Indian Cement Industry to grow at a CAGR of 10.64% by 2015-16

The Indian cement industry has strong competence base and produces quality cement that meets the global standards. Also it has achieved a tremendous success in technological up gradation and integration of latest technology and will be continuing to do so. India is ranked as the second-largest producer of cement in the world, only following China. The said industry is projected to grow at a CAGR of 10.64% over the forecast period (2012-2016). Market Analysis                      

The outlook for India’s cement industry is exceedingly bright and this due to the sustained growth in the housing sector, the Government’s emphasis on both national and state level infrastructure and increased global demand. 

The new dwelling estimates till 2020-21 will be around 140 million units requiring an investment of approximately Rs.20,000 billion. In the suburbs of metro cities and other leading cities of India, where there are large townships with prominent IT zones, there is a huge demand for Ready-Mix Concrete (RMC). Currently the market demand is mainly driven by housing sector. But in the coming years, infrastructure and commercial sectors are expected to drive the change in demand while the share of housing sector is expected to decrease. Upcoming infrastructure projects including roads, railways, airports and bridges, across India will generate a huge demand for cement over the forecast period.

The Indian government revealed plans to invest a further US$1 trillion on infrastructure during the Twelfth Five-Year Plan (2012-2017). Many Indian companies are going for capacity expansion, to meet this rising demand.

Regardless of the surplus production capacity, more capacity addition is expected over the forecast period. The governments’ increased expenditure on infrastructure development, residential and commercial construction activities have been the main reason behind the speedy growth in the Indian Cement industry.

The Indian cement industry has been attracting the top cement companies from all over the world and promoting more mergers and acquisitions for its overall growth. It has also witnessed an outbreak of mergers and acquisitions within the domestic players, bringing smaller players under the canopy of larger companies, and larger companies coming under the canopy of global players.

Cement, being a regional commodity, international competitiveness is not really a serious issue. However, in times of oversupply in the domestic market, being competitive ensures access to the export market. However as cement is a low value, high bulk commodity, freight cost becomes a noteworthy factor in determining the landed cost of cement. This has resulted in a very low volume of international trade in cement. We have to plunge for bulk transportation which can lead to significant advantages such as savings in freight costs and packing costs, avoidance of transit loss, adulteration, pilferage, bursting of bags and damage to cement.

In the overseas market, there are many enquiries for cement with reasonable prices. About 36 states in the US are facing shortage of cement and their construction activity has slowed down. To overcome the problem, the US has relaxed the import duty on cement recently.

Moreover, the industry is also fulfilling its social responsibility by showing concerns about the environment. It has adopted low NOx/SO2 combustion systems, Standards for making composite cement so that all the fly ash and other industrial waste viz. slag are fully used. Market Research Companies All this indicates that the cement industry has an important role to play in the Indian economy and will prosper optimistically in the near future.

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