The raw material of the construction industry lies in the strength of its cement, without which there would be no strong groundwork. India’s cement sector posted 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 demand for cement, nosedived to 4 per cent in 2010-11 as compared to the strong growth in the previous years, due to prolonged monsoon and subdued offtake of cement for construction activity. Despite building excess capacity and running plants at low operating levels, cement makers were able to maintain their margins at 19 per cent in 2011-12 because of the rise in the price of the commodity. 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.
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. Of these, the capacity of 97 plants is 1 million tonne and above.
Besides this, there are around 365 mini and white cement plants with a total installed capacity of around 11 million tonne.
The outlook for the industry remains rosy, with demand for the building material expected to rise almost 8 per cent year-on-year in 2012-13, according to a report by Crisil Research.
A signifi cant amount of demand is expec ted from the housing and infrastructure projects in the pipeline. Low base effect may also be a driver of cement consumption; despite being the world’s second largest market, the Indian cement industry has a very low average per capita consumption–ranging from 180kg-190 kg, as against the world’s average of 400kg-450 kg and 600-800 kg in developed countries.
