What Ramco Cements’ expansion drive means for prices in south India

Ramco Cements Ltd, one of the key cement producers in south India, recently announced both greenfield and brownfield expansions. The company is setting up a cement plant of 3.15 million tonnes per annum (mtpa) capacity in Kurnool district of Andhra Pradesh. It is also expanding capacities of its clinker unit and waste heat recovery system. The cement maker would spend ?3,430 crore of its own profits for these expansions. Once the expansion is completed, the production capacity of Ramco Cements will increase to 20mtpa in the two years by the end of 2020. The expansion will also help Ramco Cements increase its presence in Andhra Pradesh and Telangana. The company’s capacity share across these markets is estimated to increase from 22% in financial year (FY) 2016 to 37% in FY21, according to brokerage house Nirmal Bang Ltd. The move bodes well for the company but signals further pressure on prices for the cement sector.