Economy & Market

Demand uptrend persists, amid price pressures

Published

8 years ago

April 30, 2018

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Cement demand that has started picking up in the third quarter (October-December 2017) of fiscal 2018 (FY18) continued its growth streak in the fourth quarter of the fiscal, according to analysts. However, cement realisations failed to post commensurate rise, and prices, which should have seen an uptrend in the last quarter of the year, have remained subdued.Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA Ratings, says, "A demand pick-up in the recent months, October 2017 to January 2018 by 13.4 per cent, is backed by low cost housing in the eastern markets, Andhra Pradesh and Telangana along with the infrastructure demand from the eastern, southern and western markets."
Discussing the latest demand trends, CLSA’s Vivek Maheshwari and his team says, "The industry has seen a pick-up in volume growth, also reflected in 11 per cent volume growth expected for our coverage in 4QFY18 (January-March 2018 quarter). While a low base helped (these volumes), the two-year Compounded Annual Growth Rate (CAGR) should still be at a respectable ~8%." Besides, cement realisations have not seen any quarter-on-quarter (QoQ) uptick despite favourable seasonality.
The demand environment continued to remain favourable in March 2018, said Binod Modi – Senior Research Analyst, Reliance Securities, in a recent report, adding, however, the pricing trend remained subdued marked by sharp month-on-month (MoM) contraction during the month. Volume push owing to year-end month, and fair chances of price hike from April 2018 also aided volume growth.
"Demand growth was aided by both trade and non-trade segments and most dealers expect the demand momentum to remain benign till the onset of monsoon, while the prices are expected to bounce back from first or second week of April across the regions barring Central," said Modi.
"A pick-up in the affordable and rural housing segments and infrastructure – primarily road and irrigation projects – is likely to continue the demand growth momentum of around 5 per cent in FY2019," says Majumdar.
Budget FY2019 has provided higher rural credit target, increased MSP, and allocation for rural, agricultural and allied sectors, and stressed on continued focus on the PMAY and infrastructure investments, all positive for cement demand growth. Price falls
There was a disappointment on the price front for the cement companies in the Q4FY18. March quarter is traditionally the busiest quarter for construction, and hence cement prices usually firm up sequentially, but not this time.
All-India average cement price corrected by about 3 per cent MoM to ~Rs 286-291/bag mainly due to sharp correction in Western and Southern realisation, which corrected by ~6 per cent and 5 per cent MoM, respectively in March, while average prices in Northern, Central and Eastern regions corrected by ~1 per cent MoM each, according to Reliance Securities. Besides, all-India average price declined by 1 per cent YoY (Rs 3-5/bag) and 0.3 per cent QoQ in 4QFY18.
Average price in Southern region corrected sharply by 5 per cent QoQ, while it corrected by 1-1.5 per cent QoQ in Western and Northern region during 4QFY18. However, Eastern and Central regions witnessed average price improvement of ~3 per cent and ~4 per cent QoQ, respectively during 4QFY18.
CLSA said that their channel checks had indicated that "efforts are underway to raise prices by 5-20 per cent in South India and Maharashtra," the regions which saw the highest pressures on EBITDA, follow the sharp cuts in March. However, the channel is still apprehensive on sustainability of such hikes.
"Overall, while cost inflation remains a concern, we believe that price hikes are imminent across regions and unit margins should expand in FY19," says Maheshwari.
Though government seems to be vigilant about any price hike by the cement companies for last couple of months, Modi of Reliance Securities expects "prices to witness an upward movement in coming months due to rising cost pressures
and sustained demand growth leading to higher utilisation."Cost pressures
"Overall earnings before interest, tax, depreciation and amortisation (EBITDA or operating profit) for our coverage should rise by a modest 7 per cent year-on-year (YoY) although net earnings will likely decline," Maheshwari says in the report. This is mainly due to high costs particularly those of pet coke, imported coal and diesel, however, rising volumes are expected to come to manufacturers’ rescue during the quarter to an extent. Due to lack of price hikes during the quarter EBITDA margins are expected to decline by 7-8 per cent YoY and QoQ to a 13-quarter low, for CLSA’s universe of cement stocks, Maheshwari said in the report.
Majumdar also predicts that expectation of higher pet coke, coal and diesel prices are likely to put pressure on the profitability margins and debt metrics of the cement companies in the coming quarters.
"Lumpy capacity additions in the recent past have led to an increase in debt levels and some deterioration in credit metrics, although they still remain at comfortable levels for most of the larger players. Further, higher power and fuel (increase in coal and pet coke prices) and freight costs (increase in diesel prices) in FY2018 and in the coming quarters of FY2019 is likely to continue to put pressure on the profitability margins and debt metrics of the cement companies. Hence, the ability of the industry players to secure increases in cement prices remains critical from the profitability perspective," Majumdar reiterated.
Given all these scenarios, ICRA expects that the capacity overhang and the moderate demand growth to continue to keep the industry’s capacity utilisation level close to 65 per cent over the medium-term (3-5 years).

