Faced with huge overcapacity of cement due to lack of demand, Birla Corporation is worried over the possible pressure on margins, as the cement business is the maximum revenue generator for the company.

Chairman of the MP Birla group flagship Mr Harsh Lodha said although the company's cement manufacturing capacity stood at 7.5 million tonne per annum, production was lower due to lack of demand.

He said that "We were shocked to see last year's demand growth, even though the economy grew by 7 to 8%.”

Mr Loha said that the cement industry is expected to grow by 8% to 10%.

He further said that by 2011-12, the company's production capacity would increase to 9.3 million tonne per annum.

The company would also set up a cement plant in Assam with one million tonne per annum capacity in joint venture with the Assam government and has also proposed a three million tonne per annum cement plant in Tripura.

To a query, he said the company has planned an immediate investment of INR 1,050 crore in cement, power and jute. Additionally, the company is trying to secure coal assets for use.

(Sourced from ET)