Top companies investing in cement plants

Kathmandu: Nepal's cement industry is being targeted for massive investment by prominent business houses seeking to capitalize on the building boom unleashed after the end of the decade-long insurgency.
The large number of cement factories in the pipeline points to the improving industrial climate and the rising confidence of investors to pour heavy dough into manufacturing enterprises.

Among the frontrunners is Himshree Foods, producer of Rara noodles, which is building a cement factory in Hapure, Dang in partnership with Nepali and foreign investors.

“Keeping in mind the mushrooming real estate business, upcoming hydropower projects and planned construction of infrastructure like roads and bridges, we are injecting around Rs 3.5 billion into cement production

to cash in on the enormous potential demand,” Himshree president Surya Bahadur KC told the Post. KC added that the entire process of registering the factory had been completed.

“We are now seeking bank financing and also looking for partners to invest in the project,” KC said. “We expect to have everything ready for the factory to begin production within eight months,” he added. The plant's capacity is 2,000 tons per day.

Panchakanya Group, a leading manufacturer of construction materials, is also putting money in cement production.

“Even though the investment climate in the country is still not so friendly, as a leading business house, we have been pondering various ideas for new ventures. Accordingly, we are working on setting up a cement factory in the western part of the country,” Panchakanya's managing director Pradeep Kumar Shrestha said.

“We were persuaded to invest in cement because of the flourishing construction sector and our strong countrywide dealer network,” he added.

According to the data made available by the Company Registrar's Office in Kathmandu, 10 cement factories have been registered at the office during the last nine months.

Three weeks ago, a major Nepali business house had published a notice in The Economist calling for partners to invest in cement production in Nepal. The advertisement stated that it had already selected the site for a limestone quarry, the chief raw material, and that the outlay would be in the amount of Rs 6 billion.

Chaudhari Group, a top business house with interests in manufacturing and services, is also joining the cement bandwagon.

“It will be one of the largest production enterprises established as a joint venture with different companies,” president of the group Binod Kumar Chaudhari said. “We will be generating the power required for the factory on our own. We have been shifting from the service sector to manufacturing, but the cement factory is a special case,” he added.

He did not reveal how much Chaudhari was investing in the project or the location of the limestone quarry.

About 2.6 million tons of cement enter Nepal annually, but the demand is estimated to stand at about 3 million tons. Spurred by the rising demand, even the government-owned Hetauda Cement Factory has been scrambling to raise output.

“We are increasing production to 65 percent of capacity from the present 50 percent,” said deputy general manager Shiv Ratna Atal. The factory's total production capacity is 16,000 sacks of cement per day.