Cement sector builds on market demand, India

Cement sector builds on market demand, India
Published: 26 June 2006

The constantly increasing cement prices seem to prove that the demand for construction material shows no sign of flagging, reports the Times of India. And its not just big-ticket cement companies which are expanding to meet this demand, but smaller and regional players like Shree Cements, India Cements, Kesoram Industries, Century Textiles, Madras Cements, Jayprakash Associates and Lafarge are also working on adding to their existing capacities. Between them, these companies are looking at adding around 15-20Mt per annum in the next two years.

Shree Cement recently announced a Rs 700-crore expansion plan which will take the company’s total cement capacity to 9.1Mta by ’07-08. The company is looking at setting up a new cement plant of 1.5Mta capacity at Pali in Rajasthan. This would be the fifth cement unit built by the company. Its fourth unit with a capacity of 1.5Mta is currently being set up at the same place.

India Cement is looking at adding another 2Mtato its existing facilities. The expansion will be undertaken at the company’s facilities in Chilamkur, Sakarinagar and its Rassi Cement facility in AP. With this expansion India Cements’ total capacity will go up to 11m tonnes.

The company has got mining rights for limestone in Himachal Pradesh and Rajasthan. Kesoram Industries, a BK Birla group company, has earmarked an investment of Rs 425 crore for upgrading its cement production and setting up a thermal power plant.

The company is in the process of setting up a 1.7Mta plant in Karnataka and a 17mW power plant. Century Textiles is working on expanding its capacity by 1.5Mta for now, but is sitting on a fairly large land bank which can be sold to fund further expansion.

Jaiprakash Associates has already announced an expansion of 4.5Mta and last month the Jaypee group struck a deal to acquire Gujarat’s Anjan Cement, which is implementing a 1.2Mta cement plant in Kutch, Gujarat.

Jaiprakash Associates’ 3Mta greenfield cement plant in Himachal Pradesh is expected to go on stream in mid ’07 and it is also setting up a 1.5Mta greenfield cement project at Sidhi near Rewa, Madhya Pradesh. The project, expected to be commissioned by ’07-end, is estimated to cost about Rs 400 crore. Lafarge which has kept a low profile for some time is expected to announce plans to add 5-6Mta in the near future.

But this expansion will be insufficient to meet the demand for cement, which is expected to go up to 182Mta by FY09 and 200Mta by FY10. "Large foreign companies like Heidelberg, Italcementi and Cemex will enter and set up their own capacities to fulfil the demand," said a source.