Top 4 cement firms on capacity expansion spree, plan to add 42 mtpa in FY25

The top four combined are expected to increase their share in total capacity to 54 per cent by FY26, from 48 per cent in FY23

India’s leading cement makers are on a capacity expansion spree. More than 42 million tonnes (mt) of additional cement capacity is expected to go onstream in the current financial year.

Earlier this week, UltraTech Cement announced the commissioning of 5.4 million tonnes per annum (mtpa) capacity, taking its overall capacity to 151 mtpa. This is part of the 21.6 mtpa the company has guided to commission in the current financial year.

UltraTech’s closest competitor, ACC-Ambuja Cement, according to company disclosures, will add another 11.6 mtpa of capacity in FY25. Further, Shree Cement and Dalmia Cement, the other two of the top four cement makers, also have capacity commissioning lined up.

Shree Cement on Tuesday announced that it has commissioned fresh cement capacity of 3 mtpa, six months ahead of schedule. According to analyst estimates, the company is expected to add 6 mtpa of fresh capacity for the full financial year.

Based on analyst estimates and company disclosures, the top four companies will add around 42.1 mt of cement capacity in FY25. This is about 9-10 per cent of total volumes estimated as sold in FY24.

Email queries sent to the four companies remained unanswered at the time of writing this story.

Meanwhile, the rising capacity additions will further strengthen market presence for the top four cement companies, from 40 per cent share in cement capacity in FY12, to 48 per cent in FY23, and expected to reach 54 per cent by the end of FY26, as new capacities trickle in, according to estimates by rating agency CareEdge.

 

India’s cement sector is witnessing consolidation, marked by numerous mergers and acquisitions, resulting in a more concentrated market landscape, said Ravleen Sethi, associate director at CareEdge. “The consolidation is aimed at achieving economies of scale, increasing market share, and enhancing competitiveness in the industry,” said Sethi. On the cue of these rising capacities, three of the top four cement makers – UltraTech Cement, Shree Cement, Dalmia Cement – now have new brand ambassadors: actors Shah Rukh Khan, Sunny Deol, Ranveer Singh, all appointed in the past few months.

However, these capacities are also going onstream amid challenges in increasing cement prices, coinciding with the country’s General Elections, which could temporarily dampen construction activities. According to ICRA data, cement prices in FY24 declined by one per cent. The start of April has seen a fresh attempt by cement companies to increase prices. Cement dealers pegged these hikes in the range of Rs 40-80 per bag, depending on different markets. However, some past attempts to hike prices have not been successful, often witnessing partial or full rollbacks.

Abhishek Lahoti, assistant vice-president and sector head at ICRA notes that in FY24, volumes are estimated to have increased by 9-10 per cent, while prices dipped one per cent. He said that this was despite the addition of 29-32 mtpa of capacity in FY24.

The trend of muted prices and higher volume sales is expected to continue. “ICRA expects cement volumes to increase by 8-9 per cent year-on-year in FY25, backed by demand from urban housing and infrastructure segments, with cement prices to remain largely similar to FY24,” he added.