The current production capacity of the Indian cement industry is pegged at 366 million tonne (mt). Spurred by growth in the infrastructure sector, the capacity is expected to increase to around 550 mt by FY20. As per reports, if cement consumption grows at a rate of 10 per cent per year, then the industry needs to double its capacity. This calls for rapid technological upgradation, including modernisation and improvement of existing plant processes and building up additional capacity. Recent developments signal the readiness of several companies to face this challenge: Wonder Cement is expanding its current capacity to 10 million tonne by setting up a second and third production lines; second line with an investment of Rs 1,200-1,400 crore will be ready by end of 2015; JSW is setting up a three million tonne per annum (mtpa) capacity plant at Chitrapur in Karnataka to add to the current 5.4 mtpa capacity in South India; Zuari Cement, through its subsidiary Gulbarga Cement, plans to set up a 3.23 mt cement plant in Gulbarga, Karnataka.
However, the current capacity utilisation is hovering around 70-80 per cent, which is not sustainable. Hence, the major challenge the industry facing is lack of demand which is directly connected to project implementation, where investment is a major hurdle – how much investment and how soon is what, will decide the growth of consumption of cement. The housing sector constitutes about 67 per cent of cement consumption, infrastructure 13 per cent, commercial construction 11 per cent and industrial construction nine per cent.
It is noteworthy that the new government at the Centre is leaving no stone unturned to overcome the procedural delays in project implementation. Recently, in an effort to attract investment, the government has eased foreign direct investment rules for the construction sector. This is a positive signal to the investors, which in turn augurs well for the cement industry as spurt in construction activities, especially realty sector, drives the demand.
The industry is undergoing rapid technological upgradation, including modernisation and improvement of plant processes. Capacity increase of dry process plants, modernisation of grinding units, waste heat recovery units, and automation/electrical solutions are the most important upgradation measures being taken up by Indian cement players. In today?s scenario, focus of many cement players is diverted to increased production levels, rigid production schedules, increased machine utilisation, and market competition. This emphasises the need for an effective and strategic maintenance system – a gradual shift from breakdown maintenance to preventive maintenance, and further to predictive maintenance. The industry has been gradually moving in this direction.