Concrete

JSW Cement commissions additional 1 MTPA grinding unit at Nagaur

Published

12 hours ago

October 8, 2026

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With this commissioning, JSW Cement’s total cement grinding capacity has increased to 25.10 MTPA,
Mumbai

JSW Cement, one of India’s leading green cement producers and part of the diversified JSW Group, today announced the successful commissioning of an additional 1.00 MTPA cement grinding unit at Nagaur, Rajasthan. The commissioning marks another significant milestone in the Company’s growth strategy.

With this commissioning, JSW Cement’s total cement grinding capacity has increased to 25.10 MTPA, while its total clinker manufacturing capacity, including clinker capacity at its joint venture, JSW Cement FZC, stands at 9.74 MTPA.

JSW Cement had commenced operations in North India in March 2026 with the Nagaur Integrated Plant, comprising a 3.30 MTPA clinkerisation unit and 2.50 MTPA cement grinding unit. With the commissioning of the additional 1.00 MTPA cement grinding unit, the plant’s total cement grinding capacity has increased to 3.50 MTPA, enhancing the company’s ability to cater to the growing cement demand across Rajasthan, Haryana, Punjab and the National Capital Region (NCR). The expansion has been funded through a strategic mix of equity and long-term debt.

During the quarter ended 30th September 2026, JSW Cement has also commissioned the Alternate Fuel Handling System and the Waste Heat Recovery system (WHRS) at the Nagaur Integrated Plant.

Nilesh Narwekar, CEO, JSW Cement, said: “The commissioning of additional 1.00 MTPA grinding capacity at Nagaur is a key strategic priority for us and will accelerate JSW Cement’s expansion into North India. We look forward to servicing the growing needs of the region and contributing to the economic growth of Rajasthan, Haryana, Punjab and the NCR area. I am delighted to share that the company has commissioned this grinding unit within the expected timeline, showcasing our project execution capabilities. Further, the Alternate Fuel Handling System and the Waste Heat Recovery system (WHRS) are expected to substantially reduce our production costs going forward.”

Concrete

UltraTech becomes first Indian cement firm to cross 2 GW green energy

Published

1 day ago

October 7, 2026

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UltraTech Cement has crossed 2 GW of captive green energy capacity, with renewables and waste heat recovery meeting 48 per cent of its power needs.

Mumbai

UltraTech Cement Limited has surpassed 2 GW of installed green energy capacity for captive use, becoming the first cement company in India to achieve the milestone. The Aditya Birla Group company commissioned 116.55 MW of wind capacity at its Inter-State Transmission System-connected wind-solar hybrid project in Barmer, Rajasthan, along with 10 MW of Waste Heat Recovery System capacity at Sarlanagar Cement Works in Karnataka.

With these additions, UltraTech’s cumulative installed green energy capacity has reached 2,024 MW. This includes 1,580 MW of renewable energy capacity and 444 MW of waste heat recovery capacity, together meeting around 48 per cent of the company’s current power requirements.

