The Hindu Business Line : Cement capacity expansion may be delayed

The cement industry’s plans to add 110 million tonnes (mt)of capacity with a total outlay of Rs 50,000 crore by financial year 2010 is likely to be delayed due to constraints in sourcing equipment and non-availability skilled labour.

In financial year 2007-08, the industry added a record 30 mt taking the total capacity to 200 mt. The cement companies will add about 25-30 mt in FY ‘09 and another 25 mt are expected to be added in FY ’10.

“Thus, of the total 110 mt planned, 25-30 mt will flow only in FY ’11,” said Mr K.C. Birla, Senior Executive President and Chief Financial Officer, UltraTech Cement.

Globally, most of the cement majors such as Holcim and Lafarge are adding huge capacities in different countries to take advantage of the rising demand.

The major equipment suppliers for cement plants in India include China-based Nangtong Heavy Machinery Co, FLSmidth & Co of Denmark and Polysius AG – a group company of ThyssenKrupp Technologies.

The scarcity of skilled labour is also likely to delay projects planned by the industry, said Mr Birla.

No price impact

The possible delay in capacity addition is not expected to push up the retail prices as the demand has slowed down considerably in select regions, especially in the North and Eastern regions. In Gujarat prices have dropped by Rs 5-10 a 50-kg bag due to over-supply forcing companies to divert their produce to Mumbai, said an analyst.

The lull in realty sector due to sharp rise in cost of funds has adversely impacted demand for cement.