Conveying on Growth Drivers
Indian Cement Review
held its first ever "
Round Table Discussion
" on 10th June, participated by eminent personalities from cement and its related industries. The key topics of discussion were huge capacity build-up amidst weakening demand, inadequate logistics and manpower, demand drivers, machinery supplies and export potential. While a number of projects, under various stages of implementation, would add about 175 million tonne over the next 4-5 years, another 300 million tonne of capacity are being discussed and planned by various companies. Even if one-fourth of these are implemented, the country would see cement capacity ramp up to 550-600 million tonne by 2015-2016 from the current 290 million tonne. That's roughly 60-75 million tonne addition per annum. The highest annual addition of 40 million tonne was seen back in 2008.
Participants opined that the capacity addition of 60-75 million a year was unprecedented and given the adverse factors - like issues in land acquisition, mining lease, inadequate limestone resources, many of these projects may get stalled. At the most the industry may add another 100 million tonne taking the total capacity to 395 million tonne by 2015. Even at this level, the participants felt that availability of skilled workers would be a major issue while, the logistics, particularly, Railways should upgrade and expand its infrastructure. On the export front, the prospects appear bleak as there is dearth of demand within the Indian subcontinent and cement export is not a lucrative business.
The Round Table Discussion concluded on a consensus that issues like mining lease and land acquisition were acting as serious impediments in capacity expansion, use of waterways should be implemented to streamline logistic operations and costs and cement industry should take efforts to attract right talent and provide adequate training for workers.
The current issue covers an in depth analysis of cement material handling equipment industry in India. The industry with an annual business of Rs 2,000 crore, is poised for the significant growth in coming years as a total investment worth Rs 85,000 crore is being envisaged in cement capacity building over next 4-5 years. Assuming about 15 to 20 per cent of this total investment is apportioned for material handling equipments, the additional business generated will be in the tune of Rs 12,750 crore to Rs 17,000 crore or Rs 2,500 crore per annum on an average, that's twice of its current size.