Executive Summary
In this study on ‘Cement
Industry - Region-wise Demand-Supply Analysis’, we have
studied the overall supply conditions existing in the country, the
demand for cement and its effect on prices. The study has been
compiled to see when the demand will catch up with supply after
taking into consideration the inter-regional movements of
cement.
Supply-demand situation is a
critical factor in determining the overall profitability of the
industry. Even a small imbalance in demand and supply can result in
disproportionate changes in the cement prices.
Booming prices in FY95 and FY96 led
to large-scale capacity additions. As a result, supply outstretched
demand in the subsequent years. Prices began to slip as these
capacities started adding to the production. However, the industry
is slowly recovering as demand is catching up with supply and there
is hardly any capacity addition.
In FY02, cement sales increased by
around 9.6%, compared to a 0.6% decline yoy. The industry is
expected to grow at a rate of 7-8% in FY03. The slowdown of
industrial growth witnessed in FY 2000, continued in FY01. The
growth in terms of Index of Industrial Production (IIP) was 2.3% as
compared to 5.8% in the previous year. Industrial slowdown hit all
the major sectors. The infrastructure industry, with a total
weightage of 26.7% in the index, achieved a growth of only 2%
during April-December 2001(as per last available figures) as
against 6.8% in the previous year. Inspite of this, cement sector
registered a robust growth of 9.6% during FY02.
The installed capacity of the
industry reached 135mn tons in FY02. The industry has added
capacity of around 14mn tons during the year. India is the second
largest producer of cement after China. But the present per capita
cement consumption is around 82kgs as against the world average of
255kgs. This lower per capita consumption presents a good
opportunity for growth of cement industry in future.
