Cement volumes have grown in double digits during 2018-19 for the first time in 9 years since 2009-10, taking cue from rural housing demand bolstered by various government schemes, particularly subsidy scheme. Cement companies and rating agencies have put cement volume growth in the range of 12 to 13 per cent for the just concluded fiscal.
Given that the volume growth has already bridged the gap between demand and supply, the volume growth is expected to moderate during the current fiscal, say analysts.
“The industry is in its upcycle with double-digit volume growth for the full year, the first time since FY10,” said cement major UltraTech in a recent presentation to investors. The 2018-19 annual volumes of UltraTech have jumped 21 per cent, higher than the industry average.
However, UltraTech’s main competitor in capacity rankings - Holcim-Lafarge controlled ACC and Ambuja Cements, however, failed to catch up with the industry volume growth pace. For the March 2019 quarter, Ambuja and ACC reported a 2.4 per cent and 5 per cent, while they have reported six per cent and eight per cent growth for the full fiscal.
Industry’s volume growth was lead by Southern region with Andhra Pradesh and Telangana leading the pack.
Cement volumes to grow at 7 to 8 per cent during the current financial year, predicts Sabyasachi Majumdar, group head, corporate ratings at ICRA. “We believe rural housing and most of it coming from the Pradhan Mantri Grameen Vikas Yojana contributed to this growth. It looks unlikely that the double-digit trend will continue in FY20.”