Mismatch between Demand and Supply will Prevail in the Cement Industry

Published By : 07 Aug 2014 | Published By : QYRESEARCH

Chairman Kumar Mangalam Birla stated that, over the long-term the growth of cement demand will move up to double digits and the factors driving this growth will be the increasing housing and infrastructure activities.

Mr. Birla addressed shareholders at the company’s 14th AGM and said that during the period of 2013 – 2014, the cement industry experienced the brunt of the overall economic environment, which resulted in slow demand from consumers.

He also stated that there has been a surge in raw material costs and logistics. During the coming years, the cement market will witness supply exceeding demand with additional capacity set up by the industry, which will be coming on stream.

The improving outlook of the cement industry and the support from government for infrastructure and housing is expected to aid UltraTech Cement in a 25% growth which will result in a turnover of INR 25,000 crore in the current fiscal.

Chairman Birla stated that the mismatch between supply and demand will continue to exist for some time, which will result in prices to remain under constant pressure. The acquisition of the total 4.8 million tone Gujarat Cement at a price of INR 3,800 crore represents a significant event in the company’s growth strategy. This will strengthen the company’s foothold in the growing western market and strengthen their coastal footprint.

Due to this acquisition, the company’s current capacity will be of 62 million tones along with the three million tones present overseas. By the beginning of the year 2016, the company expects these figures to increase to 70 million tones when all the current projects will get fully commissioned.
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