The growth in cement dispatches in the northern region has been broadly stronger than the all-India growth on YoY basis, both during FY11 and the June 2011 quarter. This comes at a time when the cement industry has been grappling with a rising cost structure. Also, rising interest rates could hurt demand from housing, in the short term. But the BK Birla controlled-Mangalam Cement appears well-positioned to take advantage of long-term opportunities in the North.
The company is adding capacity, which was 2Mta at end of FY11. Its larger rivals in the North include Shree Cement. Mangalam Cement is expected to shortly complete regulatory formalities related to the merger of BK Birla group company Mangalam Timber Products with itself. Mangalam Timber is engaged in the production of medium density fibre board.
The company will set up a 1.25Mta plant in Aligarh, UP. Mangalam is also taking steps to upgrade existing plants to increase clinker production by 0.5Mt. This expansion would be completed over the next 15-18 months, and cement capacity would rise to nearly 3.2Mt.