Cement makers tap Sri Lankan infra biz.

CHENNAI: Stung by massive capacity expansion and poor utilisation of their plants, cement companies are looking at the war-ravaged Sri Lanka, which is rebuilding its infrastructure. Industry sources said that Madras Cements is shipping cement to Sri Lanka, while India Cements and Dalmia Cement have got the approvals from the island nation’s quality certification body — which is a precursor for shipping cement.

“Cement manufacturers import coal through us and use our port to export cement to Sri Lanka. Already, we handle vessels for Madras Cements for their exports. We are now constrained by the inadequate number of vessels plying between Lanka and Karaikal (on the eastern cost, south of Chennai),” M L N Acharyulu, executive director, Karaikal Port, told TOI.

Cement plants in the Ariyalur cluster — Madras Cements’ Alathiyur plant, India Cements’ Dalavoi plant and Dalmia Cement’s Dalmiapuram plant — would be the extensive users of Karaikal Port for exports. Madras Cements has been shipping cement through this port. Between October and December there was no dispatch by this company, while in January and February the company exported 2,825 tonnes of cement, port traffic data shows.

“For now, they (Madras Cements) are exporting bagged cement (each bag 50 kg). We have been in talks with other cement companies as well who are keen to export bulk cement (which will get bagged at the port of arrival) as well as clinker (an intermediate product which is ground to cement),” Acharyulu said.

A Dalmia Cement spokesperson said that Sri Lankan market looked attractive. “Today, it is cheaper to export from Karaikal than through Tuticorin port. We will consider exports to Lanka, but nothing has been finalised as yet,” he said. India Cements officials remained tight-lipped, while sources said that the company has received the quality approval from Sri Lanka.

As of February 2010, cement companies in the south are operating at a meagre 66.5% of their rated capacity. While in January 2010 it was 71.2% and in February 2009 the capacity utilisation levels were 88.1%. These cement plants can produce 69.8 lakh tonnes a month while they produced only 46.4 lakh tonnes and despatched 46.1 lakh tonnes. “With around 42 million tonnes of capacity addition across India during April-February FY10, all-India average cement prices have declined by around 3% during the same period.

Moreover, capacity of around 42 million tonnes per annum is expected by the end of FY12 across all regions. We believe it will pull down capacity utilisation rates and put further pressure on pricing. We expect the all-India utilisation rate to drop to around 83% in FY11 from the FY10 estimated rate of 90%,” Pankaj Pandey, head (research), ICICI Securities, said in a note.

Source : TOI