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Economy & Market

Cement: Weakened Demand to Impact Capacity Expansion, Profitability

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The sharp decline in demand in FY2021 will delay capacity addition and impact profitability in the cement sector in the medium-term, warns a CRISIL report.

The economic woes caused by the ongoing COVID-19 pandemic are likely to result in a marked decline in demand for cement in the current financial year, a report has warned.

The report, Cement Cracks, by CRISIL has warned of a 10-15 decline in the demand for cement in 2020-21 fiscal owing to the rollout of the nationwide lockdown and other social distancing measures. Demand is likely to slowly start picking up traction from 2H2021.

"On a quarterly basis, cement demand would be a washout in the first quarter of this fiscal, given lockdown measures across India that would hurt construction. Demand will pick up only from the second half of this fiscal," Isha Chaudhary and Koustav Mazumdar said in their April 8 report.

The analysts further added that complete recovery would take longer due to lower Capex by government, given diversion of funds towards health and public welfare, weakened demand for real estate and private individual houses and buildings (IHB) and a lower spend under Pradhan Mantri Awas Yojana (PMAY-Urban) given the impact on incomes. Presently, government-backed projects account for 35-40 per cent of the demand for the commodity.

However, projects in rural housing, PMAY (Rural), Pradhan Mantri Gram Sadak Yojana (PMGSY), and spend on key infrastructure projects will start to provide some relief to the sector from the second half of the year.

"Washout in the first quarter, followed by continued mildness through the seasonally weak second quarter, will weigh on the sector’s growth, leading to a first-ever demand contraction of this proportion for it this fiscal," the report stated.

"Contracting demand growth will push the sector’s utilisation level down further to 56-58 per cent, adding to the pain from the weakening seen in fiscal 2020, when incremental supply exceeded demand by 27 million tonnes (MT)," it added.

CAPACITY EXPANSION, PROFITABILITY TO BE IMPACTED
The demand shock owing to the disruption caused by COVID-19 pandemic and the ongoing nationwide efforts towards its containment is expected to affect the capacity addition plans of the industry, and stall or delay projects in the medium-term.

Despite weak demand, the cement industry had registered a decent price increase of Rs 25 per bag in FY2020 owing largely to consolidation in the regional markets by bigger players. This and lower commodity prices are likely to drive margins at cement companies to a seven-year high during the fiscal.

However, the study anticipates the price increase to reverse as players struggle on the demand front. The decline would be limited to 1-2 per cent (or Rs 5-10 per bag) as players exhibit pricing discipline, with realisations declining 2-3 per cent as the share of non-trade is likely to increase.

"Profitability, on its part, is expected to be under pressure after some expansion last fiscal. The impact of demand freefall, though, will be limited by lower input prices, the report said.

Because of directions on social distancing issued by the centre and state governments to prevent infections, leading cement manufacturers like ACC, India Cements, Ramco Cement, Ultra Tech Cement and Dalmia Cement (Bharat) temporarily suspended cement production across their plants in late March.

Manish Pant

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Economy & Market

Hindalco Buys US Speciality Alumina Firm for $125 Million

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This strategic acquisition marks a significant investment in speciality alumina, a key step by Aditya Birla Group’s metals flagship towards becoming future-ready by scaling its high-value, technology-led materials portfolio.

Hindalco Industries, the world’s largest aluminium company by revenue and the metals flagship of the $28 billion Aditya Birla Group, has announced the acquisition of a 100 per cent equity stake in US-based AluChem Companies—a prominent manufacturer of speciality alumina—for an enterprise value of $125 million. The transaction will be executed through Aditya Holdings, a wholly owned subsidiary.

This acquisition represents a pivotal investment in speciality alumina and advances Hindalco’s strategy to expand its high-value, technology-led materials portfolio.

Hindalco’s speciality alumina business, a key pillar of its value-added strategy, has delivered consistent double-digit growth in recent years. It has emerged as a high-growth, high-margin vertical within the company’s portfolio. As speciality alumina finds expanding applications across electric mobility, semiconductors, and precision ceramics, the deal positions Hindalco further up the innovation curve, enabling next-generation alumina solutions and value-accretive growth.

Kumar Mangalam Birla, Chairman of Aditya Birla Group, called the acquisition an important step in their global strategy to build a leadership position in value-added, high-tech materials.

“Our strategic foray into the speciality alumina space will not only accelerate the development of future-ready, sustainable solutions but also open new pathways to pursue high-impact growth opportunities. By integrating advanced technologies into our value chain, we are reinforcing our commitment to self-reliance, import substitution, and building scale in innovation-led businesses.”

Ronald P Zapletal, Founder, AluChem Companies, said the partnership with Hindalco would provide AluChem the ability and capital to scale up faster and build scale in North America.

“AluChem will benefit from their world-class sustainability and safety standards and practices, access to integrated operations and a consistent, reliable raw material supply chain. Their ability to leverage R&D capabilities and a talented workforce adds tremendous value to our innovation pipeline, helping drive market expansion beyond North America.”

An Eye on the Future

The global speciality alumina market is projected to grow significantly, with rising demand for tailored solutions in sectors such as ceramics, electronics, aerospace, and medical applications. Hindalco currently operates 500,000 tonnes of speciality alumina capacity and aims to scale this up to 1 million tonnes by FY2030.

Commenting on the development, Satish Pai, Managing Director, Hindalco Industries, said the deal reinforced their commitment to innovation and global expansion.

“As alumina gains increasing relevance in critical and clean-tech sectors, AluChem’s advanced chemistry capabilities will significantly enhance our ability to serve these fast-evolving markets. Importantly, it deepens our high-value-added portfolio with differentiated products that drive profitability and strengthen our global competitiveness.”

AluChem adds a strong North American presence to Hindalco’s portfolio, with an annual capacity of 60,000 tonnes across three advanced manufacturing facilities in Ohio and Arkansas. The company is a long-standing supplier of ultra-low soda calcined and tabular alumina, materials prized for their thermal and mechanical stability and widely used in precision engineering and high-performance refractories.

Saurabh Khedekar, CEO of the Alumina Business at Hindalco Industries, said the acquisition unlocked immediate synergies, including market access and portfolio diversification.

“Hindalco plans to work with AluChem’s high performance technology solutions and scale up production of ultra-low soda alumina products to drive a larger global market share.”

The transaction is expected to close in the upcoming quarter, subject to customary closing conditions and regulatory approvals.

 

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Concrete

Shree Cement reports 2025 financial year results

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Shree Cement posted revenue of US$2.38 billion for FY2025, marking a 5.5 per cent decline year-on-year. Operating costs rose 2.9 per cent to US$2.17 billion, resulting in an EBITDA of US$528 million—down 12 per cent from the previous year. Net profit fell 50 per cent to US$141 million. The company reported cement sales of 9.84Mt in Q4 FY2025, a 3.3 per cent increase from 9.53Mt in Q4 FY2024, with premium products making up 16 per cent of total sales.

Image source:https://newsmantra.in/

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Concrete

Rekha Onteddu to become director at Sagar Cements

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Sagar Cements has announced the appointment of Rekha Onteddu as a non-executive independent director, effective 30 June 2025. According to People in Business News, Rekha Onteddu is currently serving in a similar capacity at Andhra Cements, the parent company of Sagar Cements.

Image source:https://sagarcements.in/

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