Big business in the offing

Big business in the offing

The Rs 2,000-crore Indian cement plant and machinery industry is poised for a big leap in the coming years as cement projects entailing an investment of Rs 135,000 crore are in the pipeline. These projects will bring in 480 million tonne of cement capacity in the next four years. As of end-April 2011, there are 102 cement projects under implementation entailing an aggregate capacity of 183 million tonne. The total investment envisaged in these projects is Rs 70,200 crore. Another 240 projects have been announced by various companies and are under implementation with a total capacity of 480 million tonne envisaging an investment of Rs 131,000 crore. Even if half of these intentions are implemented, the total investment works out to about Rs 130,000 crore over the next 3-4 years. This implies demand for plant and machinery of around Rs 30,000 crore per annum during the project implementation period.

Currently, there are only six major suppliers of complete cement plant machinery in the organised sector. They together have an installed capacity of around Rs 600 crore per annum and are fully capable of meeting the domestic demand. Including the unorganised sector, the production of cement machinery is estimated at Rs 2,000 crore for 2010.

This industry is de-licensed and foreign direct investment (FDI) of up to 100 per cent, under automatic route as well as technology collaboration, is allowed free. Import of old and new machinery too is allowed free. However, the industry has made no significant progress in importing or exporting cement plants in the past five years.

Plant and machinery gross block of 23 cement majors aggregated Rs 44,000 crore as of March 2011. This was Rs 4,000 crore higher than the gross block of March 2010. Thus, these cement companies have added plant and machinery worth Rs 4,000 crore during the year, over and above Rs 6,100 crore worth of addition in 2009-10. Plant and machinery assets of these companies had jumped Rs 6,500 crore in the year ending March 2009. In 2010-11, cement majors, ACC and Ambuja Cements added close to Rs 2,000 crore worth of plants and machinery, implying a major leap for cement machinery suppliers.

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