Star Cement looks east for expansion

Star Cement, which has a strong presence in northeastern India, is looking to the east of the country to expand its business. The company is currently expanding its capacity at Siliguri, West Bengal.

The company is present in the east with 0.6Mta leased grinding capacity and the new grinding unit at Siliguri is expected to replace this supply, accelerating volume growth. Analysts forecast a utilisation rate of 60-65 per cent of the expanded capacities in FY22.

Even if the new unit generates EBITDA/t of INR500 (US$6.85), the return on capital employed (ROCE) will be at 12.5-13 per cent, according to analysts at Nirmal Bang Institutional Equities. The management expects profitability from the eastern unit at INR800-1000/t, although analysts believe this is some time away, reports Mint.

Eastern India has been a key area for most cement producers as demand is expected to surge. Moreover, the availability of limestone in the region makes it a good location for cement plants.