We have strategically planned to double our overall capacity and become the most efficient cement producer.
Ajay Kapur, CEO, Cement Business, Adani Group
How do you assess the cement and concrete demand in the current construction scenario?
The construction industry is crucial to the country’s economic growth since it fosters the growth and expansion of a variety of industries because of its forward and backward linkages. It is expected to register a CAGR of more than 10% during 2022-2027, while also contributing approximately 13% to our country’s GDP by 2025.
The growing construction industry largely benefits from the rising urbanisation, road and infrastructure development, which in turn facilitates demand creation of cement and concrete because of its multiplier effect. Analysis by Fitch Ratings and CareEdge Research indicate a robust growth trajectory, projecting 6-8 per cent increase in cement demand in India in the next fiscal. The previously concluded financial year (FY2023) witnessed a substantial double-digit growth in demand, signalling a positive momentum.
This upward trend is expected to persist supported by significant infrastructure investments outlined in the Union Budget and various flagship Government schemes, emphasizing the government's commitment to advancing construction initiatives. The housing sector, representing a substantial portion of the market, continues to be a key driver, supported by ongoing investments in roads and infrastructure projects.
We navigate this dynamic market by analysing regional development plans, monitoring urbanization trends, and aligning production capabilities accordingly. Consumer preferences for sustainable and high-strength concrete products guide our research & development initiatives and product offerings.
Amidst the recent moderation in input costs, there is a cautious optimism about maintaining robust operating margins while expanding market reach and product portfolios.
The construction sector's resilience, particularly in semi-urban and rural areas, is poised to provide additional impetus to cement and concrete demand.
Future strategies for ACC and Ambuja Cements, which are part of the diversified Adani Group, includes growth through capacity augmentation, synergies with Group Companies, cost efficiencies while fortifying distribution networks, and investing in environmentally sustainable practices across the value chain. This strategic outlook positions us to contribute and thrive in the evolving construction landscape.
Concrete usage will substantially go up in view of tall buildings in major cities due to urbanisation, concrete road projects and rural infra projects.
What is the demand-supply scenario of cement? Which are the major demand drivers?
Analysing the current demand and supply dynamics in the Indian cement market reveals a dynamic landscape marked by robust growth drivers. Cement production in India is poised to witness a significant 7-9% expansion, primarily fuelled by strategic investments in overall infrastructure and large-scale residential projects. This growth aligns strategically with the broader economic development goals of the country.
A key catalyst in this scenario is the government's heightened emphasis on ‘housing for all’ and infrastructure development, evident through substantial budget allocations for critical sectors like housing, road, and railways. Initiatives such as the Pradhan Mantri Awas Yojana and the 'PM Gati Shakti - National Master Plan' further amplify the demand for cement.
In response to this escalating demand, the sector is gearing up to add a substantial 80 million tonnes of capacity by FY24. This planned capacity expansion represents the most significant increase in the last decade and is indicative of rising demand. This expansion is not only indicative of market growth but also positions the industry to play a pivotal role in India's economic development journey.
As ACC and Ambuja Cements actively respond to the surging demand, it's noteworthy that the industry is witnessing a rising demand for green cement from environmentally conscious consumers. Both ACC and Ambuja Cements with their environmentally sustainable products, are committed not only to catering to this demand but also to reflect our commitment towards sustainable and responsible growth.
The demand drivers in the coming years would be housing and infra sector. The large precast units also influence the cement demand.
What are the evolving trends in cement grades and applications? Which are your latest products in this space?
India is the world's second-largest cement producer and the sector is undergoing transformative changes, emphasizing product innovation and sustainable practices. A notable focus is on energy efficiency, with advancements in preheater cyclones and calciners aimed at reducing thermal energy consumption. The industry is swiftly transitioning to blended cements to significantly cut CO2 emissions. Ongoing modernization of existing plants further enhances operational efficiency and minimizes the carbon footprint.
Ambuja Cements and ACC have complemented India’s infrastructure development with its wide array of high-quality and futuristic construction materials and solutions. We have undertaken an industry-first approach - leveraging sustainable construction through green products, to reduce CO2 emissions. Through innovation and R&D, a range of green and responsible products have been developed for high-performing and circular construction. PPC and composite cement made with low-carbon fly ash make up over 90% of the product.
ACC and Ambuja Cements have a wide range of innovative and green products. Ambuja Plus, Ambuja Cool Walls, Ambuja Compocem, Ambuja Kawach, ACC Gold Water Shield, Ready-Mix Concrete (RMX) offerings such as low carbon ACC ECOMaxX, ACC AEROMaxX and high-grade ACC PERFOMaxX, address the sustainability aspect of the construction industry. Besides, ACC is offering modern solutions like green bricks and blocks embracing eco-friendly practices for efficient construction. Alccofine is another product, an ultrafine proprietary patented mineral additive used with high-performance concrete that provides long life. This product enhances the hydraulic property and pozzolanic reactivity of concrete resulting in enhanced hydration, improved packing density of paste component, lowering water demand, admixture dosage, hence improving strength and durability of the concrete.
Apart from cementitious materials we have introduced Autoclave Aerated Concrete (AAC) block. These blocks are used largely for masonry application in housing, industrial and infra sector. ACC has set up Green Building Sector (GBC), which includes fly ash bricks, paver blocks and other precast articles.
How do you visualise the future demand trend in cement and concrete? What are your future plans?
The anticipated future demand for cement and concrete signals significant growth, particularly in India, the world's second-largest cement producer. The market size of the industry is expected to reach 4.83 billion tonnes by 2028.
The sector is primed for expansion, propelled by global urbanisation, infrastructural development, and a surge in construction activities. Acknowledging this trend, we have strategically planned to double our overall capacity and become the most efficient cement producer, not just in cost but also environmentally. Both Ambuja Cements and ACC are well-positioned with extensive manufacturing and grinding facilities across India, ready to capitalise on the projected surge in demand for cement and concrete. Through strategic expansion initiatives and a commitment to sustainability, we are poised to reinforce their market positions and make positive contributions to the rising construction sector.
