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A passage to India (part 1)

Published by , Deputy Editor
World Cement,

Yogender Malik shows how steady growth is on the cards for the Indian cement industry. As the second largest cement industry globally, the Indian cement industry registered double digit growth on a volume basis in the financial year ending in March 2019. Spurred on by demand from the government’s infrastructure projects and ambitious ‘Housing for All by 2022’ scheme, Indian cement producers also improved capacity utilisation rates. The country’s cement production and consumption are expected to register steady growth rates on account of these two factors for a number of years to come. This article presents an overview of the Indian cement industry and the viewpoint of key stakeholders in the industry.

In fact, with the Indian government’s infrastructure push and the launch of several mega infrastructure projects, cement demand is seeing a gradual shift from housing towards infrastructure. This is leading to an increase in cement’s share of the overall demand of the infrastructure sector. This upward trend is observed in urban residential and commercial real estate, led by accelerated urbanisation, rapid migration, and the rise in population of aspiring young people in major cities. This is also helping the growth in cement demand. Speaking at UltraTech Cement’s annual general meeting in Mumbai in July 2019, Kumar Mangal Birla, Chairman of Ultra Tech Cement, said, “The Indian cement industry witnessed another good year of favourable demand scenario, achieving double digit volume growth, which was last witnessed in FY10. What is commendable to note is the volume growth of nearly 13% achieved in 2019, in continuation of healthy growth registered in FY18. With a stable government at the centre, we expect a renewed thrust on infrastructure development through the construction of roads, low-cost housing, metro rail networks, airport renovation, irrigation projects, etc.”

Overview of the Indian cement industry

The financial year ending in March 2019 was one of the best yet witnessed by the Indian cement industry. The industry registered volume growth of 13.46% at a production figure of 337 million t of cement. It had been a decade since cement production in the country last achieved a double digit growth rate. Furthermore, capacity utilisation for the industry improved to 71%, which was about 5% higher than the previous year. Cement demand in India is driven by higher infrastructure spending, affordable housing, and an uptick in rural demand. The construction of houses under the government’s flagship scheme, Pradhan Mantri Awaas Yojana (Housing for All by 2022), showed impressive progress, resulting in a strong demand for cement. Infrastructure activities, especially in roads and metro projects, have also been strong demand drivers.

Geographical distribution

India, which can be geographically divided into five different zones from a market point of view, has marked differences in these zones in terms of cement installed capacity. The southern zone, comprising the five states of Tamil Nadu, Karnataka, Kerala, Andhra Pradesh, and Telangana, accounts for a third of country’s installed capacity. On the other end of spectrum, the central zone, comprising the state of Madhya Pradesh, Jharkhand, Bihar, Chhattisgarh, and parts of states of Uttar Pradesh and Rajasthan, accounts for just 13% of the total installed capacity of cement in the country.

Major cement producers in India

A total of 210 large cement plants and 350 mini cement plants together account for 479 million tpy of the installed capacity in the country. Of the total 210 large cement plants in India, 77 are located in the states of Andhra Pradesh, Telengana, Rajasthan, and Tamil Nadu. The top five players – Ultra Tech Cement, Shree Cement, ACC Limited, Ambuja Cement, and Ramco Cements – accounted for a 47.59% market share in terms of cement production in FY18 – 19. With regard to installed capacity, these five companies accounted for a share of 44.36%.

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India cement news