Madras Cements, the part of the Ramco Group, is a major cement manufacturer in south India and fifth largest cement company in india. The company’s unit at Althiyur with a capacity of 15 lakh tonne per annum was commissioned up to clinkerisation stage in January 2001. The cement mill was commissioned in May 2001. The Alathiyur second unit is eligible for sales tax-based incentives. The company took over the assets of Karnataka Minerals & Manufacturing Co Ltd, a mini cement plant situated at Mathod, Hosadurga Taluk, Chitradurga District, Karnataka. The capacity of the unit was increased from 0.66 lakh tonne to 1.5 lakh tonne per annum and the unit was commissioned in September 2000. The second kiln at RR Nagar was upgraded in May 2001 with the installation of fixed inlet segment to the cooler new calciner and modifying preheater cyclones thereby increasing the capacity of the unit from 10 lakh to 11 lakh tonne per annum of blended cement. The company ventured into dry mortar products such as renders skim coat (wall plastering products) and dry concrete in 2002.

Products & services:

The main product of the company is Portland Cement manufactured through the five advanced production facilities spread over South India. The cement capacity is 10 million tons per annum. The company is the fifth largest cement producer in the country. Ramco Supergrade is the most popular cement brand in South India. The company also produces Ready Mix Concrete and Dry Mortar products. In addition, the company also operates one of the largest wind farms in the country.

Company have five cement factories with a total capacity of 10 MTPA in R R Nagar, Tamil Nadu (1.2 MTPA), Jayanthipuram, Andra Pradesh (3.6 MTPA), Alathiyur, Tamil Nadu (3.0 MTPA), Ariyalur, Tamil Nadu (2.0 MTPA), Mathod, Karnataka (0.2 MTPA). The R R Nagar plant commenced operations in 1962 with 200 TPD. It commissioned the first 1200 TPD dry plant in 1976. A second Kiln with a Capacity of 650 TPD was added in the year 1993-94. The Jayanthipuram Plant started the operations in 1988 with 2500 TPD and was upgraded to 3200 TPD in 1992. It is equipped with a modern computer based quality control system.

Madras cement is one of the most effective player in the cement industry. It has an all India market share of around 3.0%. The company’s cement unit at Alathiyur and the ready mix concrete unit at Vengaivasal have ISO 9002 Certification. Company is one of the major player in the blended cement category and is enjoys a good brand value for its Ramco brands of cements  like “Ramco Super Steel Cement” and “Ramco Super Grade Cement”. Madras Cements has 45 MW of captive power capacity, which takes care of over 85 per cent of its power requirements. This has helped the company reduce power costs and maintain a steady supply in a power deficit state like Andhra Pradesh.

Valuation:

At current market price, stock is trading at an attractive valuation of 5.74 P/E multiple of its FY2010 estimated earnings. We recommend investors to buy “Madras cements Limited” with medium to long term investment horizon.