Cement production up 44% in 5 mths

New Delhi: India's cement production in the past five months has jumped to 44 per cent on a year-on-year basis and 2 per cent as compared to the pre-pandemic April-September 2019 period, to 142 million tonnes (MT), according to a report by rating agency ICRA.

The agency expects the pan-India cement production to be up by around 12 per cent to 332 MT in the current financial year and 358 MT in 2022-23. This will be supported by the pent-up demand, rural housing demand and the pick-up in infrastructure activity, said ICRA in its report on the cement industry. "Based on the trends so far, ICRA expects the all-India cement production to report an increase by around 12 per cent to 332 million MT in 2021-22, which will be supported by the pent-up demand, rural housing demand and the pick-up in infrastructure activity."

"In FY2023, the production is expected to grow eight per cent to around 358 million tons," said ICRA. However, it also expects the industry utilisation levels to remain at moderate levels of 62-64 per cent during 2021-22 and 2022-23, due to the capacity additions. Overall, in the first half of 2021-22, the cement prices were higher by four per cent y-o-y. "This is primarily driven by the increase in input costs, power and fuel and freight expenses over the past few months," it said.

The agency added that the coal prices were higher by 103 per cent, pet coke prices by 87 per cent and diesel prices by 20 per cent on Y-o-Y basis in H1 FY2022. The total revenue of ICRA's sample, which consists of 12 listed cement companies, is expected to increase by 13 per cent in FY2022. This would be largely supported by volumetric growth and elevated input costs are likely to exert pressure on operating margins resulting in a margin contraction by around 200-230 basis points (bps), it added.