Infrastructure cos line up for own cement unit
With construction and infrastructure projects peaking up and the cement industry announcing price hike every alternate week, the Builders Association of India (BAI) has announced a plan by its members to establish at least three units to produce the key building material. The cement price has steeply climbed to Rs 300 (approximately) for a 50-kg bag from Rs 240 in December. Tired of what they call is 'price cartelisation' by cement makers, a raft of construction and infrastructure companies are joining forces to set up a common cement plant. The group pursuing the idea includes several infrastructure majors with order books running into thousands of crores working in sectors including roads, bridges and irrigation. "We have decided to set up our own plants to cater to our own needs," said Cherian Varkey, President-elect, BAI. BAI is an apex body of engineering construction contractors. The plan is to have an annual production capacity of five million tonne per annum in each of the proposed factories. BAI says it is looking at Andhra Pradesh, Rajasthan and Gujarat as sites for the proposed units. Initially, one such plant would be undertaken in one of these three sites, to be completed in three years. Several infrastructure majors including IVRCL, Gayatri Projects, NCC, Madhucon and Ramky are said to be supporting the idea. B Seenaiah, senior member of BAI and managing director of BSCPL Infrastructure said the investment proposed for each was Rs 2,250 crore. "We plan to raise Rs 500 crore each as equity from various companies involved in construction and infrastructure and mobilise the balance Rs 1,750 crore each from banks and financial institutions. The proposed cement company will be run by professionals," he informed. He added, "Today, cement costs Rs 300 per bag, while it was priced almost half last year during the same period. We hope that with the development of the proposed plants, cement will be available at Rs 150 per bag." BAI noted a parliamentary panel had urged the government to undertake an independent study on cartelisation in the cement industry, with adequate penalties for erring parties, noted Varkey.