The Hindu Business Line : TN cement companies not gung-ho about Karaikal port

Chennai, April 17 Cement companies with factories in Tamil Nadu are happy that a new port has come up at Karaikal, but do not appear to be gung-ho about it.

In what he described as a “fulfilling moment for Marg Ltd”, the company’s Chairman, Mr G.R.K. Reddy, said that the port that his company has built would be a hit with the cement producers.

Cement companies need coal; using the Karaikal port instead of Chennai or Tuticorin will help save between Rs 100 and Rs 150 a tonne of coal, Marg’s officials told Business Line. At the current prices, this is about 4-6 per cent saving.

Sources in the cement industry do not share Mr Reddy’s enthusiasm. There are four major companies in Tamil Nadu — India Cements, Madras Cements, Dalmia Cements and Chettinad Cements.

Between them, they have some 23 million tonnes of capacity. As a thumb rule, coal requirement is about 10 per cent of cement capacity.

But not all the plants of these companies are located within the catchment area of the Karaikal port. For example, the R R Nagar plant of Madras Cement and the Sankar Nagar factory of India Cements are closer to the Tuticorin port.

Even it is assumed that cement companies could potentially bring in 2 million tonnes of coal through the Karaikal port, it is doubtful if they would do so.

Viability

Cement industry sources said that while the new port would certainly save transportation costs, there are other issues involved.

For example, companies bring coal from Chennai or Tuticorin port to its Alathur and Ariyalur plants through trucks and ships out cement through the same trucks. If coal is brought through the Karaikal port, the truck logistics will change.

Sources said that while the companies would also “try” the new port, they are not going to rush to Karaikal.

Asked if the port could be used to ship out cement, sources said it would be unviable to do so.

The Karaikal port kicks-off with an initial capacity of 4 million tonnes and wants to quickly expand to 25 million in two years.

More Stories on : Outlook | Shipping/Ports | Cement | Tamil Nadu

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