Indian cement demand picks up
Cement demand in India increased by approximately 2% y/y in January – February 2014, compared to the same period a year earlier. Demand for cement has picked up in the northern and western regions due to a rise in construction activity and demand in the central region has remained strong as a result of an increase in new building projects. However, demand in the eastern region has remained relatively flat and companies in the south have struggled due to a shortage of sand in Tamil Nadu and political tensions in Andhra Pradesh.
A representative from Karvy Stock Broking, a stock/share trading, online trading and financial services provider in India, said that the industry EBITDA declined in 2013 (by approximately 12 – 44% over the four quarters); however, the cement sector's profit decline is expected to reverse from the end of 2014.
The recently announced LafargeHolcim merger is predicted to improve both companies’ Indian operations. The partnership is expected to help reduce debt and cut costs, as well as tackle decreasing demand and rising energy tariffs in the country.
The merger between ACC and Ambuja Cements (subsidiaries of Holcim) and Lafarge would result in the creation of India’s largest cement company. According to Barclays, the company would have a production capacity of around 69 million tpa and a market share of approximately 20%, overtaking Ultratech which has a production capacity of some 58 million tpa and a market share of around 17%. Chirag Shah, Barclays, stated that the new company could become the market leader in India’s northern and eastern markets and a close second to Ultratech in the western region.
Edited from various sources by Rosalie Starling
Read the article online at: https://www.worldcement.com/asia-pacific-rim/08042014/cement_demand_picks_up_in_india_08/