Govt spending on roads, houses to fuel cement demand: Dalmia Cement

The Government of India's push on roads sector and affordable housing will lead the cement consumption story in the country that now faces surplus, unused capacity.

"The country produced 270 million tonne (mt) of cement last fiscal, but this is way below China's consumption of 1400 mt. In 2015-16, cement consumption in the country grew 5.5%, but this fiscal, we are looking at a growth of 7%," said Mahendra Singhi, group chief executive officer, Dalmia Bharat Group.

The country has a cement making capacity of 360 mt but demand for the commodity is 290 mt. Cement manufacturers were operating at around 70% of their rated capacities as capacity was in excess of actual consumption.

"Government spending on roads and houses has taken off. Schemes like Swachh Bharat Mission are going to give a boost to cement consumption. Between January and June this year, cement consumption rose 3.8%. But the industry is not witnessing real growth in the real estate sector," said Amandeep, director and chief executive officer, OCL India and Dalmia Cement (East).

About 60% of the country's cement consumption is from housing, with infrastructure and new manufacturing facilities each contributing 20%.

Out of the country's total cement production of 270 mt, Dalmia Group manufactured 13 million tonne from its installed capacity of 25 mt. Dalmia Cement has two operational cement units in Odisha at Rajgangpur and Cuttack with capacities of four mtpa and 1.5 mtpa, respectively.

Dalmia Bharat Group is eyeing a turnover of Rs 8,000 crore this fiscal, up from Rs 6,700 crore it logged last fiscal. Cement vertical accounts for over 80% of the turnover of the group with interests in sugar and refractories.

The group with its Konark Cement brand is the market leader in Odisha with a share of 24%. It is aiming at sales of about Rs 1500 crore in the state in this fiscal.

Dalmia Cement launched two cement brands in the Odisha market — Dalmia DSP Cement and Dalmia Bharat Cement. With the launch of these brands, it is eyeing an incremental share of 2% in cement business in the state.