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Core sectors output remain negative

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In December 2020, the eight core sectors output growth remained in a negative trajectory for the 10th successive month with a contraction of 1.3 per cent during the month compared with negative growth of 1.3 per cent during November 2020 and 3 per centin December 2019. There has been an upward revision in the core sector output growth in November from -2.6 per cent to -1.4 per cent.

Barring coal and electricity, all other components of the core index continue to show de-growth. The cumulative index of eight core sector during April ??December 2020 contracted by 10.1 per cent indicative of the adverse impact on industrial production during the lockdown period compared with the 0.6 per cent growth in the corresponding period of last year. Barring fertiliser, there was a broad based contraction across sectors during this period. Double digit decline in output during this period is recorded in natural gas, refinery, steel and cement.

Key highlights:

  • Coal production growth grew by 2.2 per cent in December 2020, which is the slowest in the last 5 months. Coal production has recorded positive growth which indicates revival in demand for power post easing in lockdown and resumption of industrial activities.

  • Crude Oil production has fallen by 3.6 per cent in December 2020 due to COVID-19 restrictions/lockdown, nonavailability of drilling equipment and less than planned contribution from workover wells, drilling wells and old wells. The negative growth in crude oil production has sustained for nearly 3 years.

  • Natural gas production in the country fell by 7.1 per cent in December largely due to a fall in output of western offshore fields of private/JV companies. This is the 19th consecutive month of de-growth in natural gas production.

  • Refinery production has fallen by 2.7 per cent and fall in production has been narrowing with each passing month with the easing of restrictions and as the economy has been slowly reflating. There has also been an increase in refinery utilisation during December ??0 which is now 101 per cent and this can be ascribed to the increase in demand for petroleum products as there is an uptick in economic activities. The month of December 2020 saw growth in consumption of LPG 7.4 per cent, Petrol (MS) 9.3 per cent, Bitumen 20.9 per cent, Lubes & Greases 8.5 per cent, Light Diesel Oil (LDO) 87.4 per cent and products categorised under ??thers??8.4 per cent compared with December 19.

  • Fertilizer production has fallen by 2.9 per cent due to a high base effect and as the rabi sowing season almost comes to an end.

  • Output of steel sector has contracted for the second consecutive month by 2.7 per cent in December after registering three consecutive month of positive growth during Aug-October 2020. Low demand from automobile sector and high raw material costs and relatively muted construction activities in parts of the country must have weighed on the steel production.

  • Cement production fell to a 4-month low falling by 9.7 per cent in December 2020 compared with -7.3 per cent in November 2020 and 5.4 per cent in December 2019. The fall can be ascribed to muted construction activities.

  • Electricity production grew by 4.2 per cent in December 2020 compared with 3.5 per cent in November 2020 on account of further normalisation of economic activity.

CARE Ratings??View

Going ahead, the growth in the eight core sectors will be contingent upon the normalisation of economic activities and high base effect. The growth in industrial production is likely to be marginally positive but will be contingent on the growth in consumer durables segment.

Courtesy: CARE Ratings

ABOUT THE AUTHOR:

The article is authored by Sushant Hede, Associate Economist with CARE Ratings. He can be contacted at: sushant.hede@careratings.com | +91-22-6837 4348.

Disclaimer: This report is prepared by CARE Ratings Limited. CARE Ratings has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Ratings is not responsible for any errors or omissions in analysis / inferences / views or for results obtained from the use of information contained in this report and especially states that CARE Ratings has no financial liability whatsoever to the user of this report

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Concrete

Indian Railways Plans Green Fly Ash Transport Network

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Specialised rail logistics will move fly ash from power plants to infrastructure industries.

New Delhi

Indian Railways is planning a large-scale green logistics initiative to transport fly ash from thermal power plants to industries where it can be reused in infrastructure and construction activities.

The initiative was discussed during a review meeting chaired by Union Minister for Railways Ashwini Vaishnaw. Union Ministers of State for Railways V Somanna and Ravneet Singh Bittu were also present.

