Economy & Market
Cement producers to add 23 mn t next fiscal
The cement industry, already reeling from an oversupply situation, is expected to add 23.3 million tonne of capacity in 2011-12 with the southern region accounting for a lion's share of 9.2 million tonne. The east is next with 4.1 million tonne while the north will see 3.7 million tonne of addition. The western and central regions are not too far behind with 3.3 million tonne and 3 million tonne respectively, say industry sources. This fiscal, cement companies have added 24 million tonne till October with another 20.9 million tonne scheduled to be wrapped up by the end of this fiscal. In the process, the cement capacity in India will be 301.6 million tonne, up from 257 million tonne in 2009-10. The downside, though, is that demand has been lacklustre in the last few months, especially from the housing sector. The industry's capacity utilisation currently hovers around 78 per cent, down from 87 per cent last fiscal. It may fall to 77 per cent in 2011-12. Factoring in the moderate 5 per cent increase in sales in the first half coupled with the average GDP growth estimate of 7.5 per cent in the next two years, the demand for cement may at best rise to about 9.5 per cent. The fall in demand during the last few months has largely been due to the slowdown in the housing sector which accounts for about 65 per cent of cement consumption. Real estate companies had to go slow on projects as bank borrowings have turned costly. Demand for cement from sectors such as road, railways, ports and power projects is expected to improve with the Centre planning to invest about Rs 460,000 crore ($1 trillion) in the Twelfth Plan (2012-17).