Cement demand outlook this fiscal (FY 09) remains healthy, driven by rising investment in construction and real estate sectors, the Centre for Monitoring Indian Economy (CMIE) said in its monthly report here.
CMIE expects cement production to grow by 11.5 per cent and cement consumption to grow by 12 per cent during FY 09.
The total annual installed capacity of the cement sector increased by about 22Mt during FY 08 of which, 12.7Mt were added during the March 2008 quarter. CMIE expects another 25Mt of new capacity to come on-stream in FY 09, boosting the production growth during the year.
"We expect production to grow by 11.5 per cent during FY 09 backed by the Northern region, which has seen additional capacity of around 15Mt in FY 08. The year 2009 would see an addition of another 7-8Mt in the region," CMIE said.
West and Eastern regions would continue to face a deficit. However, surplus volumes from the North is expected to meet demand in these regions, it said.
Sales volumes would drive the sector’s growth during FY 09. With limited year-on-year rise in realisations, measures to improve cost efficiencies would play a significant role in determining the sector’s profitability, CMIE added.