Nuvoco Vistas Corporation, the cement arm of Gujarat-based Nirma, is planning to establish a new grinding unit with a capacity of two million tonnes per annum (MTPA) in Kutch as part of its efforts to refurbish and operationalize the assets of the recently acquired Vadraj Cements. This development is expected to add approximately Rs 3 billion to the company’s original plan of investing Rs 12 billion in restarting the Vadraj cement assets in Kutch and Surat districts of Gujarat.

Jayakumar Krishnaswamy, the managing director of Nuvoco, mentioned during an earnings call for the fourth-quarter results that the company had identified fiscal opportunities in Gujarat, specifically in Kutch, leading them to decide to set up a grinding unit in the region. As a result, the overall capital expenditure (capex) for rebuilding the Kutch and Surat facilities and installing the grinding unit in Kutch will now increase from Rs 12 to Rs 15 billion.

The company aims to commission the new grinding unit along with the existing Vadraj cement assets in Kutch and Surat by December 2027.

Krishnaswamy further explained that Nuvoco would invest Rs 15 billion in three phases, with Rs 6 billion planned for both 2025 and 2026, and Rs 3 billion allocated for 2027. To finance this capex from internal accruals, the company intends to limit its capital expenditure for ongoing operations to a maximum of Rs 1-1.5 billion, ensuring sufficient cash flow to support the Vadraj capex.

The assets acquired from Vadraj include a 3.5 MTPA clinker unit in Kutch, a 6 MTPA grinding unit in Surat, high-quality limestone reserves, and a captive jetty in Kutch. With this acquisition, Nuvoco’s total cement production capacity is expected to reach around 31 MTPA. In addition to the Rs 15 billion planned for operationalizing Vadraj’s assets, the company will also need to make an additional Rs 18 billion upfront payment for the acquisition.

News source: The Hindu Businessline