Press Releases

  1. The Telegraph (August 20, 2009)
    Anuradha Laskar

    Barak Valley to tap market ANIRUDH LASKAR Mumbai, Aug. 20: Barak Valley Cements Ltd, based in the Northeast, will be the first company from the region to enter the capital market. It will float its initial public offering (IPO) next month to raise about Rs 40 crore. The proceeds will be used to fund the company's expansion.

    "We expect to raise Rs 35-40 crore through the IPO. We are happy to become the first company from the Northeast to be listed on the bourses," Bijay Garodia, chairman of Barak Valley Cements, told The Telegraph.

    The company, which started commercial production in April 2001, makes cement of different grades and markets its products under the Valley Strong Cement brand.

    The Assam-based company's operations are concentrated in the northeastern region. The manufacturing unit at Badarpurghat in Assam produces both ordinary portland cement and portland pozzolana cement.

    The company has three wholly owned subsidiaries - Badarpur Energy Private Ltd, Cement International Ltd, and Meghalaya Minerals & Mines Ltd.

    The company is setting up a 6mw captive power plant for Badarpur Energy, which will be commissioned within the next three months. The company said it would invest about Rs 24 crore in the plant. "We will use a part of the IPO proceeds to fund the construction of this plant. We also plan to increase our cement production capacity to 2 lakh tonnes from 1.5 lakh tonnes. This will also be funded through the IPO," Kamakhya Chamaria, managing director of Barak Valley Cements, said.

    The company will dilute about 25 per cent of its equity through the IPO. This comprises 5,660,000 shares. The company is yet to decide the face value and the premium on the shares. It has filed the draft red herring prospectus and is awaiting the Securities and Exchange Board of India's approval.

    Barak Valley Cements had posted a turnover of Rs 75 crore in 2006-07, with an operating margin of 20 per cent. "We expect a turnover of Rs 100 crore next year, with an estimated profit of about Rs 25 crore. We enjoy a margin of Rs 1,000 per tonne, which is higher than almost every other cement company in India," company officials said.

  2. Business India (June 28, 2009)
    Insecurity breeds a new business model in the Northeast

    Right from the 1960s, the North-east has been in ferment, especially in the hills surrounding the fertile Brahmaputra Valley - Nagaland, Manipur, Cachar, Mizoram. However, the plains were largely peaceful and the centre of trade and commerce, anchored in tea and timber, stayed in the valley. In the early 1980's the Assam agitation against foreigners shattered this idyll. Non-Assamese traders, tea company owners and other businessmen stopped visiting their set-ups and most of the business moved to Kolkata. A brisk hundi industry and complicated bills of exchange developed, as it became dangerous to keep cash in the disturbed areas.

    Bijay Kumar Garodia set up a barbed-wire manufacturing unit and later took over veneer and timber units in Assam and Arunachal Pradesh under the flag of Trimurti Industries, partnered by R.K. Saraogi and S.L. Ajitsaria - his two chartered accountant friends - in 1987. They later renamed it the Prithvi group.

    Garodia steered this group of close-knit investors into infrastructure: roads, bridges, culverts and the like, and this helped tide over the first crisis.

    Working with government agencies in development works helped build contacts; and Prithvi today has a diverse portfolio of interests in infrastructure, cement, dairy and tea. Through group company Arunachal Iron & Steel, it has built more than 60 steel bridges and 80 suspension bridges. Currently, its sales in the infrastructure businesses is Rs.85 crore.

    A major portion of Prithvi's turnover of Rs.560 crore comes from Barak Valley Cement Ltd. (BVCL) and Meghalaya Cement Ltd. (MCL), together they have a turnover of Rs.412 crore. The group's holding in these two companies is about 25 per cent and 35 per cent of these capital-intensive ventures worth Rs.320 crore.

    The rest of the promoter stake is distributed among other groups of investors. Garodia is chairman of BVCL and Vice-chairman of MCL, which have an almost 28 per cent market share with their production of 0.8 million tones.

    BVCL, located in Karimganj district of Assam, produces 0.3 million tones of cement. When it went public in 2007, its shares were oversubscribed 24 times. Its current share price is Rs.29. Uniquely, it is powered by a 6 MW power plant that runs on rice husk and waste vegetation and produces electricity at Rs.2 less than the grid. Rs.55 crore was invested in expansion; now, the turnover has almost doubled from Rs.73 crore in 2007-08 to Rs.132 crore on the back of its "valley's" strong cement's brand.