The company said the milestone reflects the progress of its long-term energy transition strategy. In FY27 so far, nearly one-third of UltraTech’s 76 manufacturing units in India have maintained green energy utilisation above 50 per cent of their electricity requirements, while five units have crossed 95 per cent.

K C Jhanwar, Managing Director, UltraTech Cement Limited, said, “Crossing the 2 GW green energy milestone is the result of a strategy we have pursued consistently over the past decade. Cement is an energy-intensive, hard-to-abate sector, and showing that reliability and growth can go hand in hand with a rapid shift to green energy sets a benchmark for the industry. With nearly half of our power needs now met through green energy, we are significantly less exposed to fossil fuel supply constraints and power price volatility. As we scale up renewables, waste heat recovery and battery storage across our operations, we are building an energy foundation for stable, long-term growth.”

UltraTech commissioned 430 MW of green energy capacity in FY26 and continues to expand its renewable energy and waste heat recovery portfolio.

The company is also progressively integrating Battery Energy Storage Systems across its operations to improve renewable energy utilisation and supply reliability.

In 2025, UltraTech operationalised what it described as India’s first on-site hybrid round-the-clock renewable energy project at Sewagram Cement Works in Gujarat. The project combines solar, wind and battery storage.

As part of its decarbonisation strategy, UltraTech said it has not invested in new captive thermal power capacity for either greenfield projects or brownfield expansions at its integrated units for more than a decade.

The company said its expanding green energy portfolio is helping reduce dependence on conventional grid electricity and fossil fuel-based power, while lowering exposure to fluctuations in coal and electricity prices.

UltraTech aims to increase green energy’s share in its total power mix to 85 per cent by 2030. As a member of RE100, it has also committed to meeting 100 per cent of its electricity requirement through renewable sources by 2050.

UltraTech Cement, the cement flagship of the Aditya Birla Group, has a total grey cement capacity of 210.1 MTPA and white cement and putty capacity of 3.5 MTPA. The company is also a signatory to the GCCA Climate Ambition 2050 and has committed to the GCCA Net Zero Concrete roadmap.

Concrete

Shiva Cement Merges with JSW Cement

Published

1 day ago

October 7, 2026

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JSW Cement has announced a scheme of arrangement to merge its listed subsidiary Shiva Cement with itself, creating a single unified cement platform. The boards of both companies have approved the proposal, which will require clearances from stock exchanges, the Securities and Exchange Board of India, the National Company Law Tribunal, Odisha Industrial Infrastructure Development Corporation and other applicable authorities.

The transaction is expected to be completed within 12 to 14 months, subject to the necessary approvals from regulators, shareholders and creditors. Under the scheme, JSW Cement will issue 5 equity shares with a face value of Rs. 10 each for every 41 equity shares with a face value of Rs. 2 each held by Shiva Cement shareholders other than JSW Cement.

The company said the merger would consolidate financial, managerial, technical, distribution and marketing resources while reducing administrative duplication and compliance requirements. It would also provide greater funding flexibility, potentially lower financing costs and eliminate inter-company guarantees.

The consolidation is expected to strengthen backward integration by enabling JSW Cement to use Shiva Cement’s clinker manufacturing facility. This would reduce dependence on external clinker procurement and improve supply-chain efficiency. Public shareholders of Shiva Cement would receive direct ownership in JSW Cement, which has a broader institutional investor base and a more liquid listed presence.

JSW Cement acquired a controlling stake in Shiva Cement through transactions that began in January 2017. Shiva Cement operates a clinker facility in Odisha, near the borders of Odisha, Chhattisgarh and Jharkhand, and commissioned a 1 mtpa cement grinding unit at Sambalpur in FY26 through a commercial arrangement with Bhushan Power and Steel.

JSW Cement has 24.10 mtpa of cement grinding capacity and 9.74 mtpa of clinkerisation capacity. Its Indian operations comprise nine plants, including two integrated units, one clinker unit and six grinding units. The proposed merger is intended to simplify the corporate structure and align the financial statements of the two companies.