Cement firms lead pvt sector’s capex plans
Despite the pressure of overcapacity and rising input costs, cement firms are leading the private sector’s capital expenditure plans, prompting analysts to re-rate the industry. Industry experts see brisk demand for cement next fiscal year, backed by affordable housing and government expenditure on infrastructure.
Recently, UltraTech Cement, an Aditya Birla Group company, said it was investing Rs 5,477 crore to expand its capacity by 12.8 million tonnes per annum by FY23, its largest investment programme ever. The JSW group, too, said it will pump in over Rs 1,500 crore in its subsidiary Shiva Cement to upgrade its clinker unit in Odisha, while Ambuja Cements and ACC, which are part of LafargeHolcim Group, are expected to spend Rs 780 crore to set up six waste heat recovery systems.
However, India Cements’ plans to invest Rs 1,300 crore to set up a new plant in Madhya Pradesh may be delayed till a full economic recovery from covid-19, the company’s management has indicated.
During the December quarter, cement demand grew 6 to 8 per cent from a year ago, led by pick-up in infrastructure spends, rising non-trade sales, and strong rural demand in eastern and northern markets. Average capacity utilization for the industry rose to 80 per cent against 78 per cent a year ago. During Q3, demand for cement grew 6 to 7 per cent from a year ago, compared to 5 per cent growth in the preceding quarter.