India’s cement industry is going ahead with expansion plans and capacity additions, despite dampened demand expected to persist through H1FY25. Cement giants foresee a modest 7-10 per cent volume growth this fiscal, the sluggish start marked by a pricing downturn notwithstanding.

Majors during their earnings call have guided for “moderation in demand” in the first six months, stemming from elections and subsequent labour shortages. This will be followed by monsoons, and pricing sentiments are expressed to be torpid.

“Going forward, there might be some amount of moderation (demand) in FY25.....Our belief is that the slowdown should be shorter than earlier years, primarily because private sector housing has also picked up momentum,” Atul Daga, CFO, UltraTech Cement said during a recent earnings call.

Cement prices have corrected sharply in Q4FY24, and is expected to remain stable “with no significant improvements in the near term”.

April Price Movement

Trade level prices have gone up by ₹3 per bag, across select markets in South and West India; while price hikes, announced in end-March and early-April have not found takers in North, Central and East Indian regions.

Regionally, the Southern region witnessed average price increase of ₹6 per bag (up 2 per cent m-o-m) with hikes being highest in Tamil Nadu and Kerala (around ₹10 per bag). “But mostly remained flat in other markets”, analyst firm Motilal Oswal said in a report.

Similarly, the Western region saw a price rise of ₹10 /bag m-o-m, mostly initiated in Maharashtra and Gujarat “Sustainability of these hikes unlikely in the near term,” the report mentioned adding that the average hike m-o-m was mere 1 per cent, pan-India.

Expansion plans under-way

Cement majors meanwhile are going ahead with their proposed expansion plans. UltraTech during its earnings call said, the capex is pegged in the ₹9500 crore range for FY25. The company has received single window clearance for expansion in the Northeast and has started due diligence of identified mines. Its capacity at the beginning for FY25 was 146.16 mt.

Daga said, all organic expansions are on track. “(For) Kesoram transaction, CCI approval has already been received....Interesting to note they have already refinanced and reduced the cost of their debt by almost 50 per cent. Keeping in mind the potential capacity that we will get from Kesoram in the same market, we have put on hold our Hotgi grinding unit expansion, which was a 2.7-million-ton ground clearance capacity,” he said.

Adani Group said that it is on-track to take up grinding unit capacities – across Ambuja,ACC and Sanghi - to 140 mt by FY28. The capacity addition is in progress with 35 new units coming up. The current capacity of the group stands at 78.9 mtpa.

JK Cement during its earnings call said, the company incurred a capex of ₹1170 crore in FY24, and expected around ₹1800 – 1900 crore for each of the next two fiscals.

Capex incurred in ongoing projects included 2.0 mtpa grinding unit at Prayagraj that will be likely commissioned in Q2FY25. Orders have been placed for plant and equipment and construction work has started for Panna with cement and clinker capacity of 1 mtpa and 3.3mtpa clinker. Greenfield expansion of 3 mtpa at Bihar & brownfield 1 mtpa each at Hamirpur & Prayagraj (in UP) are also expected to be commissioned in FY26.

In fact, the indications are that commissioning will be preponed, as per some analysts’ reports. The company has planned capex of ₹40 crore in FY25 for modernization of its just acquired Toshali plant in Odisha. For FY25, production is expected to start from Q3FY25.

Recently, Dalmia Bharat announced the installation of a new 1 mt cement mill at Ariyalur, Tamil Nadu. Its total capacity is at 45.6 mt. The company’s long-term growth strategy will be to have an installed capacity to 110 -130 mt by 2031.

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