    Similarly, MCL was set up in 2006 with 0.3 million tones capacity at an investment of Rs.120 crore, funded by investors and banks. Located at Lumsung in Meghalaya, at the centre of the Northeast, it later increased its capacity to 0.5 million tones. The Jaintia hills, where the plant is situated, is a trouble-free area, with plenty of limestone and coal.

    The captive limestone mines are only half a km away and have 50 years worth of supply.

    MCL, which sells cement worth Rs.280 crore under the brand of Topcem, is the second - largest player in the region after Cement Manufacturing Company Ltd. (CMCL), promoted by centuryply and three local partners.

    Both the plants are located in the Jaintia hills vicinity. "A top of the line production facility, with controlled costs, makes MCL a significant player in the region," says, Sajjan Bhajanka, Chairman, CMCL.

    MCL is now doubling its production capacity. "We are increasing 0.5 million tones of cement capacity and adding a 10 MW thermal power plant with an investment of Rs.300 crore," says Mahendra Agarwal, director and partner in the group's cement business. Work is already in progress and the plant is expected to open in a year. The power plant is expected to bring down power costs by Rs.2 a unit.

    In 2008, Prithvi has also invested in two tea gardens, Hattichera and Subong, producing 1.5 million kg, and has a 2.5 million kg garden in the Cacher area on lease from the Kolkata based Doloo Tea Company. It had also set up a two-million-kg-per-annum CTC factory in Tinsukia in Assam in 2002. The group's tea, sold through auction, fetched Rs.65 crore last year.

    The company is investing Rs.40 crore in the tea business. "We believe that if costs can be kept under control, garden prices are very attractive now," says Saraogi, who oversees the group?s tea business. He hopes to double the business to 10 million kg over the next few years. Garodia says many tea producers in the country did not invest enough in plantation, when they made profits from the business. The price gap between good tea and bad tea is widening. Producers making good tea are always rewarded. The company is also experimenting in medicinal plants and bamboo shoot cultivation besides developing tea nurseries.

    Prithvi Dairy produces 5,000 litres per day of packaged, pasteurized and homogenized toned and double-toned milk at its plant in Guwahati. It is one of the first packaged milk suppliers in the area.

    As more Prithvi companies go public and turnovers increase, the group is expected to hive off some units in future to form new groups and alliances. Till then, Prithvi will dominate the land of the Northeast.

  3. Business Standard (January 10, 2008)
    Ranju Sarkar / Mumbai

    It pays to go green, as the country's small cement manufacturers are discovering. Badarpurghat (Assam)-based cement maker Barak Valley Cements is generating power from a biomass-based thermal power plant that uses rice husk as fuel.

    Barak Valley's subsidiary Badarpur Energy has set up a 6 mw biomass-based power plant to meet the power requirements. The plant will produce 1050 tonnes daily, post expansion, from February 2008.

    Barak Valley will save Rs 10 crore, or roughly 50 per cent, on its power bills, said chairman Bijay Garodia. It will be able to generate power from rice husk at Rs 2.20 as against its average cost of Rs 5.50-6.00 a unit.

    The power utility, Asssam State Electricity Board, supplies power at Rs 3.90 a unit, while it costs Rs 10 a unit to produce captive power using DG sets. This pushes its average cost of power to Rs 5.50-6.00 a unit.

    Cement is a power-intensive industry, with power accounting for 20-25 per cent of the input costs. With the small cement plants consuming 100 units of power to make a tonne of cement, the costs come to Rs 550-600.

    Garodia has invested Rs 30 crore to set up the 6 mw power plant and hopes to recover the investment in 3-4 years. What's more, Garodia will earn nearly Rs 1 crore in the next ten years by trading carbon credits for reducing emissions.

    The biomass-based thermal plant will use rice husk and bamboo, which is available in plenty. "The local economy will get a boost as money will be made on agri waste," said Garodia, who's based in Kolkata.

    Many small cement makers across the Chittoor region in Andhra Pradesh are using biomass-based thermal power plants (10-12 mw), with rice husk as a feedstock. Other power-intensive industries could draw a leaf from them.