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Thursday, August 23, 2007

Two Pak cement firms clear BIS standards check

NEW DELHI: Cement from Pakistan has finally received the ISI mark and can land in India. The Bureau of Indian Standards (BIS) has given its nod to Lucky Cement and Maple Leaf, the first two Pakistani manufacturers to obtain the certification. A third manufacturer, Pakistan Cement, is likely to get the certification by next week.

Cement from Pakistan may come at a substantial discount to the prevailing domestic prices. Consumers, mainly the builders, are hopeful that domestic prices, which have risen by nearly 45% in the past one-and-a-half years, would align itself with import prices.

Lack of BIS certification had held back the process of import of cement from across the border since April when, encouraged by the Indian government’s waiver of all duties on cement imports, several Pakistani manufacturers had evinced interest in exporting the commodity.

The biggest challenge for the exporters would be to overcome logistics bottlenecks. “We will be able to import cement into India only by September-end. The quantum of import and the mode would depend largely on the logistics,” said Lucky Cement India representative Pesi Dabdi, who runs a Jaipur-based cement distribution company, Creative Enterprises.

Mr Dabdi said the first batch of import may be no larger than 2000 tonnes, but the company would like to scale it up to 20-30,000 tonnes per month in a short period. Lucky Cement is still evaluating which mode, rail or sea, it would use for export.

“Using the sea route from Karachi to Kandla or Mumbai port would definitely be cheaper, but the mode we use would depend largely on the location of the customer,” said Mr Dabdi. He said the company is negotiating with potential customers for orders, but nothing has been finalised yet.

Maple Leaf too has a target of exporting 20-25,000 tonnes of cement per month to India, but initially the quantum may not be more than 10,000 tonnes. The company’s representative in India, S K Arora, who is the director of real estate firm Collage Group, said, “Most of the cement imported from Maple Leaf would be consumed in-house for our own construction projects.”

The initial plans are to get cement through the rail route from the company’s plant in Mianwali, 450 km from Lahore, to Amritsar via Wagah border. “But I don’t know if we have the capacity to handle such big volumes at Amritsar station. Availability of wagons and other facilities would certainly be an issue,” said Mr Arora.

The Indian cement industry has an installed capacity of 172 million tonnes and is working at a capacity utilisation of 97%. There is a demand-supply mismatch with demand growing at an estimated 10% and production at only 7% in the past four months. Pakistani cement can fill in this gap, but the actual impact on prices can be felt only after more foreign manufacturers get the BIS certification and import substantial amounts.

BIS is at present examining applications from 13 other foreign manufacturers, including 10 from Pakistan, and one each from China, Hong Kong and Bangladesh. Besides Lucky Cement (6.8 million tonnes capacity) and Maple Leaf (4 mt), only four applicants have a capacity of 2 mt or more and none of them have more than 3.25 million tonnes of capacity.

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