Indian Cement Industry Growth
The Indian cement industry is poised for a remarkable phase of expansion, with plans to add 145-160 million tonnes of capacity from FY25 to FY28. This move is a strategic response to the burgeoning demand from the infrastructure and housing sectors and marks a significant development in the industry’s growth trajectory.
Capacity Expansion: A Response to Rising Demand
In the last five fiscal years, the industry has seen an addition of 119 million tonnes per annum, culminating in a total capacity of 595 million tonnes. The forthcoming capacity augmentation is not just about meeting the escalating demand; it’s also a concerted effort to consolidate market share in a highly fragmented and competitive arena.
Growth Trends and Regional Focus
The cement industry has experienced impressive demand growth, with an 8% increase in FY22 and a 12% surge in FY23. The coming fiscal year is anticipated to witness the commissioning of 70-75 million tonnes of new capacity, with a significant focus on the eastern and central regions of India. This regional emphasis underscores the industry’s strategy to tap into area-specific demand dynamics.
The Role of Major Players and Market Dynamics
Large cement manufacturers are set to account for over half of the planned capacity addition. This trend underscores the robust financial health and strong market presence of these major players. However, the influx of incremental supply and heightened competition is expected to keep price growth in check, with predictions of a mere 0-1% increase, stabilizing Cement prices in India around Rs 390-395 per 50-kg bag.
Fiscal Forecasts and Price Trends
Looking ahead, the industry anticipates a demand growth of 10-12% this fiscal, propelled by government initiatives in affordable housing and infrastructure projects. The subsequent fiscal year might see a moderation in demand growth to 4-6%, with a potential uptick in cement price in Hyderabad Rs 400-405 per 50-kg bag.
Insights from Industry Experts
Industry analysts have highlighted key trends impacting the industry. An expert notes a 1% decrease in cement prices during the first three quarters of the current fiscal, marking a reversal after four years of growth. Bhatt points out the easing of power, fuel, and freight charges, which collectively account for half of the production cost, providing relief to manufacturers amid steady realizations.
Conclusion: A Period of Robust Growth Amid Challenges
The Indian cement industry is embarking on a period of significant growth, driven by solid demand and backed by the financial strength of its leading players. However, this growth comes with its own set of challenges, including price stabilization due to increased supply and intense market competition. As the industry navigates these dynamics, its ability to balance expansion with profitability will be crucial in shaping its future trajectory.
The expansion is a strategic response to the rising demand from the infrastructure and housing sectors, indicating a significant development in the industry’s growth trajectory.
In the last five fiscal years, the industry has added 119 million tonnes per annum, resulting in a total capacity of 595 million tonnes.
The industry experienced an 8% growth in FY22 and a 12% surge in FY23. The focus for the coming fiscal year is on commissioning 70-75 million tonnes of new capacity, particularly in the eastern and central regions of India.
Major cement manufacturers are set to account for over half of the planned capacity addition. While this highlights their robust financial health, it is expected to keep price growth in check, with predictions of a mere 0-1% increase, stabilizing cement prices in India around Rs 390-395 per 50-kg bag.
The industry anticipates a demand growth of 10-12% in the current fiscal, driven by government initiatives in affordable housing and infrastructure projects. The subsequent fiscal year might see a moderation in demand growth to 4-6%, with a potential uptick in cement prices in Hyderabad to Rs 400-405 per 50-kg bag.