The Indian cement industry is likely to add around 15Mt of fresh capacity in 2007-08 – a little over half of the 27Mt it had talked about at the beginning of the financial year.
As a result, the cement capacity in the country will be 182Mt by March 2008, 8.5 per cent short of the target set by the working group on cement industry for the Eleventh Five Year Plan (2007-12). Analysts felt this could keep cement prices buoyant in the months to come.
The industry and the government have been locked in a confrontation for several months now over high cement prices, prompting the Centre to allow duty-free imports. Some quantities of imported cement have already reached the Indian markets from Pakistan.
To help ease the shortages, ement companies have added 11.50Mt in this current year. While the Cement Manufacturers’ Association says the industry has so far added 6.35Mt, the figure does not include the capacity expansion of two companies – ACC and Binani Cement. ACC added 1.4Mt at its two plants and Binani added 4.1Mt recently.
Market players said that the delay in projects was mainly on account of supply constraints on the plant and machinery front and environment clearances from the government. H M Bangur, president, CMA, and the managing director of Shree Cement, said, "We will not be able to meet the target as project delays are taking place. There will be at least one quarter’s delay."
"As most of the projects are greenfield ventures, unlike the earlier expansions which were through modernisations, debottlenecking and brownfield projects, the time being taken for operationalisation is more,” said A K Saraogi, chief financial officer, JK Cement, adding: “Additional land requirement and delay in delivery of equipment are adding to the problems."