Local prices, sources said, which dipped to a record Sri Lankan Rs 200 (Indian Rs 117), has recovered last week, thanks largely to the imposition of a differential duty on imports into the country.

While L&T, with joint venture partner Ceylinco, has already kicked off its 0.3 million tonne bagging project a few months ago, Gujarat Ambuja Cements, which is investing $50 million in its Ceylon Ambuja project, is expected to operationalise its 0.5 million tonne bulk terminal project this month.

The prices in Sri Lanka, which has been historically higher than most Indian markets, has been witnessing major volatility following large-scale dumping of low priced cement from Indonesia, Thailand and Malaysia.

As a result, the local prices which were hovering at around SL Rs 350 (Indian Rs 205) a year back, dipped to just around SL Rs 200 (Rs 117). Of late, the prices have stabilised at around SL Rs 260 (Indian Rupees 152) "There has been a sudden oversupply of cement in the Sri Lankan markets due to massive dumping by many of the transnational operators. This has resulted in the dip in prices," said a top L&T official. Sri Lanka is a 2.1 million tonne market for cement with 6-7 players, including transnationals Holderbank and Tokyo Cement. The size of the market in the island nation is smaller than Mumbai, the largest market for cement in India, which has a consumption of 2.5-3 million tonnes.

L&T, which despatched 20,000 tonnes to Sri Lanka last month, is gearing up to prop up its despatches so as to break even in the current financial year.

The company proposes to set up a grinding unit at a later stage. Sources in Gujarat Ambuja Cements said that the prices in the island nation is fast stabilising and has bounced back in recent weeks. "We are optimistic about the Sri Lankan market and hope to start operating the 0.5 million tonne in a few days," said a company official.

In recent months, GACL has been despatching cement consignments from India to create awareness about the Ambuja brand and has set up its warehouse at Peliyagoda.

With the terminal becoming operational, the company will be able to supply bulk cement. GACL also plans to set up a one million tonne grinding unit in the second stage to become a significant player in the local market. As a novel way to differentiate its products, GACL is currently selling cement in Sri Lanka in pre-slung poly covered units of 30 bag each.