Cement sector may see higher demand growth in next 3 to 5 years: ACC

Despite the domestic cement industry facing challenging times due to muted demand, excess capacity and declining prices, it may see higher demand growth over the next 3-5 years, segment major ACC has said. "The year 2015 was most challenging in terms of demand growth, excess capacity and declining prices. Forecasts for India's GDP growth in 2016 and in the short term are of the order of 7 to 8 per cent. India's per capita consumption of cement at 207 kg is well below the world average of 540 kg. India is destined for development and growth," said ACC Chief Executive and Managing Director Harish Badami, He was addressing the shareholders at the company's 80th Annual General Meeting here, reported by PTI. This augurs well for construction activity and cement. On this basis, we expect cement demand to grow in line with GDP over the next 3-5 year period, Badami added. The overall demand for cement was dull, with growth of only about 2 per cent in 2015. A surplus of about 100 million tonnes of capacity and the low capacity utilisation of 73 per cent made the cement market very competitive throughout the year, the CEO said. The cement industry faced additional constraints as a result of certain policy and regulatory shifts, especially in the areas of limestone lease renewals and coal linkages, he said. However, ACC is well positioned and ready to participate in this next phase of national growth, he said. Commenting on the company's growth plans, Badami said, ACC's Jamul project (in Chhattisgarh) is nearing completion and precommissioning activity is currently under way. The new kiln at Jamul, which adds clinkering capacity of 2.8 mtpa, will be lit up in the next few days. The new cement grinding units at Jamul and Sindri (Jharkhand) will also be commissioned shortly. Notwithstanding the challenging competitive environment, the company achieved overall cement capacity utilisation of 77 per cent, which was 4 per cent higher than that of industry and unit sales realisation improved by 1 per cent in 2015, as compared to the previous year, he added. Badami pointed out that 2015 was a historic year for the cement industry when two of the world's largest cement companies - Lafarge of France and Holcim of Switzerland - merged to create LafargeHolcim Ltd. The new entity is an undisputed world leader in the cement and building materials industry spread across 90 nations with 1,500 ready mixed concrete plants and 200 cement plants, having a capacity of 374 million tonnes per annum. ACC is one of the largest subsidiaries in LafargeHolcim occupying an important and strategic position in the Group's global footprint, he added.