India Cements may go slow on HP project

India Cements, the south Indian cement major, may relocate its proposed 2 million tonnes facility in Himachal Pradesh or put it on hold because of infrastructure hurdles and a slowdown in the cement industry.

The plant, which has seen a delay in commissioning by over a year, faces an uncertain future, denting the company’s expansion plans in the northern region. On a query over the expected pull-out from Himachal Pradesh, V M Mohan, joint president, corporate (finance), India Cements, said, “We need to get back to you on this.” He added, “We are discussing the issues related to infrastructure with the state government. The project is taking a lot of time as there are no roads (because of a tough terrain) to take up the equipment.”

On whether the company has invested in land acquisition, Mohan said the company had “identified the land” and added that it was difficult to set a time-frame for the plant’s commissioning. The Himachal plant, for which an investment of Rs 800 crore has been earmarked, is India Cements’ second project in the North after the Rajasthan project. The company controls a fourth of the southern market and has plans to double its capacity to 18 million tonnes from the current 9 million tonnes.

“We are thinking of having the project in Himachal Pradesh or at any other site,” said the company’s top executives at a conference call. They added that the state government had to ensure the infrastructure requirement for setting up the plant. So far, the industry giants, ACC and Ambuja Cements, have been successful in their operations in the state.

Though units in Rajasthan (1.5 MT) and Maharashtra (1 MT) are on track, the Himachal project is lagging far behind. The executives added, “Even if we do not start the Himachal project, our capacity will still be 16 million tonnes (by 2010).” Experts said capacity utilisation was already on the downside and firms would not go for under-utilisation of their capacities.