Ernst & Young: Cement sector to grow in double-digits from next fisc
April, 15th 2011
The 197-million tonne domestic cement industry is set to clock double-digit growth from next fiscal with demand outstripping even the 57-mt capacity addition expected by FY14, says an industry report by Ernst & Young India.
The Rs 77,800-crore (as of March '10) domestic cement market -- already one of the fastest growing ones globally and the second largest among the emerging markets after China -- is on course to a double-digit growth path, it says.
"From FY13, the domestic demand is expected to exceed supply... From FY12 through FY14, the domestic cement industry will add at least 54 mt new capacity," says Ernst & Young India partner Nitin Gupta in a report titled 'Cementing India.'
But he notes that this additional 57 mt capacity is unlikely to be absorbed by domestic demand this fiscal and it sees capacity utilisation level remaining at around 80 per cent during this fiscal.
However, the report adds that from FY13 onwards demand will outstrip supply and this higher demand is expected to continue in the medium to long-term.
The report places its optimism on two factors mainly: the very low per capita intake and the massive USD 1-trillion infrastructure push being given by the government over the next five years.
"Although India is one of the largest cement markets in the world, per capita consumption is still low compared to the global average as well as that of other large markets like China and the US.
"Moreover, the country lags significantly behind China on the infrastructure front and can register an unprecedented growth in infrastructure in future. This is a clear indicator that the industry has huge growth potential and is on course to witness double-digit growth in the coming years," he says.