Cement production to grow 11.5% in FY09: CMIE

Cement demand outlook this fiscal is expected to remain healthy, driven by rising investment in construction and real estate sectors, according to Centre for Monitoring Indian Economy (CMIE). CMIE expects cement production to grow 11.5 per cent and cement consumption 12 per cent during FY09.

The total annual installed capacity of the cement sector increased by about 22 million tonnes during FY08, of which 12.7 million tonnes were added during the March 2008 quarter. The CMIE expects another 25 million tonnes of new capacity to come on-stream in FY09. Northern region, which has seen additional capacity of around 15 million tonnes in FY08, will see an addition of another 7-8 million tonnes in 2009. Western and Eastern regions would continue to face a deficit. However, surplus volumes from the North are expected to meet demand in other regions. Sales volumes would drive the sectors growth during the fiscal. With limited year-on-year rise in realisations, the measures to improve cost efficiencies would play a significant role in determining the sectors profitability.