Cement, paper keep boiler orders high

A slowdown in the sugar industry has not affected the order books of turbine and boiler manufacturers, who are seeing a higher demand from sectors such as cement, steel and paper.

In the past two years, turbine and boiler manufacturers had seen good orders from sugar industry players such as Bajaj Hindusthan and Balrampur Chini Mills, which undertook a series of expansion projects, both greenfield and brownfield.

"Though orders from the sugar industry are negligible since the past few months, the overall boiler orders for our company remain good due to better orders from sectors such as cement, steel and paper," said a senior official at Thermax, a leading boiler manufacturer.

High realisation in the 2005-06 sugar season (October-September) had prompted most sugar companies to expand their production capacities that became operational in the 2006-07 season. While the industry capacity went up significantly, farmers, who were paid cane prices in time, planted more sugarcane. The combined impact of higher capacity and more acreage led to a 45 per cent rise in sugar production between 2005-06 and 2006-07. As a result, sugar prices crashed heavily and companies turned conservative on their expansion plans.

On the contrary, cement and paper have seen a sustained demand that has continued since the last year and the outlook for both these sectors remains favourable. Paper companies such as Bilt and JK and cement companies such as ACC and Ultratech have announced capacity addition.

"Our order book represents the condition of manufacturing growth in different sectors of the economy. In 2005-06, we saw good demand from the sugar industry, which accounted for almost 30 per cent of the total orders. While the sugar orders declined to about just 10 per cent in 2006-07, orders from sectors such as cement, metal and paper saw a sharp increase", said Nikhil Sawhney, vice-president, Triveni Engineering and Industries, a turbine manufacturer.