India: Rajasthan update – cement firms cut output by 50 per cent

India: Rajasthan update – cement firms cut output by 50 per cent
Published: 06 June 2008

Cement production units in Rajasthan have been forced to cut their capacity utilisation by as high as 50 per cent, following the 12 day violent Gujjar agitation. The Gujjars are demanding inclusion in the Scheduled Tribes list.

Companies have cut down production since they are unable to supply regular quantities to consumption centres within and outside the state owing to the non-availability of railway wagons and shortage of trucks.

JK Lakshmi Cement director Shailendra Chouksey says, “We are able to dispatch only 50 per cent of the 11,000t cement produced daily by our plant at Sirohi. This has been the case for the last 3-4 days and consequently, the plant’s storage capacity has been exhausted. As a result, the capacity utilisation had to be brought down to 50 per cent. Utilisation would come down further if the situation remains unchanged for the next 3-4 days.”

The unrest has affected the availability of trucks and rail wagons and the the intra- and inter-state road and rail traffic. This has impacted cement dispatches to markets such as Alwar, Bharatpur, Dausa, Sikar and Jaipur (within Rajasthan) and to northern markets in Delhi, Haryana, Punjab and Uttar Pradesh. With a capacity of 32Mt, Rajasthan is the largest cement producing state in the country. Leading companies like Ambuja and Grasim have their plants in the state.

“Demand is there but we are unable to dispatch cement due to transportation problems. We have cut down our capacity utilisation by a marginal five per cent,” said H M Bangur, managing director, Shree Cements. Another leading cement company in the state said its plant has cut down cement production by 15-20 per cent.

Chouksey said the diesel price hike of INR2/litre is expected to have a bearing of INR3-4 on each cement bag of 50kg. “The increase in diesel prices would add to the cost of inputs such as coal, fly ash and gypsum, which we transport through trucks. However, we would maintain the ex-factory prices as assured to the government. But the delivered cost to dealers and retailers is bound to increase,” he said.