This report profiles India’s cement industry, discussing market trends through 2013 and outlook for 2014 and beyond. The report also highlights leading players in the sector including Ambuja Cements Ltd, UltraTech Cement Ltd and India Cements Ltd.

Cement is one of the eight core industries of the Indian economy. As of 2013, India was the second largest producer of cement in the world behind China. However, per capita cement consumption in India is still amongst the lowest in the world. The vast potential that exists in the industry has attracted investors from all round the world.

FY14 was a tough year for the Indian cement industry. Sustained slowdown in industries and construction sector moderated the overall consumption of cement in the country. High interest rates particularly hit the real estate sector which is the main driver of the construction industry. Excess capacity due to subdued domestic demand and fall in global cement prices led to a decline in domestic prices. As a result, most of the cement players recorded a steep decline in profit margins during the year. The overcapacity and falling margins have made the situation ripe for industry consolidation. Going forward, we may witness a rise in mergers and acquisitions within the sector.

The consumption of cement in India is expected to grow in the years to come backed by increased political stability and steady growth in housing and infrastructure development. The country’s installed capacity is sufficient to accommodate any rise in consumption.

Key Points:

• Government spending on infrastructure has been a major source of growth for the sector. As of FY12, the investment in infrastructure was at 8.37% of GDP. This figure is projected to grow to 10.70% of GDP by the end of the 12th Plan period (2012-17).

• During 2006-14, India’s installed cement capacity increased at a CAGR of 10%. Private sector accounted for more than 95% of the capacity while the remainder came from government.

• During 2006-14, India’s annual cement consumption grew at a CAGR of 8%, which was less than the capacity growth during the same period.

• During 2008-14, the production index for core industries recorded a CAGR of 5.1%. Cement industry outperformed the overall group with a CAGR of 6.6% during the same period. However, in FY14, both the overall group and cement industry saw a subdued growth in production.