Swiss cement major Holcim, which controls both ACC and Ambuja Cements, today said it plans to set up 2-3 manufacturing plants in India to increase its capacity to 60 million tonnes per annum (MTPA) in five years.
"We are planning to increase the capacity to 60 MTPA in five years from 50 MTPA now. We will set up 2-3 plants with capacity of 2-3 MTPA each," Holcim Executive Committee Member Paul Hugentobler told reporters on the sidelines of a seminar here on use of concrete in highways.
Hugentobler did not reveal the amount of investment that would be required for the proposed capacity expansion, but according to industry thumb-rule, setting up a 3-MTPA plant costs around Rs 1,800 crore.
Holcim, the second-biggest player in the Indian market, holds 46.21 per cent stake in ACC and 45.67 per cent stake in Ambuja Cements.
ACC recently started production in its sixteenth plant in Karnataka. Ambuja Cements has five plants.
ACC has a capacity of 26 MTPA at present, which will go up to 30 MTPA this year, while Ambuja Cements has that of 20 MTPA.
The new plants will come up in the limestone-rich states of the country, Hugentobler said, but declined to identify the locations, saying, "India is such a big country. The new plants are going to come up where the limestone is".
Limestone is available in most states, including Gujarat, Rajasthan, Punjab and Kerala. India is one of the largest suppliers of limestone in the world.
India's current cement manufacturing capacity is around 240 MTPA and is likely to go up to 276 MTPA by the end of the current financial year.
Meanwhile, only 177.8 million tonnes cement were consumed in the country last fiscal. Therefore, with the projected 10 per cent growth in consumption in the current fiscal, there would be over supply in the market leading to margin squeeze for industry players.
Hugentobler, however, is not impressed with statistics and said, Holcim was never worried about over supply in the Indian market since there is a huge scope for improvement in demand in the coming years.
He, however, ruled out any acquisition in India and said that capacity additions would be done only through the organic route.
When asked if Holcim would increase its stake in ACC and Ambuja Cements, Hugentobler evaded any direct answer.
Meanwhile, ACC Managing Director Sumit Banerjee said cement prices were moving up and could rise even higher in the coming months till monsoon starts.
"Prices are improving. Will it go up? It may. If you ask me about whole India, it is going to move up," Banerjee said.
Discounting the fear of oversupply in the market, he said, "supply-demand is evenly matched today".
