Cement holds the country together. Some 570 cement plants produce over 300 million tonnes of it every year.
India is the second largest cement producer in the world. The increase in demand for cement from housing and infrastructure could give a boost to its production in India. Companies like NCL Industries and Heidelberg Cement plan to increase their cement production to earn more profits.
BOOM spoke to K Ravi, Managing Director of NCL Industries, to get some insights about th expansion of the cement sector in India.
- Market size (or Demand drivers): The housing sector in India is the biggest demand driver of cement. This accounts up to 67% of the total cement consumption in India. The demand for cement is expected to reach 550-600 Million Tonnes Per Annum (MTPA) by 2025, according to the government data. NCL Industries plans to boost its cement production up to 2.7 million tonnes due to increase in demand from the construction and infrastructure sector.
- Limestone reservoirs: Andhra Pradesh and Telangana have numerous limestone reserves. This drives the focus of NCL Industries towards increasing its production capacity for the southern market. It also plans to extend its production activity to other areas like Karnataka and Tamil Nadu.
- Increase in cement plants: NCL Industries is planning to expand its cement capacity from 2 million tonnes to 2.7 million tonnes by the end of 2016. It also plans to expand the redimix concrete business by setting up plants in Hyderabad, Vizag and Amravati. At present, the company is also working on its ‘Wood Cement Particle Board Plant. “90,000 extra cement boards will be made on the completion of the expansion”, added K Ravi, Managing Director of NCL Industries.
- Government spending: Budget 2016-17 allocated Rs 7,296 crore towards Urban Rejuvenation Mission – The Smart Cities project. It also allocated Rs 19,000 crore for the Pradhan Mantri Gram Sadak Yojana (PMGSY) for FY17. Such large scale projects would need large tonnes of cement. Higher demand will help cement companies increase their profit. This could also be a motivating factor for cement companies to increase their production capacity.
- Road ahead: One cannot ignore the fact that there is no other substitute to cement. ‘In the next 10 years, India could become the main exporter of clinker and gray cement to the Middle East, Africa, and other developing nations of the world’, according to BRICS India 2016 report. The report also states that cement plants in Gujarat and Visakhapatnam will have an added advantage for exports. This could result in a tough competition with other cement plants in other parts of India.