Huge overcapacity in cement worries Birla Corp

Faced with huge overcapacity of cement due to lack of demand, Birla Corporation is worried over the possible pressure on margins, as the cement business is the maximum revenue generator for the company.

Chairman of the M P Birla group flagship Harsh Lodha said although the company's cement manufacturing capacity stood at 7.5 million tonne per annum (mtpa), production was lower due to lack of demand.

"We were shocked to see last year's demand growth, even though the  economy grew by 7 - 8%," he said.

The cement industry is expected to grow by 8-10%, Lodha told reporters after the company's 91th AGM here today. 

He further said that by 2011-12, the company's production capacity would increase to 9.3 mtpa. 

The company would also set up a cement plant in Assam with one mtpa capacity in joint venture with the Assam government and has also proposed a three mtpa cement plant in Tripura.

To a query, he said the company has planned an immediate investment of Rs 1,050 crore in cement, power and jute. 

Additionally, the company is trying to secure coal assets for use, Lodha said.