Kesoram Industries plans to increase its annual capacity by 1.6Mt, which will take its total capacity to about 4.5Mt. The company has cement units in the southern states of Karnataka and Andhra Pradesh. "We are also planning to set up a captive power plant near the unit to reduce costs," said Parik, adding that the capacity of the power plant would be 7.5mW.
The entire expansion is estimated to cost 4.25 billion rupees ($97m), which Parik said will be funded through a mixture of internal resources and debt. The power plant will cost INR750 million, while the remainder will go into expanding the cement capacity. Kesoram Industries has interests in textiles, paper and chemicals as well as cement. Although the cement units are located in southern India where consumption is considered the lowest in the country, Parik said the situation is improving. "Besides, our cement is also sold in the western states of states of Maharashtra and Goa," he added.
Analysts say demand for cement in south India is about 20 per cent of the country’s total demand of 122Mt. Although the southern region has been considered to be an underperformer due to slow infrastructure projects, consumption is expected to pick up once the post-tsunami reconstruction work starts. Properties in the states of Tamil Nadu, Andhra Pradesh and Kerala were badly damaged in the tsunami that lashed southern India December 26.