Cement firms step up capex despite market concerns over demand

Cement firms step up capex despite market concerns over demand Cement firms are planning to step up their capacities by investing in new expansions and running their existing plants at full capacity, despite emerging market concerns that demand can reverse in the future.

Aditya Birla group cement firm UltraTech Ltd has confirmed its plans to invest Rs 2,000 crore to expand its Rajasthan-based unit's capacity by 2.9 million tonne (MT).

K C Birla, chief financial officer (CFO) at UltraTech, said, "In this quarter, the board has decided to enhance capacity at Aditya Cement Works in Rajasthan by 2.9 million tonne, including the setting up of two grinding units."

The additional facility at the Rajasthan plant is expected to be commissioned by the end of next financial year. The company has plans to fund the expansion through a blend of internal accrual and borrowings.

Recently, cement giant ACC also announced its decision to spend Rs 3,300 crore to be spent over a period of three years for manufacturing a new 5 mtpa plant at Jamul in the state of Chhattisgarh. The additional facility is expected to become operational by late 2015.

Similarly, Shree Cement has plans to spend Rs 1,000-1,200 crore on capacity expansion this year. During 2012, the company spent Rs 800 crore towards capex. As per reports, here Cement is already establishing a
4 mtpa clinker plant and a corresponding grinding facility in North India.