Cyclical challenge

Cyclical challenge

India is the second largest manufacturer of cement in the world. The Indian cement industry includes 20 companies which account for over 70 per cent of the market. With these 20 major players planning to up their capacity in the year 2013, the cement production is expected to increase. Nevertheless, the industry is currently facing a downward pressure on account of increase in input costs and slackness in demand forcing prices downwards. Experts from this sector believe that once the pending projects, development in the tier II and tier III cities gets back on track, the demand for cement will rise.

According to data from Cement Manufacturers Association (CMA), India has around 139 large cement plants with a capacity of 234.3 million tonne as on March 31, 2011. India's cement industry experienced a modest recovery in 2011-12 with demand rising 6.6 per cent compared to a mere 4 per cent increase in 2010-11. The sale of cement rose to 223.02 million tonne in 2011-12 from 209.5 million tonne in 2010-11 whereas production expanded 6.2 per cent to 223.6 million tonne against 210.5 million tonne. The pan-India price of cement rose 14 per cent on an annual basis in 2011-12 and cement companies added 63 million tonne production capacity in the last two years.

However, now the industry is going through a challenging phase. Players from the field are optimistic that the situation will improve in the near future. The industry is expected to add 30-40 million tonne of capacity in 2013.The sector is set to see large scale merger and acquisition. CARE Research estimates the cement demand to grow at a CAGR of 8.3 per cent during the period FY12-15.

With the industry in its cyclical phase of challenges, we, at ICR, decided to bring forth the major players and their views on the industry. We have further quizzed them on their expectations from the upcoming budget of 2013. Extraordinary concrete machines were on display at bC India from Februalry 5-8, 2013 at Bandra Kurla Complex, MMRDA Grounds, Mumbai thus proving that technology is getting more and more sophisticated in the sector. Taking a leaf from the same, the Indian Cement Review conference is being scheduled in April to deliberate many important issues amidst a galaxy of experts. So look for the announcement advertisement in this issue and book your seats early in this conference.

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