Cement groups line up expansion plans

Cement groups line up expansion plans
Published: 02 May 2006

The Indian cement industry could witness an investment of around Rs 20,000 crore over the next one and a half years, as cement companies are adding capacities to meet huge demand in the world’s second largest cement market.  During the past one month alone, leading cement majors like Grasim Industries, the Holcim-controlled Gujarat Ambuja and Sanghi Cement, have announced plans to invest around Rs 9000 crore to add capacities in their manufacturing units (reports the Economic Times)
 
Nagpur-based Murli Agro also said that it plans to foray into the cement business with an investment of Rs 500 crore to set up a 2mt cement capacity. Ambuja Cement Eastern, a Holcim group company, has said that the company board has approved in principle, a capital outlay estimated at Rs 800 crore for expansion in clinkerisation capacity at its unit at Bhatapara, Chhattisgarh. 
 
Grasim Industries, along with its subsidiary UltraTech Cement, is planning to invest Rs 6,000 crore to increase the total cement capacity to 40mt by ’08. Currently, both have a cement capacity of 31mt. Sanghi Industries is mobilising Rs 1,500 crore for expansion activities. 
 
During the past one and a half years, about 55 companies have announced greenfield or brownfield expansion plans. If all projects materialise, India’s cement capacity will touch a high of 200Mt by March ’08. 
 
Data available with ET shows that companies like Zuari Cement, Dalmia Cement, OCL, Binani Cement, Birla, India Cements, Saurashtra Cement, NCL Industries and JK Cement have proposed or are implementing capacity expansion projects in India. "So far, we have grown by acquiring assets. Now we are creating assets. The additional investments will enhance total capacity to 40mt by the end of ’08," DD Rathi, whole-time director and CFO, Grasim Industries said. 
 
Cement demand in India grew by 15per cent in the March quarter, and companies raised prices by nearly a quarter in response. Analysts said that up to ’08, about 21.5mt of the capacity is expected to be added through expansion in the domestic cement industry. 
 
The current fiscal’s domestic demand will be 140Mt. Now that the GDP is expected to grow to eight per cent, growth in cement consumption is also expected to remain above 12 per cent per year.  Analysts said infrastructure spending on roads, ports and airport, a spurt in housing construction and expansion in corporate facilities are likely to spur growth.