Cement firms line up $10 bn capex expansion

Domestic cement makers have promised to invest Rs 4,5000 crore ($10 billion) on adding close to 100 million tonne of capacity, a government official said.

The companies plan to raise output in the next five years, Ajay Dua, secretary in the Department of industrial policy, told reporters in New Delhi today.

The country now has a cement-making capacity of about 165 million tonne a year compared with neighboring China's capacity of more than 1 billion tonne. 
 

BRICK BY BRICK Highlights of Indian Cement Industry as on March 31, 2006
LARGE PLANTS*
Cement plants (nos)	130
Installed capacity (Million tonne)	160.24
Production (Mn tonne in 2005-06)	141.81
Plants with capacity of mn tonne and above (nos)	76
Manpower employed (nos) approx.	1,35,000
Turnover in 2005 (in $ mn) around	9,700
MINI PLANTS**
Cement plants (nos)	365
Installed capacity	11.10
Production (Mn tonne in 2005-06)	6.00 (P)

"Increasing cements imports will not help lower prices of the building material,'' Dua said. Imported cement is expensive, besides which the country doesn't have dedicated terminals to handle cement shipments, he said.

Local cement makers are today scheduled to meet finance minister P Chidambaram for the first time after rejecting the government's request to scrap price increases arising from higher excise duties, Dua said. Chidambaram's office said no such meeting was planned today.

Chidambaram imposed a dual tax rate on cement the Budget to persuade companies to limit price increases. The excise rate was raised to Rs 600 ($13.5) from Rs 400 a tonne on cement sold at Rs 190, or more, a 50-kilogram bag. For cement priced below Rs 190 a bag, the tax was cut to Rs 350 a tonne.

Cement manufacturers have passed on the increase in duties to its consumers across the country, H M Bangur, vice president of the Cement Manufacturers' Association of India, said in a phone interview from New Delhi on March 5.

Chidambaram had earlier cautioned cement makers about acting as a cartel on pricing.