales of 2.4 MT out of a capacity of 2.75 MT from Kalburgi last year prompting it to add another line.

Indian cement industry has a total installed capacity to produce a total of over 450 MT per annum, out of which about 270 MT were sold last year. “The pricing of the cement in the market is not good. But we are under no pressure to sell at a cheap price,” Saxena pointed out.

He said the company has already invested Rs 300 crore this year to expand its business in the country. “We have set up 1.2 MT of bulk cement terminal at Kalamboli in Mumbai with an investment of Rs 70 crore and our plans are on track to set up the second line of 2.75 MT per annum capacity at the existing Kalburgi cement plant,” Saxena said.

With expansion, the brand at present has a market share of 10 per cent in Mumbai, 18 per cent in Andhra Pradesh and Telangana, 5 per cent in Tamil Nadu, 14 per cent in Karnataka and 3 per cent in Kerala regions.

In the last 10 years, the company operates in 8 states namely Andhra Pradesh, Telangana, Goa, Karnataka, Kerala, Maharashtra, Puducherry and Tamil Nadu through a network of 3,300 dealers.

Michael Gonsalves