Cement biggies bail out local units

Step up outsourcing orders to meet export demand

Struggling small-sized cement plants in Saurashtra and Kutch have got a fresh of life as their bigger peers have increased outsourcing orders to meet thier export needs.

This has also resulted in small cement players hiking prices to Rs 120-125 a bag in the last two months against the earlier prices of Rs 110-115 per bag. The owners of small cement plants, however, attribute the Rs 10-15 price hike to the rise in cost of raw materials.

"More than 8-10 mini cement plants had shut down in the recent past owing to poor market condition. But for the last one month or so, small plants in Saurashtra are running round-the-clock," said Natvar Patel, secretary, Gujarat Mini Cement Plant Association.

"Generally, monsoon is slack season for the industry. But this time owing to the hike in raw material and demand from overseas, cement prices have gone up. The price of clinker, the basic raw material for mini cement plants, has risen by Rs 400 per tonne, while the price of coal has gone up by Rs 2,300 a tonne from Rs 1,200. These are the reasons for the rise in the cement prices of mini plants," Patel said.

There are 41 small cement plants in Saurashtra, of which 21 are located in Rajkot district.

According to market sources, with the rising demand from big companies, small firms are likely to raise cement prices further during the year. "There is a strong possibility of a further rise in prices by at least Rs 5 in two-three months," market sources said.

Mukesh Patel, a cement dealer in Rajkot, said, "At present people prefer to use cement from mini plants as it is available at lower rates compared with branded cement which cost Rs 150-152 a bag."

Consumers, mainly builders, use branded cement only for ceiling construction.

In Rajkot around 800 tonne of cement is consumed per day, of which 300 tonne is used by builders. There are 125 cement plants in India, of which 10 are in Gujarat with a production capacity of 17 million tonne. The consumption of cement in Gujarat is nearly 7.5 million tonne.

Last year India had produced 11.14 crore tonne of cement, while consumption of cement was nearly at 10.75 lakh tonne. India is the second largest producer of cement in the world after China.