L & T Plans Mangalore Cement Terminal

Engineering major Laresn & Toubro (L&T), also the countrys second largest cement maker, has decided to set up a bulk handling cement terminal in Mangalore, Karnataka, to facilitate exports. The company sources say the terminals capacity has not been finalised

The terminal is close to L&Ts 1.75-million tonne upcoming unit at Tadaptri in Andhra Pradesh. Among the countries L&T plans to target for exports are Bangladesh, Sri Lanka and Southeast Asian countries like Singapore, which have substantial bulk handling facilities, sources said.

The bulk handling terminal will only be the third of its kind in the country.

The other two are owned by Gujarat Ambuja at Gujarat, and L&T itself near its Pipavav plant in Gujarat.

 

The Mangalore terminal will also help the company reduce freight costs as sea transportation is considerably cheaper than road or rail.

At the same time, coal and other critical inputs for Tadaptri and other plants can be imported and stored at this terminal.

The ECC division of L&T has been commissioned to set up the terminal.

The estimated cost of the project is around Rs 7.15 crore and will be funded primarily through internal accruals.

The division will begin work from June and will complete the project in another eight months.

With freight costs ballooning, the input costs of most cement majors have increased by 10-12 per cent thus putting a severe pressure on margins.

At the same time cement prices began plummeting during the middle of last calendar year and have remained stagnant since. As a result, sales realisation of cement companies have declined.

The Mangalore project is especially significant under these conditions as transportation cost via sea is around one-third to one-fifth of the cost through road and rail.

In line with its decision to explore the latent export potential, the company has already set up a jetty in Gujarat, which will facilitate exports and deliveries to the western and southern markets in the country.

The company plans to export about 60-75 per cent of the total production at its 2-million tonne coastal plant at Kovaya, Gujarat. The capacity is proposed to be increased by another two million tonnes.

Out of a total installed capacity of 94.01 million tonne in the country, L&T accounts for 6.15 million tonne.

There are plans to increase its installed capacity to 12 million tonnes by the turn of the century. Apart from Gujarat, the company has two 2.9-million tonne plants in Awarpur, Maharashtra, and another at Hirmi, Madhya Pradesh, with 1.75 million tonne capacity.

The company also has a clinker grinding unit in Jharsuguda, Orissa, with an installed capacity of 0.7 million tonne.

The Tadaptri plant is expected to be commissioned by April 1998.