Cement major Gujarat Ambuja is setting up two captive power plants, which will reduce the cost of production. The company is expected to save Rs600 crore annually on account of thermal power plants.

It is setting up the 2x12MW and 2x30MW captive power plants at Ropar, Punjab and Gujarat units. The captive thermal units would also reduce GACL''s dependence on furnace oil and the ensuing volatility in global oil prices.

The cost pressures arising from higher coal prices will be offset by firm prices, cost-efficient captive thermal power plants and freight economics from coastal location of some plants, say analysts with SSKI, a leading broking firm.

The analysts expect GACL''s consolidated earnings to grow by 36 per cent in FY05 and 30 per cent in FY06. GACL''s key markets are witnessing the highest prices while export prices too are firm.