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Cement industry posts 6.4% growth in FY12

Demand revival in second half of the year gives boost to numbers

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Chandan Kishore Kant Mumbai
Last Updated : Jan 21 2013 | 2:54 AM IST

After posting the poorest show in a decade in 2010-11, at sales growth of less than five per cent, India’s cement industry put up a better performance in financial year 2011-12, thanks to the robust demand revival in the second half of the year.

The 330-million-tonne industry grew 6.4 per cent against less than five per cent in FY11. This was better than the cement makers’ earlier estimates of six per cent. However, later in the year when demand revived, industry officials and sector analysts turned positive, with growth projections of 6.5-7 per cent.

The industry sold 223.02 million tonnes of the building material, compared with 209.5 million tonnes in FY11. Production, too, rose to 223.6 million tonnes against 210.5 million tonnes, up 6.2 per cent.



During the first half of the year (April-September), the industry managed to grow a mere 3.23 per cent. However, the strong revival in demand from the third quarter of FY12 helped cement makers raise prices, which improved their profitability.

In November, the industry notched up sales growth of 19.5 per cent (one of the highest in many years in a month). Though, the demand growth later tapered, it remained in double digits till February. It was during this time that prices hit an all-time high of Rs 300 for a 50-kg bag. This level prevails even now.

“The industry witnessed demand rise across the country. In particular, western, central and northern regions were the main contributors for strong demand revival,” says the research head of a Mumbai-based brokerage.

However, the ending month of FY12 could not remain in line with the earlier few months, as sales dipped to single-digit. In March, the industry sold 22.5 million tonnes, a rise of 7.5 per cent against the corresponding month last year.

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Going forward, industry officials are optimistic and project growth at eight to nine per cent. The Holcim group of companies — ACC and Ambuja Cements — have chalked out expansion plans worth Rs 5,000 crore, while Aditya Birla Group’s UltraTech Cement has plans to add 25 million tonnes of capacity in the next few years.

According to the latest report from the working group on the industry for the 12th five-year Plan (2012-17), India would require overall cement capacity of around 480 million tonnes. This would mean the industry will have to add another 150 million tonnes of capacity during the period.

Currently, the top players — UltraTech, ACC, Ambuja Cements, Jaiprakash Associates, India Cements — and Shree Cement, collectively control more than half of the cement market in the country. There are 40 players in the industry across the country.

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First Published: Apr 12 2012 | 12:30 AM IST

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