Concrete

Cement Volume Set to Rise to 450MT by FY25 with Rising Infrastructure

Published

2 years ago

March 15, 2023

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As the infrastructure and real estate industry is set to upcycle, CareEdge reports a boost in demand for cement and shares its projection on expected growth.

The cement industry has benefitted from high volume growth, majorly driven by a revival in demand from the housing sectors, upcoming infrastructure projects such as the construction of roads, railways, and highways as well as generous rural demand. The cement sector remains one of the key beneficiaries of economic growth as there is a positive correlation between GDP growth rate & cement demand growth. In the 9MFY23, the overall cement demand registered 11 per cent growth over last year and on a full year basis CareEdge expects 8 per cent to 9 per cent growth.
The central government continues to focus on increasing capex outlay to spur growth in light of the 2024 general elections. The capex for 2023-24 (Budget Estimate) at Rs 10 lakh crore is almost 3 times of the capital expenditure in FY2019-20. The capex spree also augurs well with the central government’s aim to make growth more inclusive as investment in infrastructure and productive capacity have a multiplier effect. The public sector capex has focused on improving the connectivity inside the country and gradually the allocation for highways and railways have surged from 35 per cent in FY18 to 43 per cent in FY23. The Union Budget 2024 also increased outlay on railways and plans for 50 new airports.

The combined effect of increasing infrastructure spends, real estate upcycle, low per capita consumption and the expected increase in private sector capex well supports the demand growth for cement in FY24-FY25. CareEdge expects the sales volume for the cement industry to grow by 8-9 per cent in FY23 to 380-385 MT and to 440-450 MT by FY25 year-end with Central and eastern regions witnessing more lucrative demand. Given the demand is expected to remain robust in upcoming years, the cement players have also announced additional capacity to keep up with the growth pace.
The cement industry is concentrated with the top 10 players having more than 68 per cent of the installed capacity share. Going forward as well the capacity expansion during FY23-FY25 is expected to be predominantly undertaken by the top players and hence the consolidated nature of the sector is likely to continue. “The sector may also witness acquisition of mid or smaller-sized players by the top players amid the prolonged margin pressure which the sector is witnessing. This will lead to further consolidation in the sector and better pricing discipline amongst remaining players,” said Ravleen Sethi, Associate Director, CareEdge.

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Concrete

Construction Costs Rise 11% in 2024, Driven by Labour Expenses

Cement Prices Decline 15%, But Labour Costs Surge by 25%

Published

2 days ago

November 19, 2024

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The cost of construction in India increased by 11% over the past year, primarily driven by a 25% rise in labour expenses, according to Colliers India. While prices of key materials like cement dropped by 15% and steel saw a marginal 1% decrease, the surge in labour costs stretched construction budgets across sectors.

“Labour, which constitutes over a quarter of construction costs, has seen significant inflation due to the demand for skilled workers and associated training and compliance costs,” said Badal Yagnik, CEO of Colliers India.

The residential segment experienced the sharpest cost escalation due to a growing focus on quality construction and demand for gated communities. Meanwhile, commercial and industrial real estate remained resilient, with 37 million square feet of office space and 22 million square feet of warehousing space completed in the first nine months of 2024.

“Despite rising costs, investments in automation and training are helping developers address manpower challenges and streamline project timelines,” said Vimal Nadar, senior director at Colliers India.

With labour costs continuing to influence overall construction expenses, developers are exploring strategies to optimize operations and mitigate rising costs.

Concrete

Swiss Steel to Cut 800 Jobs

Job cuts due to weak demand

Published

3 days ago

November 18, 2024

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Swiss Steel has announced plans to cut 800 jobs as part of a restructuring effort, triggered by weak demand in the global steel market. The company, a major player in the European steel industry, cited an ongoing slowdown in demand as the primary reason behind the workforce reduction. These job cuts are expected to impact various departments across its operations, including production and administrative functions.

The steel industry has been facing significant challenges due to reduced demand from key sectors such as construction and automotive manufacturing. Additionally, the broader economic slowdown in Europe, coupled with rising energy costs, has further strained the profitability of steel producers like Swiss Steel. In response to these conditions, the company has decided to streamline its operations to ensure long-term sustainability.

Swiss Steel’s decision to cut jobs is part of a broader trend in the steel industry, where companies are adjusting to volatile market conditions. The move is aimed at reducing operational costs and improving efficiency, but it highlights the continuing pressures faced by the manufacturing sector amid uncertain global economic conditions.

The layoffs are expected to occur across Swiss Steel’s production facilities and corporate offices, as the company focuses on consolidating its workforce. Despite these cuts, Swiss Steel plans to continue its efforts to innovate and adapt to market demands, with an emphasis on high-value, specialty steel products.

Concrete

UltraTech Cement to raise Rs 3,000 crore via NCDs to boost financial flexibility

UltraTech reported a 36% year-on-year (YoY) decline in net profit, dropping to Rs 825 crore

Published

3 days ago

November 18, 2024

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UltraTech Cement, the Aditya Birla Group’s flagship company, has announced plans to raise up to Rs 3,000 crore through the private placement of non-convertible debentures (NCDs) in one or more tranches. The move aims to strengthen the company’s financial position amid increasing competition in the cement sector.

UltraTech’s finance committee has approved the issuance of rupee-denominated, unsecured, redeemable, and listed NCDs. The company has experienced strong stock performance, with its share price rising 22% over the past year, boosting its market capitalization to approximately Rs 3.1 lakh crore.

For Q2 FY2025, UltraTech reported a 36% year-on-year (YoY) decline in net profit, dropping to Rs 825 crore, below analyst expectations. Revenue for the quarter also fell 2% YoY to Rs 15,635 crore, and EBITDA margins contracted by 300 basis points. Despite this, the company saw a 3% increase in domestic sales volume, supported by lower energy costs.

In a strategic move, UltraTech invested Rs 3,954 crore for a 32.7% equity stake in India Cements, further solidifying its position in South India. UltraTech holds an 11% market share in the region, while competitor Adani holds 6%. UltraTech also secured $500 million through a sustainability-linked loan, underscoring its focus on sustainable growth driven by infrastructure and housing demand.