Shree Cement acquires 90 acres for new projects

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Shree Cement, a building material maker concentrated in North India, has resumed purchase of land in other regions after long negotiations with locals, as it tries to minimise the fluctuations to its fortunes associated with a focus on a single region.

The company after acquiring leases for limestone mining, the key raw material for the manufacture of cement, has bought about 90 acres of land in various states such as Karnataka, Chhattisgarh and also its home state of Rajasthan to set up new plants, said an industry official in the know of developments. The company had to abandon land purchases in September due to local resistance.

“We have acquired land for our new units in different locations of the country,” said Shree Cement managing director HM Bangur, without giving details. “Getting land from farmers is an uphill task but the company is in process.”
Indian companies face tremendous resistance in buying land as the locals with decades and some even centuries of history to that locality, refuse to part with it.

At times, such acquisitions have even turned violent. Cement manufacturers require lots of land, both for the plant and to mine limestone. Cement companies are adding 110 million tonne in the next few years or so as they expect a strong demand because of the government’s focus to build roads, ports and bridges across the nation, according to estimates by the Cement Manufacturers Association. The investments may total about Rs 50,000 crore over the next three years.

The current capacity with 70 companies is about 240 million tonnes. If Shree Cement completes the projects in the next six months, its capacity would rise to 12 million tonnes from 10 million tonnes, which would cost it Rs 450 crore.

Although India is a single market, cement prices vary substantially between the regions as plants are usually concentrated around areas where limestone is available. At different times, different regions have surplus and deficit skewing the profitability of companies.