Birla: overcapacity to persist in current fiscal, India

Birla: overcapacity to persist in current fiscal, India
Published: 20 June 2011

The Indian cement industry is set to continue being impacted by increasing volume additions and higher input costs, according to Harsh Lodha, chairman of the Birla Corp.

In a meeting with shareholders he said: “With the surplus capacity rising over the next few quarters due to new expansion commencing operations there is a concern on the capacity utilisation and on the sustainability on the sale realisation,” Lodha wrote in his report.

Indian cement industry has witnessed massive capacity additions during the past 3-4 years which has resulted in significant pressure on price realisations and also on capacity utilisation in 2010, with average cement prices correcting significantly, Lodha said. Prices, driven by renewed demand and seasonal factors, have recovered from these exaggerated lows, he said. However, the Birla Corp sees a 10.5% CAGR growth in cement production in 2012-2014 in view of the upcoming infrastructure projects.