The Growth of Ce­ment In­dus­try in Kar­nataka State

- Jy­oti S. Bhandi - Dr. Basavaraj Kum­noor

Economic Challenger - - NEWS - *Jy­oti S Bhandi ** Dr. Basavaraj Kum­noor *Re­search Scholar , Depart­ment of Economics, Gul­barga Univer­sity, Gul­barga Cell: 91 9901099180 ** Re­search Guide, Depart­ment of Economics, Gul­barga Univer­sity, Gul­barga Cell + 919449309229

AB­STRACT

Kar­nataka is a pi­o­neer in the field of in­dus­trial de­vel­op­ment. Ce­ment in­dus­try is the big­gest and fastest grow­ing in­dus­try in the state. Kar­nataka is one of the top most states that pro­duce qual­ity ce­ments in In­dia. It stands sev­enth place on all In­dia level. This in­dus­try con­trib­utes sig­nif­i­cantly to the national de­vel­op­ment, to the cause of cor­po­rate value ad­di­tion, to the qual­ity of life and stan­dard of liv­ing.

IN­TRO­DUC­TION

Kar­nataka is In­dia's eighth largest state in terms of area and ninth largest sate in terms of pop­u­la­tion and com­prises 30 dis­tricts. It is well and truly one of the most pro­gres­sive in­dus­tri­al­ized states of the coun­try. The state has an il­lus­tri­ous his­tory of suc­cess­fully in­tro­duc­ing sev­eral in­dus­trial and tech­no­log­i­cal ini­tia­tives and aims to achieve a GSDP of over 9% and of over 12% for the in­dus­trial sec­tor, by pro­mot­ing a di­ver­si­fied in­dus­trial base with strengths in both old and new econ­omy fields.

Par­tic­u­larly Kar­nataka ranks 7 th in terms of pro­duc­tion of ce­ment in the coun­try. There are over 16 ce­ment in­dus­tries in Kar­nataka pro­duc­ing around 11 mil­lion tones per an­num of ce­ment (which is around 6.51% of In­dia's pro­duc­tion). The ex­port of ce­ment from Kar­nataka was 0.01 mil­lion tones in 2012.

Kar­nataka ce­ment in­dus­try is show­ing signs of growth and Gul­barga, Ba­galkot, Chi­tradurga have been iden­ti­fied as ce­ment Hubs. This is an at­tempt for cap­tur­ing all ce­ment in­dus­try re­lated de­vel­op­men­tal ac­tiv­i­ties in Kar­nataka.

19 ce­ment projects are ap­proved in the state by the State High Level Clear­ance Com­mit­tee in the last year with a to­tal ca­pac­ity of 44 mil­lion tones per an­num.

Avail­able re­sources

The ap­prox­i­mate lime­stone de­posits of all grades proved, prob­a­ble and pos­si­ble is 17,253 mil­lion tones out of In­dia's to­tal re­serves of 76, 464 mil­lion tones.

Large lime­stone de­posits are found in the dis­tricts of Bel­gaum, Bel­lary, Bi­japur, Chi­tradurga, Gul­barga, Shi­moga, Tumkur and Ut­tar Kananada.

DE­MAND AND SUP­PLY OF CE­MENT IN KAR­NATAKA

Ce­ment de­mand in Kar­nataka is pri­mar­ily de­rived from hous­ing (60-65 per­cent),

in­fra­struc­ture ( 20- 25%), com­mer­cial con­struc­tion (10-15%) and in­dus­trial seg­ments (5-10%). De­mand has grown at a healthy pace of over 8.5 per cent dur­ing the last five years on the back of strong de­mand reg­is­tered in its end – user seg­ments.

There is in­con­sis­tency be­tween lo­cal de­mands for ce­ment and its sup­plies by the man­u­fac­tur­ers. On the one side the de­mand for ce­ment is in­creas­ing rapidly, but on the other side there is scarcity of sup­ply of ce­ment due to some chal­lenges faced by ce­ment fac­to­ries.

THE CHAL­LENGES OF CE­MENT IN­DUS­TRY

1. Ris­ing in­put cost of key raw ma­te­rial of late has be­come a crit­i­cal is­sue im­pact­ing the prof­itabil­ity of ce­ment in­dus­try. 2. Ris­ing do­mes­tic coal prices and non avail­abil­ity of low cost link­age coal has in­creased the power and fuel cost for ce­ment man­u­fac­tures. 3. As per in­dus­try re­search re­ports, raw ma­te­ri­als ac­count for 10 per­cent of to­tal costs and have grown at a CAGR of coal 25 per­cent dur­ing last seven years. Key raw ma­te­ri­als com­prise lime­stone (coal 10% of raw ma­te­rial), gyp­sum (35%) and oth­ers like fly ash (55%). 4. Trans­porta­tion cost is a sig­nif­i­cant cost driv­ing the prof­its in this in­dus­try and the same has also in­creased due to an in­crease in the sur­charge and cess by In­dian rail­ways. 5. Re­cently an­nounced hikes in diesel prices will fur­ther es­ca­late the cost of pro­duc­tion for ce­ment com­pa­nies.

GOVERN­MENT INI­TIA­TIVES

The state Govern­ment has set up a “Spe­cial in­dus­trial zone for ce­ment” in each dis­trict like, Bel­gaum, Bel­lary, Bi­japur, Chi­tradurga, Dhar­wad, Gul­barga Has­san, Shi­moga, Tumkur and Ut­tar Kan­nada, con­sid­er­ing nat­u­ral and hu­man re­sources avail­able in the states The pro­posed zone to be de­vel­oped on Pub­lic pri­vate part­ner­ship (PPP) ba­sis.

CON­CLU­SION

In to­tally ce­ment in­dus­try pro­vides an es­sen­tial com­mod­ity for the con­struc­tion and growth of the coun­try. There is a rapid growth in sales and prof­its. Kar­nataka is also one of the states which pro­duce va­ri­ety of ce­ments. The nu­mer­ous plants of ce­ment have sprung up across the state. But large num­ber of plants are con­cen­trated in north Kar­nataka, es­pe­cially in Gul­barga dis­trict, due to the huge lime­stone po­ten­tial in the re­gion, es­ti­mated at one sev­enth of coun­try's re­serves. How­ever, it is fore­seen that the Kar­nataka ce­ment in­dus­try will see bright fu­ture over the com­ing years.

REF­ER­ENCES

Dis­trict in­dus­tries cen­tre (DIC), Gul­barga Thom­bre Deepak, Ce­ments : Chang­ing growth dy­nam­ics in: The Hindu Sur­vey of In­dian In­dus­try, 2007, pp.187-190. Depart­ment of Com­merce and In­dus­try, Govern­ment of Kar­nataka http://www.kar­natakain­dus­try.gov.in. Depart­ment of mines and min­er­als, Govern­ment of Kar­nataka. http://www.mines.kar.nic.in CRISIL RE­SEARCH AN­NUAL RE­VIEW JULY2008.

Ta­ble-1: Lo­ca­tion of Ma­jor Ce­ment Units in Kar­nataka as an May 27 th 2012

Source: www.kar­nataka.com/in­dus­try/ce­ment

ACC CE­MENT PLANT AT WADIC, KAR­NATAKA

Graph-1: Lime­stone re­sources in mil­lion tones

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