Andhra cement capacity may double by 2009

Andhra Pradesh, which is endowed with over 30 per cent of the country's limestone reserves, is expected to see doubling of its cement production capacity to over 48 million tonnes a year by 2009, going by the expansion and greenfield projects lined up by various companies.

With the South Indian market mostly dependent on Andhra production, the new capacities are considered to sustain the overall profitability of the industry. The compound annual growth rate of over 12 per cent in consumption is expected during the five-year period starting 2007.

Except My Home and Gujarat Ambuja, which have planned to commission two greenfield plants with 2 million capacity each in Guntur district in 2010 and 2011 respectively, the rest of the proposed capacity addition is slated to come in three years from now.

According to the statistics available with the government departments, the new capacity of 2 million tonnes in 2007, 9.32 million tonnes in 2008, and 12.41 million tonnes in 2009 are expected to be added in the state. This may ease the supply constraints to some extent in the near future, officials said.

As of now, about 13 large and five mini cement plants are going in for expansion. Another eight companies, including Penna, Sanghi, Dalmia, Raghuram and Madras Cements, have proposed to set up greenfield projects mostly in Rayalaseema and Andhra regions with a total capacity of 18.1 million tonnes a year. Capacity expansion proposed by large units and mini units is 12.1 million tonnes and 3 million tonnes respectively.

Hyderabad-based Visaka Industries is also said to be considering a re-entry into cement manufacturing, though one of its top executives maintains that the company has not yet firmed up any plans in this regard.

Meanwhile, the state mining department has started the process of evaluating the mining of limestone reserves by the existing companies as the demand for new limestone reserves has phenomenally gone up following huge capacity addition plans.

"Normally, the cement companies are going into the depths of three benches (one bench is equal to 9 metres ) whereas the deposits are normally available up to a depth of 36 metres. We now need to enforce full utilisation of the existing mines so as to conserve the untapped reserves for future capacities," an official of the directorate of mining told Business Standard.