India generates nearly 340 million tonnes of fly ash every year from thermal power plants. The proposed initiative aims to create an efficient rail-based transport system using specialised containers and dedicated logistics arrangements to move fly ash safely from power plants to end-use industries.

Fly ash is widely used in road construction, cement manufacturing, brick production, concrete, blocks and boards. By improving its movement through the railway network, the initiative is expected to support better utilisation of this industrial by-product while reducing environmental concerns linked to storage and disposal.

The move also aligns with India’s circular economy goals by converting waste from thermal power generation into a useful raw material for the construction and infrastructure sectors. Wider availability of fly ash can help reduce material costs in areas such as bricks and cement, supporting more affordable infrastructure and housing development.

Through this initiative, Indian Railways aims to provide a cleaner, safer and more organised transport solution for fly ash, turning an environmental challenge into an infrastructure resource.

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Concrete

ACC To Expand Cement Capacity Amid Strong Infrastructure Demand

Chairman signals calibrated growth and sustainability focus

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ACC will continue to expand its cement capacity in a calibrated manner, deepen its ready-mix concrete (RMC) footprint and accelerate the adoption of low-carbon technologies, the company chairman conveyed in the latest annual report. The note emphasised a balanced and disciplined approach as the business pursues growth while maintaining environmental safeguards.

He argued that the long-term growth outlook for the Indian economy remains strong but that demand conditions in the near term were likely to stay moderate, necessitating cautious expansion. He pointed to India’s relatively low per capita cement consumption compared with global averages as an indicator of significant long-term potential and highlighted the rise in public capital expenditure to Rs 12 trillion (Rs 12 tn), which he said accounted for about four point four per cent of the GDP.

Against this backdrop, ACC and the wider Adani Cement business are positioning themselves as integrated building materials solution providers rather than traditional commodity suppliers, prioritising capability creation over consolidation. The chairman framed cement as the ingredient and concrete as the performance and said that infrastructure and real estate development increasingly demand engineered solutions delivered at site.

He described how deeper integration across energy, logistics and digital systems is intended to improve responsiveness and efficiency across manufacturing, transport and market operations. The company intends to strengthen technical engagement, mix optimisation and application support to improve project timelines, reduce wastage and enhance structural durability while embedding data analytics and predictive systems.

On sustainability, ACC affirmed its commitment to reducing its environmental footprint through greater use of blended cement, renewable energy, alternative fuels and improved thermal efficiency, presenting industrial growth and environmental responsibility as parallel objectives. The message positioned the group to supply engineered concrete solutions at the point of application as it scales capacity and service offerings.

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Concrete

Ambuja Sees Cement Demand Easing To Around Five Per Cent In FY27

Company Cites Housing, Infrastructure And Government Capex

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Ambuja Cements has said in its latest annual report that cement demand in India is likely to moderate to around five per cent in fiscal year twenty seven, marking a slowdown from the estimated six point five to seven point five per cent growth anticipated for fiscal year twenty six. The company described this as a transition to a more measured pace of expansion after several years of strong momentum in the sector.

It said that underlying demand drivers such as housing, infrastructure development, urbanisation and government capital expenditure remain intact and are expected to sustain cement consumption across regions. The report noted that global geopolitical uncertainties and weather risks, including forecasts of a below normal monsoon, could influence near term demand, while emphasising that the longer term infrastructure story for India continues to provide a solid foundation for the sector.

Industry observers have said that the sector may move towards mid single digit growth rates in fiscal year twenty seven after stronger performances in recent years. The company outlined a calibrated expansion strategy with capacity additions phased to match project pipelines, regional demand patterns and market absorption, seeking to avoid oversupply and pressure on pricing.

Ambuja has crossed the 100 million tonnes per annum capacity milestone (100 mn t per annum) following acquisitions and organic expansion, strengthening its position in the competitive market. The outlook in the report broadly aligns with other market assessments that placed demand at around five per cent in fiscal year twenty five, a recovery to six point five to seven point five per cent in fiscal year twenty six and an easing in fiscal year twenty seven as capacity increases. Executives remain focused on long term demand fundamentals driven by infrastructure and housing.

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