A little over 17Mt of new capacity will be added during 2010-11 in India’s Andhra Pradesh alone, the largest cement market in the southern region, and also the State with the highest installed capacity. This comes at a time when the State is going through a prolonged period of slump in cement demand. Of this, the Nalgonda cluster will account for close to nine million tonnes of fresh capacity, followed by the Yerraguntla (3.20 million tonnes) and the Kurnool with (3 million tonnes) clusters.

The companies that will be adding capacity during this financial year include Jaypee Cements (2.50 million tonnes), Zuari Cements (2 million tonnes), Penna Cements (1.50 million tonnes), NCL (1.40 million tonnes), and Andhra Cements and KCP Cements (1 million tonnes each).

At the end of this financial year, the installed capacity in the southern region is expected to be 127 million tonnes: Andhra Pradesh, 71 million tonnes; Tamil Nadu, 34 million tonnes; and Karnataka, 22 million tonnes. Madras Cements and Chettinad Cement will be adding two million tonnes each of fresh capacity in Tamil Nadu early next financial year, putting more pressure on the already depressed prices. Work on these two plants is underway and they will go on stream at a time when no dramatic increase in demand is in sight, according to industry sources.

According to sources, cement is being sold at Rs 210-235 a bag in Andhra Pradesh, Rs 250-255 in Tamil Nadu, Rs 250-270 in Karnataka and Rs 300 in Kerala. However, industry experts say that most of the cement companies in the South, especially those with large operations in Andhra Pradesh, are operating at 50-60 per cent of their installed capacity.
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