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In India, cement demand and consumption are expected to surge significantly over the next three to four years. The demand will be driven by strong infrastructure and housing development spending. In budget 2023-24, the Indian government has given a strong indication of what is to follow over the next few years. In the budget, a total of INR 1.6 trillion has been allocated for the development of roadways and highways. Under the Pradhan Mantri Awas Yojana (PMAY), the government has increased the allocation by 66% to INR 790 billion.
To cash in on this infrastructure and housing boom, cement manufacturers are targeting a pan-India presence. By the end of 2024, Dalmia Bharat has set its sights on establishing a strong presence in the western, mid, and northern regions of India. The firm is currently executing an expansion plan, wherein it is seeking to increase the capacity to 120 million tonnes per annum (mtpa) by 2031. The current capacity of Dalmia Bharat stands at 41.1 mtpa across 14 cement plants and grinding units.
The firm is expecting the cement demand to grow faster than the GDP of India, and thus, it plans to become a pan-India player. The expansion plan will also enable the firm to reduce its exposure to the east-south region of India.
Other players are also planning to expand their footprint in the Indian market. JK Cement, for instance, acquired a 100% stake in Toshali Cements Private Ltd in June 2023. The acquisition worth INR 1.57 billion will enable the firm to expand its footprint in the eastern region of India. Currently, Toshali Cements has two manufacturing units, both of which are located in Odisha. After the acquisition, Toshali Cements will become a subsidiary firm of JK Cement.
Orient Cement also announced a capital expenditure plan of INR 16 billion to expand its capacity in Karnataka. Of the 16 billion capex, the firm is planning to spend nearly INR 5 billion to INR 6 billion in this fiscal year. The move, announced in May 2023, will enable the firm to cater to the growing cement demand in the southern part of the country. The expansion is projected to complete over the next 18 months. In addition to the INR 16 billion capex, the firm is also planning to spend around INR 10 billion to expand in presence in the state of Telangana and Rajasthan.
Industry leaders such as UltraTech Cement are also adding to its capacity. By fiscal year 2025, the firm is projected to reach 142.65 mtpa with an expenditure of INR 130 billion. Adani Group, on the other hand, acquired ACC and Ambuja Cements from Holcim in 2022. The firm also announced a capital expenditure of INR 460 billion to boost the capacity to 140 mtpa by fiscal year 2028. Shree Cement, another leading player in the cement market in India, is aiming to increase its capacity to 80 mtpa by 2030.
JSW Cement, in June 2023, announced that the firm had raised US$50 million to fund its capacity expansion. The firm secured the capital by entering into a sustainability-linked loan agreement with BNP Paribas Singapore. Over the last few months, this is the second time JSW Cement has raised such green capital. Earlier as well, the firm raised US$50 million, as it seeks to reach a production capacity of 50 mtpa.
Shree Digvijay Cement, in March 2023, also announced that the firm received environmental clearance from the Ministry of Environment, Forest, and Climate to expand its current cement capacity. The firm is in the process of expanding the cement capacity from 1.2 mtpa to 3 mtpa. The clinker capacity, on the other hand, will be increased to 2.21 mtpa from the current 1.10 mtpa.
Going forward, ConsTrack360 expects more cement manufacturers in India to boost their pan-India presence, as they seek to cash in on the infrastructure and housing boom over the next five years. The capacity expansion programs, along with the goals of building a pan-India presence, will keep driving investment in the sector. This will subsequently aid the growth of the cement market in India from the short to medium-term perspective. These initiatives are also likely to lead to more mergers and acquisition deals in the Indian market over the next three to four years.
