Mumbai: To cash in on rising demand from infrastructure and housing sectors, the cement industry is on course to add capacity by 150-160 million tonnes from FY25 to FY28, a report said on Tuesday. In the past five fiscals, the industry has added capacity by 119 million tonnes (MT) per annum to reach a total of 595 MT now, according to a Crisil Ratings report.
The capacity addition is for the purpose of meeting the rising demand as well as to consolidate market share in a highly fragmented and competitive industry, the report added. Cement demand grew 8 per cent in fiscal 2022 and 12 per cent in FY23. As much as 70-75 MT capacity addition is expected to be commissioned in next fiscal, with 50-55 per cent concentrated in the eastern and central regions.
Large players will account for 50-55 per cent of the planned capacity addition, the report said, adding, however, incremental supply and stiffer competition will cap price growth but benign cost will protect and aid margins. Robust demand in the past two fiscals has bolstered the balance sheets of large cement players and some mid-sized ones with strong market presence, prompting them to expand capacity on the back of healthy cash accrual and credit profile. This fiscal, demand is projected to grow 10-12 per cent, driven by the government push to affordable housing and pre-election spending on infrastructure.
