Connect with us

Economy & Market

HOUSING FOR ALL

Published

8 years ago

on

Shares

What’s in store for cement?
Analysts across spectrum estimate that if only 25 per cent of houses are substituted, then the total incremental cement requirement per annum will be around 10 MT.
Housing for All by 2022 (HFA-22) is the flagship project of Prime Minister Narendra Modi. President Pranab Mukherjee, in his address to the joint session of Parliament on June 9, 2014, had announced that "by the time the nation completes 75 years of its independence, every family will have a pucca (permanent) house with water connection, toilet facility, 24×7 electricity supply and access". In order to achieve this objective, the central government launched a comprehensive scheme called Pradhan Mantri Awas Yojana (PMAY) – HFA-22. The scheme received cabinet approval in June 2015, and since then has been taking shape for faster execution.
Based on the recent activities of the government, industry experts believe the scheme is finally picking up pace and there may be a big jump in execution than what it was witnessed in the past. In this story, ICR has analysed the construction target of the government, likelihood of actual construction versus target and what is in store for the cement sector if the scheme is implemented on time. The story also analyses which states stand to benefit from this scheme and in turn which cement companies will be the beneficiaries.Increase in demand
Analysts expect incremental cement demand at 3.76 per cent per annum from the ‘Housing for All’ scheme. Based on the calculations in respect of total investment and number of housing units to be constructed under the scheme, cement players expect incremental cement demand to the extent of around 10 MT to be generated, translating into a growth of 3.76 per cent per annum. However, given the fact that cement demand growth of only 4 per cent to 5 per cent coming in from normal housing and infrastructure segments, the total cement demand growth is unlikely to touch double digits despite assumption of full scale implementation of ‘Housing for All’ scheme. Therefore, while the contribution from ‘Housing for All’ scheme is significant, it will not help the cement industry to achieve higher capacity utilisation by FY20.
To this, Pushpraj Singh, Chief Marketing Officer, JSW Cement, says, "On the back of ‘Housing For All’ scheme, we expect cement growth of about 7 to 8 per cent in the times to come." He added: "So if you see the CAGR of the industry, it has not been positive. It has been almost stabilised at whatever level it was for the last five years in South. If you look at the Eastern and the Northern regions, there has been significant growth. Combined, we expect about 6 to 7 per cent growth in the overall cement market in India."Technology
Since affordable housing require fast pace work completion, in this situation, Manju Yagnik, Vice Chairperson, Nahar Group, suggests precast construction as a cost-effective method for affordable housing. "It’s a fast and sustainable building technology for large housing projects that doesn’t compromise on quality," Yagnik says. Precast is a standard building system based on ready-made, factory-manufactured elements and intelligent connections. It provides how to style and construct an ample range of appropriate homes to fulfill the requirements of city dwellers in an exceedingly affordable timeframe and at an affordable price. Such new technologies will help boost the supply faster for affordable housing at a reasonable price. Ashok Mohanani, Chairman and Managing Director, Ekta World, believes that Indian property developers are adopting international strategies like pre-fabricated construction, dry-wall techniques, and slip-form construction for quick development. However, he thinks there’s a need to cut back the value of procurement of recent technological instruments and alternative products and materials. "Value engineering and rationalisation of the overhead costs can facilitate the sector vastly in bringing down the value of affordable housing units," he suggests. 32 million housing units on the card
The government had earlier constituted a technical group to ascertain actual urban housing shortfall in India. In a report published in 2012, the group estimated urban housing shortage at 18.8 million units. For the rural segment, the government recently outlined a scheme wherein it will build 13.2 million houses with the help of state governments and some contribution from the beneficiaries. This adds up to total housing requirement of around 32 million dwelling units (DU) by 2022. Meanwhile, total investment of $246 billion to achieve HFA-22 objectives, which means much higher private sector participation is required.What’s in for the cement sector?
Nirmal Bang, an equity research company based in Mumbai, assumed of
32 million units with an average area of Rs 400 per sq ft at an average construction cost of Rs 250 per sq ft. Nirmal Bang has estimated how much incremental cement demand HFA-22 can generate. The method they have used is based on the total investment and cement intensity of the project. Real estate developers that they connected believe that each housing unit will cost on an average Rs 1,250 per sq ft. Out of this, total construction cost is Rs 700 per sq ft and cement cost is
Rs 100 per sq ft. This tallies with general cement requirement of 20 kg per sq ft for construction of individual housing units. The key challenge in estimating the incremental cement demand and to understand how much this HFA- 22 construction will substitute individual house building in the country. Even if industry estimates that if only 25 per cent of houses are substituted, then total incremental cement requirement per annum will be 10 MT. This is a sizable addition to cement demand at 3.76 per cent.
