By Nitin Chittal

The Most important factor that decides the location of a cement plant is its proximity to the source of limestone. Since cement manufacturing is a weight-losing process, (for a tonne of cement 1.2-1.3 tonne of limestone is required), it makes sense to locate the plant near a limestone mine. As a result, 51.3 per cent (56.45 mt) of the country's total cement capacity is located in seven limestone clusters in the country. These clusters account for 53 per cent of the total cement production in the country.

State-wise, Andhra Pradesh has the largest limestone reserves followed by Madhya Pradesh and Rajasthan. However, large cement capacities have come up in Tamil Nadu and coastal Gujarat as well.

The leader as of March 1999 is Madhya Pradesh (26.03 mt), followed by Andhra Pradesh (16.70 mt), Rajasthan (15.07 mt) and Gujarat (12.59 mt).

Freight decides distribution
Cement being bulky, its transportation over long distances is not feasible. Transportation by road beyond 250 km skews the economics. Though road is the preferred mode of transport for shorter distances, rail is preferred for longer distances. However, lack of railway infrastructure like lines and wagons, limit the amount of cement that can be transported as well as the areas to which it can be transported. For, beyond a certain distance, even railways become uneconomical. Which is why coastal plants prefer sea transport, which costs a third of road transport costs.

Sea transport, however, is the privilege of a chosen few -- those with plants located in coastal areas. Gujarat Ambuja, the pioneer of bulk sea transport in India, despatches cement via sea to Mumbai and the far south.

Regional preference
Outward freight at 17 per cent of the total operating costs is a significant head and it makes sense for companies to try and minimise it. This is the reason why cement companies try to sell their output in local markets.

All states, except Madhya Pradesh consume around 80 per cent of their cement outputs. The aberration is due to the fact that demand in Madhya Pradesh is a paltry 5.1 mt, while total capacity and production in the state are 25.7 mt and 19.1 mt, respectively. Necessarily, the state needs to feed its excess production to the north (Uttar Pradesh, 6.3 mt and Haryana, 1.2 mt), and the east (Bihar, 1.5 mt and West Bengal, 2.3 mt).