Mumbai: Cement demand outlook this fiscal (FY 09) remains healthy, driven by rising investment in construction and real estate sectors, the Centre for Monitoring Indian Economy (CMIE) said in its monthly report.
CMIE expects cement production to grow by 11.5% and cement consumption to grow by 12% during FY 09.
The total annual installed capacity of the cement sector increased by about 22 milllion tonnes during FY 08 of which, 12.7 million tonnes were added during the March 2008 quarter. CMIE expects another 25 million tonnes of new capacity to come on-stream in FY 09, boosting the production growth during the year.
“We expect production to grow by 11.5% during FY09 backed by the Northern region, which has seen additional capacity of around 15 million tonnes in FY 08. The year 2009 would see an addition of another 7-8-million tonnes in the region,” CMIE said.
West and Eastern regions would continue to face a deficit. However, surplus volumes from the North is expected to meet demand in these regions, it said.
Sales volumes would drive the sector’s growth during FY 09. With limited year-on-year rise in realisations, measures to improve cost efficiencies would play a significant role in determining the sector’s profitability, CMIE added.