Cement demand outlook this fiscal remains healthy, driven by rising investment in construction and real estate sectors, the Centre for Monitoring Indian Economy (CMIE) said in its monthly report.
The CMIE expects cement production to grow 11.5 per cent and cement consumption 12 per cent during FY09.
The total annual installed capacity of the cement sector increased by about 22 million tonnes during FY08, of which 12.7 million tonnes were added during the March 2008 quarter. The CMIE expects another 25 million tonnes of new capacity to come on-stream in FY’09, boosting the production growth.
“We expect the production to grow 11.5 per cent during FY09 backed by the Northern region, which has seen additional capacity of around 15 million tonnes in FY08. The year 2009 would see an addition of another 7-8 million tonnes in the region,” the CMIE said.
Western and Eastern regions would continue to face a deficit. However, surplus volumes from the North are expected to meet demand in these regions, it said.
Sales volumes would drive the sector’s growth during the fiscal. With limited year-on-year rise in realisations, the measures to improve cost efficiencies would play a significant role in determining the sector’s profitability, CMIE added.
After decelerating in the previous three months, cement production and consumption growth rate picked up during February 2008.
Coming over a low base, production and consumption grew a robust 12.6 per cent and 14.8 per cent, respectively, during the month. The growth was driven by a healthy performance of the northern region, which saw its production and consumption rising 25 per cent each, the CMIE added.
Meanwhile, CMIE also projected in its monthly report that agricultural crop production to grow at a modest rate of 2.3 per cent in FY09.
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