Date:15/12/2007 URL: http://www.thehindubusinessline.com/2007/12/15/stories/2007121550450700.htm

Back Cement industry to add 13 mt new capacity in this fiscal

Capacity utilisation reaches all-time high of 95%

Ambarish Mukherjee

New Delhi, Dec. 14 The domestic cement industry is all set to increase production capacity by an additional 6.65 million tonnes during the remaining part of the current financial year.

During the April-October 2007 period, the industry had already created 6.35 million tonnes of new capacity through greenfield and brownfield expansions.

Together, the total new capacity likely to be created during the current fiscal will be around 13 million tonnes, highest since 2000-01, when 16.2 million tonnes production capacity were added by the manufacturers, according to the Cement Manufacturers Association (CMA).

The industry association, however, is unable to quantify the exact amount of investment made by the companies during the expansion process because a substantial portion of the new capacity has come up through brownfield expansion utilising the available infrastructure in existing plants.

According to officials in the CMA “the thumb rule is that, 100 million tonnes new capacity needs an investment of about Rs 55,000 crore. By this estimate, an additional 13 million tonnes production capacity will call for an investment of over Rs 7,000 crore.”

“But because most of the companies have utilised the available land and infrastructure in their existing plants for setting up new capacity, the total quantum of investment had been lower,” the official said.

On the other hand, capacity utilisation in domestic cement plants had been increasing steadily since 2000 and has touched an all-time high of around 95 per cent during the current year, the official pointed out.

NOVEMBER PRODUCTION

Cement production during April-November 2006-07 stood at 107.71 million tonnes as against 106.82 million tonnes in the same period last fiscal. Dispatches during the period were 99.99 million tonnes as against 99.29 million tonnes in the corresponding period last fiscal, marking a marginal improvement.