Cement players on growth path despite weak demand, pricing pressure

Ambuja reports lower volume growth in East, South; Shree Cement losing in North

The battle for market share in the Indian cement industry is intensifying, with some even among the top-four players reporting loss of volumes in certain regions.

Despite weak demand and pricing pressure, many of these producers remain focused on accelerating expansion.

Shree Cement, one of the top-four cement makers in India with 56 million tonnes per annum (MTPA) capacity, informed analysts earlier this week that it faced constraints in the northern market. This was “because we had two very powerful competitors (Ambuja Cement and UltraTech Cement) sitting with us there,” said company executives on a call.

The Bangur family-promoted cement company (Shree Cement) instead chose to push volumes in the eastern markets. Interestingly, East India is one of the two regions that executives from Ambuja Cements said it lost volumes.

“Basically, East and South are the two areas where we were losing out on volume growth,” said executives from Ambuja Cement, in a post earnings call with investors earlier this month.

The battle continued to keep cement prices under pressure. Executives from Dalmia Cement noted, “Prices have not been sustained because there is a market share game by all the players. People are hungry for market share.”

Despite the price pressure and weak demand, cement makers remain steadfast on their expansion plans, some accelerating it.

Executives from Shree Cement said, “The company is working on further expanding capacities in different geographies to reach its target ahead of schedule.”

The price and demand pressure has, however, made the company revise its volume growth guideline for the year. “We will now grow in tandem with the market,” they said.  

“We aspire to increase our capacity and volume share faster than the industry,” said executives from Dalmia Cement. However, they cautioned that capacity addition milestones have been delayed.

“While we had given an intermittent milestone of 75 million tonnes by FY27, but given that Jaiprakash Associates has entered into the insolvency process, we believe that we should now be able to achieve this milestone by FY28,” executives said on the call.

The company added it is in the process of acquiring land before it announces the road map to reach 110-130 MTPA by 2031.

Executives from UltraTech in July noted that they expect dramatic price movements, once all India capacity utilisation starts going up above 85 per cent.

“India ended with an overall capacity of 626 million tonnes installed capacity. The estimated demand in the last financial year was about 425 million tonnes, thus, on an average, about 70 percent capacity utilisation. There may be about 50 million tonnes of inefficient capacity in the system,” the executive added.