The Growth of Cement Industry in Karnataka State
- Jyoti S. Bhandi - Dr. Basavaraj Kumnoor
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.
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.
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.
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.
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.
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
ACC CEMENT PLANT AT WADIC, KARNATAKA