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India’s overall cement production capacity was nearly 545 million tonnes (MT) in FY20 and accounted for over 8% of the global installed capacity in FY20.

Indian Cement Industry Analysis

    Last updated on Jan, 5 2021

India is the second largest cement producer in the world and accounted for over 8% of the global installed capacity as of 2019. India’s overall cement production capacity was nearly 545 million tonnes (MT) in FY20. Of the total capacity, 98% lies with the private sector and the rest with public sector. The top 20 companies account for around 70% of the total cement production in India. As India has a high quantity and quality of limestone deposits through-out the country, the cement industry promises huge potential for growth.

The demand of cement industry is expected to reach 550-600 MT per annum (MTPA) by 2025 because of the expanding demand of different sectors, i.e., housing, commercial construction, and industrial construction.

According to CLSA (institutional brokerage and investment group), the Indian cement sector is witnessing improved demand. Key players reported by the company are ACC, Dalmia and Ultratech Cement. In the second quarter of FY21, Indian cement companies reported a sharp rebound in earnings and demand for the industry increased, driven by rural recovery. With the rural markets normalising, the demand outlook remained strong. For FY21, CLSA expects a 14% YoY increase in EBITDA in the cement market for its coverage stocks.

A total of 210 large cement plants account for a combined installed capacity of 410 MT in the country, whereas, 350 mini cement plants make up for the rest. Of the total 210 large cement plants in India, 77 are in the states of Andhra Pradesh, Rajasthan, and Tamil Nadu. Sale of cement in India stood at Rs 63,771 crore (US$ 9.05 billion) in FY20. India’s export of cement, clinker and asbestos increased at a CAGR of 6.44% between FY16-FY19. In FY20 (till January 2020), it reached US$ 1.66 billion. To enhance the source of capital for infrastructure financing, Credit Guarantee Enhancement Corporation, for which regulations have been notified by the RBI, will be set up in FY20.

According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), cement and gypsum products attracted Foreign Direct Investment (FDI) worth US$ 5.28 billion between April 2000 and March 2020.

India’s export of cement, clinker and asbestos increased at a CAGR of 1.68% between FY16-FY20 and stood at US$ 1.98 billion in FY20.

The Government of India is strongly focused on infrastructure development to boost economic growth and is aiming for 100 smart cities. The Government also intends to expand the capacity of railways and the facilities for handling and storage to ease the transportation of cement and reduce transportation cost. These measures would lead to an increased construction activity, thereby boosting cement demand. As per Union Budget 2019-20, the Government expected to upgrade 1,25,000 kms of road length over the next five years, which would boost the demand for cement. Also, the Government of India extended an additional outlay of Rs. 18,000 crore (US$ 2.43 billion) for the PM Awaas Yojana - Urban over the already allocated Rs. 8,000 crore (US$ 1.08 billion); this is expected to be used for the development of ~30 lakh houses (ground support for 12 lakh houses and completion of 18 lakh houses) and will likely create an additional 78 lakh jobs and boost production and sale in the steel and cement sectors.

Indian Cement Industry Report (November, 2020)
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