Calcutta, April 13: Shree Cement is looking to expand its capacity to about 20 million tonnes (mt) per annum by 2015. The company had a cement production capacity of 13.5mt at the beginning of 2013.
As part of its expansion drive, the company is setting up an integrated unit in Chhattisgarh at an estimated cost of Rs 1,700 crore.
Further, to tap the growing demand for cement in the eastern market, it is setting up a grinding unit in Bihar at an investment of Rs 500 crore. The company is expanding capacity at its plant in Rajasthan.
“The Chhattisgarh unit could be commissioned by April next year, while the Bihar unit could come up by next month. We are also on the verge of completing the expansion at Rajasthan. Together, our production capacity will reach around 20 million tonnes per annum from 13.5 million tonnes,” H.M. Bangur, managing director of Shree Cement, told The Telegraph.
The Calcutta-based company sells cement under the brands Shree Ultra, Bangur and Rockstrong.
It has a strong market presence, mostly in North India.
Asked about his selection of Bihar over Bengal, Bangur said, “Bihar is a relatively under-penetrated market with a size of around 10 lakh tonnes per month. There are not many manufacturers in that state. Bengal, on the other hand, is a saturated market with a size of around 15 lakh tonnes per month.”
According to analysts, the cement industry is facing a problem of excess capacity. “The overall industry capacity is around 370mt, exceeding the demand by around 110mt. The demand has been weak on account of the economic slowdown,” said V. Srinivasan, an analyst with Angel Broking.
He said manufacturers had been persistently adding more, which has resulted in capacity utilisation for the industry to decrease to around 70 per cent.
Bangur, however, said that despite the excess capacity and high-cost pressure with rising raw material costs, manufacturers are betting on more capacity to gear up for future demand.
“The manufacturers usually take into account a 5-year picture. So it’s better to have excess capacity,” he said.