However, ICICI Securities estimates differ from Nirmal Bang. As per ICICI Securities, even if one estimates only 20 per cent of houses to be constructed under PMAY get completed by 2022, assuming average size of the house 270 sq ft and 18 kg of cement requirement per square feet, it will give total cement requirement of approximately 27 MT by FY22.Companies to benefit
Based on the earlier success of housing construction, analysts believe that PMAY – rural has more potential in states like Uttar Pradesh, Bihar and West Bengal. Cement companies with higher exposure in the eastern and central regions (like UltraTech Cement, Shree Cement, Dalmia Cement and Birla Corporation) will benefit from the same. Under PMAY – urban scheme, states like Tamil Nadu, Madhya Pradesh, Andhra Pradesh and Maharashtra will stand to benefit. Companies with higher exposure to the southern region (like Dalmia Cement, Ramco Cements and India Cements) will benefit from the same.
It is expected that the share of infrastructure in overall cement demand would increase from the current 18-20 per cent to 22-24 per cent over the next five years, led by increased government spend. Over the last few years, weak macroeconomic environment along with several regulatory issues have impacted spending on infrastructure. However, increase in project announcement along with pick-up in execution suggests a sign of revival in the sector.
In addition, with general elections approaching in the next 18 months, it is expected that the project execution pace to improve further. Within infrastructure spends, industry expect roads and highways, railways, metros, airports, irrigation and urban infrastructure to drive higher growth. Analysts estimate a huge 160-190 MT potential cement demand from planned government infrastructure projects.
That said, India’s 17 states are expected to go for assembly election by FY20, which has likely consumed approximately 142 MT (around 50 per cent of cement demand) of cement in FY17. Five states in FY19 and nine states in FY20 are expected to go for state election.The disparity
Housing shortage in India is experienced by lower income group, which makes subsidy model redundant Housing schemes in the past have failed as the subsidy model doesn’t work, because the income level of homeless people is so low that they cannot afford to build a house even with the help of subsidy from the government. Based on studies conducted by the government, the housing need arises from the congestion in the house rather than homelessness.
Based on the government studies, around 80 per cent of total requirement comes from congestion in the house, which means the number of married couples in the house is more than the number of rooms available. This is a common phenomenon in urban areas, and because of the same, slum redevelopment projects take a huge time to take off as the density of population living in the area is high.
Moreover, the studies further highlight that 96 per cent of total requirement is from people coming under economic weaker section and lower income group categories. The definition of economic weaker section then was household with income below
Rs 5,000 per month and the same for lower income group was income between
Rs 5,000 to Rs 10,000 per month. This clearly shows that interest subvention scheme is not likely to address the housing problem as the income bracket of population facing housing shortage will have affordability issues.Progress of PMAY
As of now, 35 MoAs have been signed with 30 states and 5 union territories;
4,317 cities (472 Class I cities) have been selected in 35 states and union territories for inclusion under the scheme. Till now, the government has considered 7,474 projects for construction of 37 lakh houses for the economic weaker section in 35 states and union territories involving central assistance of Rs 2 lakh crore.
Meanwhile, of the Rs 57,000 crore central assistance, Rs 13,149 crore as a part of the first installment has been released to the concerned states against approved projects. As per the Ministry of Housing and Urban Affairs, at present only 3 lakh dwelling units have been constructed so far and another around 13 lakh housing units are under construction.
The industry has added cement capacities at 10.2 per cent CAGR over past decade; while demand clocked about 6.2 per cent CAGR. This has led to increase in surplus capacities from 34 MT (14 per cent of total capacity) in FY10 to 129 MT (31 per cent of capacity) in FY17. Utilisation levels also declined from peak of 98 per cent in FY07 to 69 per cent by FY17. Krupal Maniar, CFA, ICICI Securities, believes that up-cycle would be slow, gradual and elongated as we expect capacity addition at 3-4 per cent CAGR over next five to six years.
Increasing greenfield plant capex cost and rising entry barriers (like mine auction, regulatory clearances) are unlikely to push supply additions significantly. ICICI Securities expect cement demand to clock approximately 6 per cent CAGR (still lower than/in-line with GDP growth), resulting in gradual but steady improvement in utilisations over next five to six years. The Government focus on rural economy and higher infrastructure spends is likely to improve demand for the sector. Accordingly, Dharmesh Shah, Research Analyst, ICICI Securities, says "we expect utilisation to improve gradually by 500 bps to 74 per cent in FY20E."More M&A deals in the offing
The cement industry has seen some consolidation in recent years due to rising overcapacity, longer gestation periods (in securing various government/environment clearances, acquiring land), higher costs (elevated land costs) and issues relating to debt servicing. Some of the key deals have been UTCEM acquisition of JPA cement assets, Nirma’s acquisition of Lafarge cement business in India, and Birla Corp’s acquisition of Reliance Cement. The due diligence for ACC-ACEM merger is also on. Binani Cement and Murli Industries are under NCLT restructuring with Dalmia Bharat recently announcing the acquisition of Murli Industries.– RAHUL KAMAT

Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Concrete

Adani’s Strategic Emergence in India’s Cement Landscape

Published

4 days ago

on

September 16, 2025

By

Shares

Milind Khangan, Marketing Head, Vertex Market Research, sheds light on Adani’s rapid cement consolidation under its ‘One Business, One Company’ strategy while positioning it to rival UltraTech, and thus, shaping a potential duopoly in India’s booming cement market.

India is the second-largest cement-producing country in the world, following China. This expansion is being driven by tremendous public investment in the housing and infrastructure sectors. The industry is accelerating, with a boost from schemes such as PM Gati Shakti, Bharatmala, and the Vande Bharat corridors. An upsurge in affordable housing under the Pradhan Mantri Awas Yojana (PMAY) further supports this expansion. In May 2025, local cement production increased about 9 per cent from last year to about 40 million metric tonnes for the month. The combined cement capacity in India was recorded at 670 million metric tonnes in the 2025 fiscal year, according to the Cement Manufacturers’ Association (CMA). For the financial year 2026, this is set to grow by another 9 per cent.
In spite of the growing demand, the Indian cement industry is highly competitive. UltraTech Cement (Aditya Birla Group) is still the market leader with domestic installed capacity of more than 186 MTPA as on 2025. It is targeted to achieve 200 MTPA. Adani Cement recently became a major player and is now India’s second-largest cement company. It did this through aggressive consolidation, operational synergies, and scale efficiencies. Indian players in the cement industry are increasingly valuing operational efficiency and sustainability. Some of the strategies with high impact are alternative fuels and materials (AFR) adoption, green cement expansion, and digital technology investments to offset changing regulatory pressure and increasing energy prices.

Building Adani Cement brand
Vertex Market Research explains that the Adani Group is executing a comprehensive reorganisation and consolidation of its cement business under the ‘One Business, One Company’ strategy. The plan is to integrate its diversified holdings into one consolidated corporate entity named Adani Cement. The focus is on operating integration, governance streamlining, and cost reduction in its expanding cement business.
Integration roadmap and key milestones:

  • September 2022: The consolidation process started with the $6.4 billion buyout of Holcim’s majority stakes in Ambuja Cements and ACC, with Ambuja becoming the focal point of the consolidation.
  • December 2023: Bought Sanghi Industries to strengthen the firm’s presence in western India.
  • August 2024: Added Penna Cement to the portfolio, improving penetration of the southern market of India.
  • April 2025: Further holding addition in Orient Cement to 46.66 per cent by purchasing the same from CK Birla Group, becoming the promoter with control.
  • Ambuja Cements amalgamated with Adani Cement: This was sanctioned by the NCLT on 18th July 2025 with effect from April 1, 2024. This amalgamation brings in limestone reserves and fresh assets into Ambuja.
  • Subject to Sanghi and Penna merger with Ambuja: Board approvals in December 2024 with the aim to finish between September to December 2025.
  • Ambuja-ACC future integration: The latter is being contemplated as the final step towards consolidation.
  • Orient Cement: It would serve as a principal manufacturing facility following the merger.

