Calcutta, March 21 : Cement Manufacturing Company Limited (CMCL), a 70 per cent subsidiary of Century Plyboards Limited (CPL), is looking to exploit the strong demand for the commodity in the Northeast.
A Crisil report marks the northeastern region as the fastest growing cement producing area with a compounded annual growth rate of 13 per cent.
CMCL, which enjoys an 18 per cent market share in the region, has its cement and clinker units at Lumshnong in Meghalaya and sells the cement under the brand name — Star Cement.
At present, Cement Manufacturing Company Limited’s combined annual capacity is 1.2 million tonnes (mt).
It is set to expand clinker capacity by 1.75mt through its wholly owned subsidiary Star Cement Meghalaya Limited. The clinker will be taken to CMCL’s two proposed grinding units at Guwahati (Assam) and Kahalgaon (Bihar) where 3.20mt of cement will be produced.
After these expansions, CMCL’s capacity will go up to 4.4mt. The units are expected to commence production by September.
“We are undertaking a capital expenditure of about Rs 1,100 crore to increase our capacity from 1.2mt to about 4mt. Given the strong demand for cement in the Northeast, we would like to complete our projects very soon,” said Sajjan Bahujanka, managing director of CPL.
Excess demand
The cement market in the Northeast has an estimated demand of 5 million tonnes per annum against which production is 3mt.
The deficit is met by purchasing cement from outside the region.
This demand-supply mismatch and the high logistic cost of bringing cement from outside have resulted in the region being a high price-end market.
“In order to meet up with the excess demand, we transport cement from Chhattisgarh and Madhya Pradesh which results in the landed cost of cement being as high as Rs 300 to Rs 400 a bag. But, with our capacity expansion plans, this can go down,” said Bahujanka.
CMCL’s limestone mines have reserves of 300 million tonnes, which are enough to meet its raw material requirements for the next 70 years.
The firm is entitled to various fiscal incentives ranging from sales tax exemptions to fly-ash freight subsidies, according to the policies of the central government and the state government of Meghalaya.