The domestic cement industry is all set to increase production capacity by an additional 6.65Mt during the remaining part of the current financial year.
During the April-October 2007 period, the industry had already created 6.35Mt of new capacity through greenfield and brownfield expansions.
Together, the total new capacity likely to be created during the current fiscal will be around 13Mt, highest since 2000-01, when 16.2Mt production capacity were added by the manufacturers, according to the Cement Manufacturers Association (CMA).
The industry association, however, is unable to quantify the exact amount of investment made by the companies during the expansion process because a substantial portion of the new capacity has come up through brownfield expansion utilising the available infrastructure in existing plants.
According to officials in the CMA “the thumb rule is that, 100Mt new capacity needs an investment of about Rs 55,000 crore. By this estimate, an additional 13Mt production capacity will call for an investment of over Rs 7,000 crore.”
“But because most of the companies have utilised the available land and infrastructure in their existing plants for setting up new capacity, the total quantum of investment had been lower,” the official said.
On the other hand, capacity utilisation in domestic cement plants had been increasing steadily since 2000 and has touched an all-time high of around 95 per cent during the current year, the official pointed out.
Cement production during April-November 2006-07 stood at 107.71Mt as against 106.82Mt in the same period last fiscal. Dispatches during the period were 99.99 million tonnes as against 99.29Mt in the corresponding period last fiscal, marking a marginal improvement.