The Hindu Business Line : Kesoram Cements expanding capacity

Plans ahead
The company has already mobilised funds through bank loans an internal accruals.
It is targeting markets in Andhra Pradesh, Karnataka, Western Maharashtra, Madhya Pradesh and Uttar Pradesh.

G. Naga Sridhar

Hyderabad, April 16 Kesoram Cements, an arm of Kesoram industries of the B.K. Birla Group, will invest nearly Rs 850 crore in adding significant production capacity by 2009.

“We are executing a major capacity augmentation programme at our existing plants which would be completed by next year. This will take our total capacity to 9.5 million tonnes (mt) from over 6 mt at present,” Mr K.C. Jain, Senior President, Kesoram Cement, told Business Line here.

The company currently operates three manufacturing plants at Basantnagar (Karimnagar), Andhra Pradesh for Kesoram Cement, Sedan in Karnataka for Vasavadatta Cement and Adityanagar Morak (Kota), Rajasthan for Mangalam Cement.

The expansion programme currently underway would be adding an additional 2 mt Kesoram Cement, 1 mt to Vasavadatta and half a million tonne to Mangalam Cement, he added.

Kesoram, one of the oldest cement companies in the country, would be spending Rs 850 crore on the expansion programme. “Funds are not an issue. We have already mobilised the money through bank loans and internal accruals,” he said.

Market graph

The company would be pumping the additional capacity to the markets in Andhra Pradesh, Karnataka, Western Maharashtra, Madhya Pradesh and Uttar Pradesh. “These are the markets where we are present and there is more unmet demand. We will cater to it,” Mr Jain said.

There were no plans to export the cement as the domestic markets were on a high, he added. On the increasing price of cement, Mr Jain said except the Rs 3-6 hike recently, the cement prices had been nearly stable for the last six months. “Price is a function of demand and supply which should be decided by the market. However, I don’t foresee any significant hike in cement prices in the next six months,” he added.

Demand-supply gulf

Kesoram’s cement prices are in the range of Rs 198 to Rs 220, he added. On the demand and supply gulf in the industry, Mr Jain said the situation would change dramatically over the next two years. “Everywhere we are hearing and talking about capacity generation. It remains to be seen where we will be going,” he said.

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