Scale, capacity expansion and market position
In financial year-2025, Adani Cement, including Ambuja, surpassed 100 MTPA. This makes it one of the world’s top ten cement companies. Along with ACC’s operations, it is now firmly placed as India’s second-largest cement company. In FY25, the Adani group’s sales volume per annum clocked 65 million metric tonnes. Adani Group claims that it now supplies close to 30 per cent of the cement consumed in India’s homes and infrastructure as of June 2025.
The organisation is pursuing aggressive brownfield expansion:

  • By FY 2026: Reach 118 MTPA
  • By FY 2028: Target 140 MTPA

These goals will be driven by commissioning new clinker and grinding units at key sites, with civil and mechanical works underway.
As of 2024, Adani Cement had its market share pegged at around 14 to 15 per cent, with an ambition to scale this up to 20 per cent by FY?2028, emerging as a potent competitor to UltraTech’s 192?MTPA capacity (186 domestic and overseas).

Strategic advantages and competitive benefits
The consolidation simplifies decision-making by reducing legal entities, centralising oversight, and removing redundant functions. This drives compliance efficiency and transparent reporting. Using procurement power for raw materials and energy lowers costs per ton. Integrated logistics with Adani Ports and freight infrastructure has resulted in an estimated 6 per cent savings in logistics. The group aims for additional savings of INR 500 to 550 per tonne by FY 2028 by integrating green energy, using alternative fuel resources, and improving sourcing methods.

Market coverage and brand consistency
Brand integration under one strategy will provide uniform product quality and easier distribution networks. Integration with Orient Cement’s dealer base, 60 per cent of which already distributes Ambuja/ACC products, enhances outreach and responsiveness.
By having captive limestone reserves at Lakhpat (approximately 275 million tonnes) and proposed new manufacturing facilities in Raigad, Maharashtra, Adani Cement derives cost advantage, raw material security, and long-term operational robustness.

Strategic implications and risks
Consolidation at Adani Cement makes it not just a capacity leader but also an operationally agile competitor with the ability to reap digital and sustainability benefits. Its vertically integrated platform enables cost leadership, market responsiveness, and scalability.

Challenges potentially include:

  • Integration challenges across systems, corporate cultures, and plant operations
  • Regulatory sanctions for pending mergers and new capacity additions
  • Environmental clearances in environmentally sensitive areas and debt management with input price volatility

When materialised, this revolution would create a formidable Adani–UltraTech duopoly, redefining Indian cement on the basis of scale, innovation, and sustainability. India’s leading four cement players such as Adani (ACC and Ambuja), Dalmia Cement, Shree Cement, and UltraTech are expected to dominate the cement market.

Conclusion
Adani’s aggressive consolidation under the ‘One Business, One Company’ strategy signals a decisive shift in the Indian cement industry, positioning the group as a formidable challenger to UltraTech and setting the stage for a potential duopoly that could dominate the sector for years to come. By unifying operations, leveraging economies of scale, and securing vertical integration—from raw material reserves to distribution networks—Adani Cement is building both capacity and resilience, with clear advantages in cost efficiency, market reach, and sustainability. While integration complexities, regulatory hurdles, and environmental approvals remain key challenges, the scale and strategic alignment of this consolidation promise to redefine competition, pricing dynamics, and operational benchmarks in one of the world’s fastest-growing cement markets.

About the author:
Milind Khangan is the Marketing Head at Vertex Market Research and comes with over five years of experience in market research, lead generation and team management.

Continue Reading

Concrete

Precision in Motion: A Deep Dive into PowerBuild’s Core Gear Series

Published

1 month ago

on

August 16, 2025

By

Shares

PowerBuild’s flagship Series M, C, F, and K geared motors deliver robust, efficient, and versatile power transmission solutions for industries worldwide.

