The Indian cement industry, already experiencing an oversupply situation, is expected to add 23.3Mt of capacity in 2011-12 with the southern region accounting for a lion’s share of 9.2Mt.
The East is next with 4.1Mt while the north will see 3.7Mt being added. The western and central regions are not too far behind with 3.3Mt and 3Mt each, say industry sources.
This fiscal, cement companies have added 24Mt till October with another 20.9Mt scheduled to be wrapped up by the end of this fiscal. In the process, the cement capacity in India will be 301.6Mt, up from 257Mt in 2009-10. The downside, though, is that demand has been lacklustre in the last few months, especially from the housing sector.
Mr Sanjeev Kumar Singh, Research Analyst, Centrum Broking, said the glut would keep the utilisation rate and pricing power of cement makers under pressure. “Companies may find it difficult to pass on the rise in operational cost due to expensive raw materials to end-users which will eventually lead to deterioration in margins and return ratios,” he added.