Steel and cement companies along with new players are planning to invest over Rs 38,000 crore in three to five years in new projects to tap the boom in cement demand. Dalmia Cements will be investing Rs 14,000 crore in two greenfield plants in Tamil Nadu, the Anil Dhirubhai Ambani Group and MSP Steel and Power will pump in Rs 11,000 crore for six greenfield plants in Madhya Pradesh.
Asansol-based cement maker Burnpur Cement has drawn plans to invest Rs 10,000 crore to set up plants in Bihar, Uttar Pradesh and Nepal. India Cements will set up two greenfield projects in Rajasthan and Himachal Pradesh with an investment of Rs 1,450 crore.
Binani Cements plans to put up two new projects in Gujarat and the eastern part of the country with an investment of Rs 1,800 crore. Rajasthan-based JK Lakshmi Cement, which has just come out of the red, has planned a new unit at a cost of Rs 700 crore.
Cement majors such as ACC Ltd, Grasim, UltraTech and Ambuja Cements have all announced expansion to meet the growing demand.
The industry is expected to add 111 million tonnes to its annual capacity by the end of 2009-10. Installed capacity is expected to rise from 166 million tonnes per annum (mtpa) in FY07 to 186 mtpa by FY08-end, and 219 mtpa by end of FY09, and up to 241 mtpa by FY10-end, said the recent ICRA Industry Monitor report.
Despite an addition of six million tonnes of capacity between March and July, the utilisation has been as high as 96.9 per during the period. Domestic cement consumption for the first half of the financial year was 53.62 million tonnes, up 10.9 per cent from the same period last year.
The report predicts that considering an expected production and consumption growth of 9 to 10 per cent during this year, the demand-supply position is expected to improve from 2008-09 onwards, which may stabilise price of cement.