Products – M, C, F, K: At the heart of every high-performance industrial system lies the need for robust, reliable, and efficient power transmission. PowerBuild answers this need with its flagship geared motor series: M, C, F, and K. Each series is meticulously engineered to serve specific operational demands while maintaining the universal promise of durability, efficiency, and performance.
Series M – Helical Inline Geared Motors: Compact and powerful, the Series M delivers exceptional drive solutions for a broad range of applications. With power handling up to 160kW and torque capacity reaching 20,000 Nm, it is the trusted solution for industries requiring quiet operation, high efficiency, and space-saving design. Series M is available with multiple mounting and motor options, making it a versatile choice for manufacturers and OEMs globally.
Series C – Right Angled Heli-Worm Geared Motors: Combining the benefits of helical and worm gearing, the Series C is designed for right-angled power transmission. With gear ratios of up to 16,000:1 and torque capacities of up to 10,000 Nm, this series is optimal for applications demanding precision in compact spaces. Industries looking for a smooth, low-noise operation with maximum torque efficiency rely on Series C for dependable performance.
Series F – Parallel Shaft Mounted Geared Motors: Built for endurance in the most demanding environments, Series F is widely adopted in steel plants, hoists, cranes, and heavy-duty conveyors. Offering torque up to 10,000 Nm and high gear ratios up to 20,000:1, this product features an integral torque arm and diverse output configurations to meet industry-specific challenges head-on.
Series K – Right Angle Helical Bevel Geared Motors: For industries seeking high efficiency and torque-heavy performance, Series K is the answer. This right-angled geared motor series delivers torque up to 50,000 Nm, making it a preferred choice in core infrastructure sectors such as cement, power, mining, and material handling. Its flexibility in mounting and broad motor options offer engineers’ freedom in design and reliability in execution.
Together, these four series reflect PowerBuild’s commitment to excellence in mechanical power transmission. From compact inline designs to robust right-angle drives, each geared motor is a result of decades of engineering innovation, customer-focused design, and field-tested reliability. Whether the requirement is speed control, torque multiplication, or space efficiency, Radicon’s Series M, C, F, and K stand as trusted powerhouses for global industries.

Continue Reading

Concrete

Driving Measurable Gains

Published

1 month ago

on

August 16, 2025

By

Shares

Klüber Lubrication India’s Klübersynth GEM 4-320 N upgrades synthetic gear oil for energy efficiency.

Klüber Lubrication India has introduced a strategic upgrade for the tyre manufacturing industry by retrofitting its high-performance synthetic gear oil, Klübersynth GEM 4-320 N, into Barrel Cold Feed Extruder gearboxes. This smart substitution, requiring no hardware changes, delivered energy savings of 4-6 per cent, as validated by an internationally recognised energy audit firm under IPMVP – Option B protocols, aligned with
ISO 50015 standards.

Beyond energy efficiency, the retrofit significantly improved operational parameters:

  • Lower thermal stress on equipment
  • Extended lubricant drain intervals
  • Reduction in CO2 emissions and operational costs

These benefits position Klübersynth GEM 4-320 N as a powerful enabler of sustainability goals in line with India’s Business Responsibility and Sustainability Reporting (BRSR) guidelines and global Net Zero commitments.

Verified sustainability, zero compromise
This retrofit case illustrates that meaningful environmental impact doesn’t always require capital-intensive overhauls. Klübersynth GEM 4-320 N demonstrated high performance in demanding operating environments, offering:

  • Enhanced component protection
  • Extended oil life under high loads
  • Stable performance across fluctuating temperatures

By enabling quick wins in efficiency and sustainability without disrupting operations, Klüber reinforces its role as a trusted partner in India’s evolving industrial landscape.

Klüber wins EcoVadis Gold again
Further affirming its global leadership in responsible business practices, Klüber Lubrication has been awarded the EcoVadis Gold certification for the fourth consecutive year in 2025. This recognition places it in the top three per cent
of over 150,000 companies worldwide evaluated for environmental, ethical and sustainable procurement practices.
Klüber’s ongoing investments in R&D and product innovation reflect its commitment to providing data-backed, application-specific lubrication solutions that exceed industry expectations and support long-term sustainability goals.

A trusted industrial ally
Backed by 90+ years of tribology expertise and a global support network, Klüber Lubrication is helping customers transition toward a greener tomorrow. With Klübersynth GEM 4-320 N, tyre manufacturers can take measurable, low-risk steps to boost energy efficiency and regulatory alignment—proving that even the smallest change can spark a significant transformation.

Continue Reading

Trending News