Cement Industry Poised For Growth

The Indian cement industry is the second largest cement producer in the world after China with a production capacity of nearly 420 million tonnes. It accounts for 6.9% of the world’s cement output.

- Ankita Chakraborty and Varsha Singh

India’s cement production capacity is expected to reach 550 million tonnes by 2025. The industry provides employment to more than a million people directly or indirectly. In a country like India, the demand for cement is derived chiefly from the housing sector. One-fourth of the demand comes from the infrastructure sector and about 10-15% demand is generated from the commercial construction sector.

According to an ICRA report, the cement off-take continued to be weak in FY2018 and showed only a marginal increase of 0.5% in November 2017. Based on the current trends, the demand for cement is likely to report a modest growth of around 2% in FY2018. Though it registered a y-o-y growth of 17.3% in November 2017, this was primarily due to the base effect arising out of low production of 20.5 million MT in November 2016.

FY 2017-18 was a difficult year for the industry, with growth coming down to low single digit figures. The most obvious cause was the slowdown in the housing sector. There were also a few challenges in FY2017-18 like the ban on sand mining and use of pet coke, diminished market concentration of industry leaders, implementation of the Real Estate Regulatory Authority (RERA) Act, and widespread drought situation. But in Q3 of FY2018, production increased by 11.6% to reach 75.6 million MT supported by demand in Andhra Pradesh, Telangana, the eastern (except Bihar) and western markets. Also, production was lower in Q3 FY2017 on account of demonetisation.