In a country like ours, where many families still do not have a roof above their heads, and acute absence of infrastructure hobbles the manufacturing sector, and consequently, per capita consumption of cement is around a lowly 200 kg, potential growth of cement consumption is a given. That proposition is decidedly valid for the longer term, and this upward trend in consumption overrides the classical cyclic troughs and crests which are so very much typical of commodities like cement.
However, in the short term, transient market volatilities caused by seasonal cycles as well as economic lulls in investment worry us no end and keep the analysts mighty busy. This conundrum posed by the complicated interplay of all these factors, makes for interesting study.
We do know that both in terms of capacity and consumption, India has the distinction of being the second ranked country in the world, behind China. In fact, cement may be the only item or parameter, where India has the honour of being buttressed by China and USA on either side. But we also know at the same time, that this recognition matters little to the bottom line of Indian cement players, apart from the sheer reputational value and national pride this ranking imparts to us. Irrelevant as it may be in business terms, a report recently concluded that India's share of the pie in the global cement marketplace (if there ever was one..!) was 24 per cent in 2018, and will move up to a highly reassuring 30 per cent by 2030. Since cement doesn't travel well, at least not beyond 500-700 km, an integrated global cement market is a misnomer, a theoretical or imagined entity.
So, the Indian cement players will have to worry about our domestic, or even regional capacity overhangs, and regional trends of demand growth. They have to analyse projections of rural and urban consumption, investments forthcoming into infrastructure, and design their strategies around our domestic capacities and cost scenarios. Choices are continuously being made by our cement companies, between organic and inorganic routes of expansion. The simple truth about acquisition of existing capacity, albeit at a higher cost, is that this action helps increase one's market share without adding to the excess capacity. On the other hand, Greenfield expansion of capacity can come at a lower cost, at a time and place of one's choosing.
To make this discussion lively and interesting for our readers, we have put together contributions and views of reputed stakeholders, including some well-known names in the consulting space for cement sector. We do hope this bouquet of reports will give some new insights into an already crowded body of work on this subject.