Don't miss this sector ( Complete overview )

 The cement production is expected to increase by 10% to 12% and the utilization is expected around 65% in FY22. As per ICRA, in FY22, cement production in India is expected to increase by 12% YoY, driven by rural housing demand and the government's strong focus on infrastructure development.

INTRODUCTION

India is the second largest producer of cement in the world. It accounts for more than 7% of the global installed capacity. India has a lot of potential for development in the infrastructure and construction sector and the cement sector is expected to largely benefit from it. Some of the recent initiatives, such as development of 98 smart cities, is expected to provide a major boost to the sector.

Aided by suitable Government foreign policies, several foreign players such as Lafarge-Holcim, Heidelberg Cement, and Vicat have invested in the country in the recent past. A significant factor that aids the growth of this sector is the ready availability of raw materials for making cement, such as limestone and coal.

At present, the Installed capacity of cement in India is 500 MTPA with a production of 298 MTPA.

The cement demand in India is estimated to touch 419.92 MT by FY 2027. As India has a high quantity and quality of limestone deposits throughout the country, the cement industry promises huge potential for growth.

India's cement production is expected to increase at a CAGR of 5.65% between FY16-22, driven by demands for roads, urban infrastructure, and commercial real estate. The consumption of cement in India is expected to grow to at a CAGR of 5.68% from FY16 to FY22.

As per Crisil Ratings, the Indian cement industry is likely to add ~80 million tonnes (MT) capacity by FY24, the highest in the last 10 years, driven by increasing spending on housing and infrastructure activities.

INVESTMENTS

FDI inflows in the industry, related to the manufacturing of cement and gypsum products, reached US$ 5.48 billion between April 2000-March 2022.

As per DGCIS, India’s export of Portland cement, aluminous cement, slag cement, super sulphate cement, and similar hydraulic cement stood at US$ 118.15 million in FY21.

In 2021, working remotely is being adopted at a fast pace, and demand for affordable houses with ticket sizes below Rs. 40-50 lakh (US$ 53,694-67,118) is expected to rise in Tier 2 and 3 cities, leading to an increase in demand of cement.

Some of the major investments and development in the Indian cement industry are as follows:

In June 2022, UltraTech Cement approved Rs. 12,886 crores (US$ 1.65 billion) capital expenditure to increase capacity by 22.6 million tonnes per annum (MTPA) through brownfield and greenfield projects.

PE/VC investments in real estate stood at US$ 677 million as of April 2022.

PE/VC investments in infrastructure stood at US$ 896 million as of April 2022.

Cement production in India increased by 8.8% in March 2022 over March 2021.

In May 2022, Adani Group acquired a 63.1% stake in Ambuja Cements Ltd along with related assets. Ambuja's local subsidiaries include ACC Ltd, which is also publicly traded.

In February 2022, ACC Limited announced the successful commissioning of a 1.6 MTPA Grinding Unit (GU) at Tikaria in Uttar Pradesh.

In November 2021, UltraTech Cement announced its commitment to the Global Cement and Concrete Association (GCCA) 2050 Cement and Concrete Industry Roadmap to produce carbon-neutral concrete by 2050.

In November 2021, Dalmia Cement announced plans to produce 100% low-carbon cement by 2031. The company has a US$ 405-million carbon capture and utilization (CCU) investment plan to help it realize its goal.

Dalmia Cement plans to spend US$ 1.35 billion to increase its installed cement capacity by 52% to 50MT/yr from 33MT/yr before FY2024.

In November 2021, Dalmia Cement announced plans to invest US$ 70.1 million for setting up its upcoming 2MT/yr cement plant in Bokaro, Jharkhand.

In October 2021, JK Cement Ltd. signed a long-term strategic Memorandum of Understanding (MoU) with Punjab Renewable Energy Systems Private Limited (PRESPL). The MoU is part of JK Cement’s attempts to decarbonize its operations and significantly scale up the use of biomass-based and alternate fuels as replacements to fossil fuels, like coal, in its manufacturing operations.

In October 2021, JSW Group collaborated with Salesforce to support an ambitious digital strategy. Using Salesforce’s Sales Cloud and Service Cloud, JSW Group will offer a single group interface, enhancing distribution, customer experience, and supply chain for the large project division across its steel and cement businesses.

In October 2021Hyderabad-based Penna Cement Industries, received approval from the capital markets regulator Securities and Exchange Board of India (SEBI), to go ahead with its Rs. 1,550 crores (US$ 206.75 million) initial public offering (IPO).

In September 2021, Ambuja Cement launched ‘Concrete Futures Laboratory’, a one-stop solution that will enable budding professionals to test, learn and experience various aspects of cement and concrete.

In September 2021, the Odisha government approved Ramco Cements' expansion plan with an additional grinding capacity of 0.9 MTPA capacity at Haridaspur in Jajpur with an investment value of Rs.190 crore (US$ 25.5).

In September 2021, Shree Cement launched three projects that were valued at Rs. 4,806 crores (US$ 646 million). Of this, Rs. 3,541 crore (US$ 476 million) will be used to establish 3.8 MTPA cement plant in Rajasthan, while the remaining amount will be spent on establishing a grinding plant in West Bengal and installing solar power plants at various cement plants across the country that are valued at Rs. 759 crores (US$ 102 million) and Rs. 506 crores (US$ 68 million), respectively.

GOVERNMENT INITIATIVES

In order to help private sector companies thrive in the industry, the Government has been approving their investment schemes. Some of the initiatives taken by the Government off late are as below:

As per the Union Budget 2022-23:

Higher allocation for infrastructure– US$ 26.74 billion in roads and US$ 18.84 billion in railways is likely to boost demand for cement.

Under the housing for all segments, 8 million households will be identified according to Rs. 48,000 crores (US$ 6.44 billion) set aside for PM Awas Yojana.

The government approved an outlay of Rs. 199,107 crore (US$ 26.74 billion) for the Ministry of Road Transport and Highways, and this step is likely to boost the demand for cement.

As per Invest India, National Infrastructure Pipeline (NIP) expanded to 9,305 projects from 7,400 projects.

In October 2021, Prime Minister, Mr. Narendra Modi, launched the ‘PM Gati Shakti - National Master Plan (NMP)’ for multimodal connectivity. Gati Shakti will bring synergy to create a world-class, seamless multimodal transport network in India. This will boost the demand for cement in the future.

The Union Budget allocated Rs. 13,750 crores (US$ 1.88 billion) and Rs. 12,294 crores (US$ 1.68 billion) for Urban Rejuvenation Mission: AMRUT and Smart Cities 

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Ultratech/Ambuja cement/ Jk cement/ ACC / India cements / Shree cement Etc 

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 ( Owner ) Hemant pagi