In 2024, India's domestic cement industry underwent a major consolidation, with fierce competition between two giants, Chaoke Cement, led by Aditya Birla Group, and Ambuj and ACC Cement, owned by Adani Group. The two companies have aggressively expanded through massive mergers and acquisitions. Chaoke Cement and Adani Cement have acquired 50 million tons per year of capacity for $4.5 billion to consolidate their respective market positions and achieve planned growth. In
2024, the cement industry faces operational challenges such as mediocre capacity utilization, declining sales, slow volume growth, and declining margins. In 2025, the industry will struggle to overcome last year's shortcomings, and demand expectations are optimistic, thanks to increased government spending on infrastructure.
Industry consolidation
The cement industry has undergone significant consolidation following a series of acquisitions, with the top five players now having a market share of 62%, up from 45% in FY19. Adani Group's entry into the cement industry has intensified competition, especially with the Adani-led Ambuje Cement acquiring Sanchi Industries, Penna Cement, Oriental Cement and My Home Cement. In addition, its subsidiary ACC acquired the Asian Concrete and Cement Company. Supercement, led
by Aditya Birla, has also been active, acquiring Kesoram and India Cement. Following these acquisitions and expansions, Adani Cement's total production capacity has reached 100 million tons per year, including 70 million tons per year capacity acquired from Holcim Switzerland. The company plans to further increase its production capacity to 140 million tons per year by fiscal year 2028. In contrast, Chaoke Cement currently has an operating capacity of 156.66 million tons per year and plans to expand to 200 million tons per year by fiscal year 2027.
Other players, such as Jaykay Cement, are also looking for growth, with plans to increase capacity to 50 million tons per year by fiscal year 2030. However, after this wave of acquisitions, major players are expected to shift their focus to organic growth due to financial constraints. Ambuje Cement has few cash reserves left after its recent acquisition, while Chaoke Cement is burdened with huge debts.
Capacity utilization
is expected to improve in the first half of fiscal year 2025. Clinker utilization is expected to rise from approximately 75% in the second quarter of fiscal 2025 to 81% in the third quarter of fiscal 2025 and 98% in the fourth quarter of fiscal 2025. Historically, higher clinker utilization in the fourth quarter has supported the industry's pricing power. In addition, Chaoke is expected to maintain capacity utilization above 80% during fiscal year 2025-2027, while Ambuje is expected to be above 75%.
Cement prices
Cement prices have fallen to a four-year low in the first half of fiscal year 2025 due to low demand and fierce competition. However, sustainable price increases are expected to be supported by projected price increases in 2025 due to increased demand and reduced competitive intensity following industry consolidation. Rising prices could have a magnifying effect on top players' EBITDA, which has stayed within a range in 2024.
Demand Outlook
Cement demand is expected to increase, thanks to government spending on infrastructure, housing and real estate. Government spending is critical to driving cement demand and is expected to follow GDP growth in the coming years as government policy focuses on investment-led growth.
Profit Margin
Fuel costs have always been an important factor in profit margins. Overall, fuel costs are expected to cushion cement makers' profit margins in 2025, despite recent increases in imported petcoke prices. Companies are also focusing on cost-efficiency measures, including increasing the use of green power and optimizing logistics.
Conclusion
In 2025, the cement industry in India will experience an upward cycle, driven by growing demand, reduced competition and improved cost efficiency. While regional presence and operational efficiency remain key priorities for cement companies, cement sales volumes are expected to recover in the second half of fiscal 2025, driven by increased rural consumption, rebounding urban housing demand and higher government infrastructure spending.
Industry consolidation is expected to further enhance pricing power and support price increases, while cement companies focus on improving efficiency, reducing costs and increasing the use of green power. The outlook for the industry is positive, although some challenges remain in achieving the expected level of profitability.
浙公网安备33010802003254号