India's Shree Cement plans to add about 9mn t/yr of capacity to reach 56mn t/yr output by the end of 2024. Higher cement output typically raises consumption of petroleum coke and coal.
The Bombay Stock Exchange-listed Shree will add cement capacities in the eastern state of West Bengal, northwestern state of Rajasthan and southern state of Andhra Pradesh, the company said in its recently published annual report for the 2022-23 fiscal year ending 31 March 2023. The cement maker upgraded its unit in the eastern Jharkhand state in April to add 500,000 t/yr of cement capacity to reach a total of 46.9mn t/yr.
The expansions are part of its goal to reach 80mn t/yr of capacity by 2030. Shree has acquired limestone mines at several locations and is developing various sites to set up greenfield cement projects across the country, it said.
India is the world's second-largest cement producer after China, but has a low per capita consumption of 240-250 kg/yr, compared with a global average of 500-550 kg/yr. Most cement makers are investing in expansion projects to address growing demand.
The cement sector continues to witness a spate of capital expenditure announcements in anticipation of medium-term demand growth and market share gains, according to India Ratings and Research, a subsidiary of global ratings agency Fitch. India Ratings expects a large portion of the industry's announced capacity addition of 150mn t/yr to become operational by March 2025, according to a note published in April.
The cement sector is likely to see increased consolidation in the near-to-medium term because of a widening gap in financial metrics between large and small cement companies, given a difficult operating environment, India Ratings added. The aggressive medium-term capacity targets of large companies are unlikely to be achieved organically.
Market participants expect India's decision to allocate higher funds for the infrastructure sector to raise cement consumption and boost demand for coke and thermal coal, the key fuels used in cement production.
Investments in infrastructure and production capacity have a large multiplier impact on growth and employment, India's federal finance minister Nirmala Sitharaman said on 1 February. The government raised its 2023-24 capital investment budget by 33pc from a year earlier to 10 trillion rupees ($121.95bn).
The current government's term ends next year, and the budget presented early this year was the last full budget of its five-year term. Federal governments in India historically tend to boost infrastructure spending in the last full budget of their term.
