India's cement demand could grow 9%-10% in the next fiscal year if the government keeps its promise to continue the push for greater infrastructure spending, said a senior executive at ACC Ltd., a top producer of the building material in the country.
The demand could grow 7.5%-8.5% otherwise, with a 6.0%-6.5% expansion in India's gross domestic product in the fiscal year starting April 1, 2010, ACC Chief Commercial Officer J. Datta Gupta said in a recent interview.
India is increasing its investments in the infrastructure sector by building roads, ports and other facilities to support the economy's rapid expansion. That, along with the huge opportunity in the housing sector, is attracting global majors to the country, the world's second-largest cement market after China.
"We expect the demand from infrastructure to grow by about 20%-25% next fiscal year" if the government continues to focus on the sector, Mr. Gupta said. Demand from the housing sector is likely to slip slightly, he added, without specifying by what percentage.
India has a capacity to manufacture 223.95 million tons of cement each year. The housing sector - which isn't yet out of the impact of the global credit crunch - accounts for more than half of the cement consumption, while Infrastructure accounts for about 15%.
For the current fiscal year, the Cement Manufacturers' Association is projecting a 9%-10% increase in total demand.
Demand grew at more than 12% in the April-August period of the current fiscal year, driven primarily by infrastructure and rural housing projects.
Construction work generally slows from June to September due to heavy rains, but the activities weren't hurt much this year due to a delayed arrival of the onsoon rains in most parts of the country.
Given the government's spending plan on infrastructure, Mr. Gupta said, he doesn't see any need for consolidation in the cement industry for the next couple of years. "Even smaller companies should be able to sustain," Mr. Gupta said.
Among the international companies with an Indian presence, Swiss cement maker Holcim Ltd. owns a majority stake in ACC and Ambuja Cements Ltd., while Germany's HeidelbergCement has a 68.55% stake in HeidelbergCement India Ltd.
Also, France's Lafarge has a manufacturing capacity of more than 5.0 million tons in India.
