The four-year economic boom in the country has sparked off a frenzy among cement manufacturers for adding fresh capacities, says ProjectsToday. According to India's largest online database on new projects, 88 cement projects worth Rs223.7bn are in the pipeline as of October 31. This translates into an increase of 150% in total investment compared with a negative growth of 16% in the previous year.

ProjectsToday feels that the Government's continuous thrust on improving the country's poor infrastructure, and the wide spread boom in the real estate and construction sector has prompted cement companies to take up brownfield and greenfield projects in large numbers. Cement companies expect the impressive growth in demand to continue for a decade or so.

The 88 projects together will result in incremental cement capacity of around 92mn tons per annum (m tpa) during the next 5-6 years. Of these, 55 projects are greenfield while the rest are brownfield projects. Going by the progress made by individual cement projects, ProjectsToday says that by the year ending March 2011, the total cement capacity in the country would touch the 250mn tpa mark.

Since most new cement projects have been announced in the recent past, the year 2006-07 would not see much action in terms of capacity addition. The year will see only 1.66m tpa of capacity addition. Ambuja Cement Eastern's 1mn tpa cement project, coming up at Farakka in West Bengal, is the only large project expected to be completed before March 2007, says ProjectsToday. 

Capacity addition (mn tons per annum)

source: www.projectstoday.com

During 2007-08, around 22 projects with an aggregate capacity of 11.6m tpa would commence commercial production and take the total cement manufacturing capacity to 184m tpa. The projects (1.5m tpa each) of Grasim, Jaiprakash Associates and Shree Cements are expected to be completed during this period. The 1mntpa Roorkie cement project of Gujarat Ambuja is also expected to commence production during 2007-08.

In the year ending March 2009, around 23 cement projects with a combined capacity of 21.17m tpa are expected to go into production. Prominent among them are the 3m tpa Solan project of Jaiprakash Associates, the 2m tpa Sirohi expansion project of Binani Cement and the 1.65m tpa expansion project of Kesoram's Sedam plant in Karnataka.

Binani and Kesoram are also setting up captive power plants of 40 mw and 22 mw, respectively. Also scheduled for completion during the period are Shree Cement’s 1.5m tpa new plant at Pali, Rajasthan and a 1.4m tpa new plant of Calcom Cement in Assam. In the south, Madras Cement is expected to complete its Jayanthipuram plant expansion.

During the last two years of the 11th Plan, around 32 cement projects with a total capacity of 46m tpa are expected to go on stream. Of these, 26 will be greenfield projects with aggregate capacity of around 36m tpa. Nearly 21 of these plants are large in size with capacities ranging between 1-2mtpa. Gujarat Ambuja’s 2.5m tpa project in Rajasthan, Madras Cement’s 2m tpa green field project in Ariyalur, Tamil Nadu and Shree Cement’s 2m tpa grinding unit at Gurgaon are the prominent projects expected to commence production during this period.

With the Indian economy expected to grow at an average rate of 8% during the next 5-6 years, the outlook for the cement industry looks very bright. Hence, ProjectsToday expects most of the currently envisaged projects to be implemented without any hitch. It is of the view that though the cement industry is cyclical in nature, the demand for cement is expected to grow at a healthy rate in the coming years as the Government is very serious about shoring up the country's infrastructure. In addition, the current boom underway in the real estate and construction sector is expected to last longer as more and more developers are moving into Tier II and III cities and towns.