L & T Set To Increase Cement Capacity To 12 Mt: Kulkarni

Engineering and construction firm Larsen and Toubro Ltd (L&T) said on Tuesday it plans to boost its cement manufacturing capacity to 12 million tonnes by the year 2000.

L&T managing director Sudhakar Kulkarni told Reuters in an interview that the company had a project underway to double the capacity of its plant in Gujarat to four million tonnes, as part of plans to expand cement manufacturing capacity.

We have a cement manufacturing capacity of somewhere around 6.5 million tonnes, he said. We are working on a project to double the capacity of our Gujarat plant to a total of 3.75 million tonnes.

 

L&T is the countrys second largest cement maker. The firm recently announced a net profit of Rs 411 crore for the year ended March 31, up from Rs 389 crore in the previous year.

A second plant at Tadpatri in Andhra Pradesh was expected to be completed early in 1997/98 (April-March), Kulkarni said.

That will get completed sometime around the first quarter of 1997-98 and the capacity will be around two million tonnes, he said. He said the company expects to further double the capacity of its Tadpatri plant to 4.0 million tonnes by 2000-2001.

So we will have a total capacity of 12 million tonnes by the turn of the century, he added.

Prospects for the Indian cement industry, which went through a bad phase last year, would improve from around October, Kulkarni said.

Last year was a fairly bad year for the cement industry, he said. It was a bad market, the prices were very much depressed, the industrial activity was down, infrastructure activity was not there.

L&Ts cement production rose 42 per cent to 5.4 million tonnes during 1996-97, the firm said in its annual report. Kulkarni said he expected the cement industry to pull out of the trough very quickly as soon as the monsoon, which began this month in most parts of the country had ended. In my view this is a short-term problem, he said. Maybe another three or four months. After the monsoon season is over, these things should revive.

Kulkarni said Indias per capita consumption of cement, at 70-80 kgs , was abysmally low, not low. He said the world average was about 250 kgs, but in countries like Malaysia and Thailand it was more than 600 kgs, climbing as high as 1,200/1,300 kgs in Korea and Taiwan.

So I think if youre talking about a seven per cent growth rate, if youre talking about infrastructure development in this country then the cement demand will have to increase by at least somewhere in the region of 10 to 12 per cent per annum, Kulkarni said.

The Indian government has set itself an annual GDP growth rate target of seven per cent for the next few years.

This should create adequate demand, and so I think were taking a long term view of this industry, Kulkarni added.

There will be ups and downs in a market thats a part of the game. But if one takes the long-term view, there is bound to be an upsurge in the market.He warned that only large players would be able to compete in the cement industry of the future.

This will also be a game of the companies who are able to sustain it. This sort of playing with one million two million tonnes capacity will not do, Kulkarni said.(Reuter)