Cement firms go slow on capital expenditure

Cement firms go slow on capital expenditure

Owing to muted demand prospects and over capacity, cement companies in India are reportedly slowing their capital expenditure plan in 2013-14.

Launch of residential projects, which constitute two-thirds of demand for cement in India, has slowed down in the country.

UltraTech Cement, the largest cement producer in India, may cut its capital expenditure by 50 per cent in the next 12 months compared to an estimated spending of Rs 44.3 billion ($819.23 million) in the last fiscal year.

At the height of the construction boom in India five years ago, several cement firms planned their capital expenditure programmes. At that time, these cement firms assumed double-digit economic growth would continue for many years.

Since then more than 100 million tonne (mn t) of capacity, or more than 50 per cent, has been added, with 30 mn t added in 2012-2013 alone.

However, the current slowdown in the economy reduced economic growth to around 5 percent.

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