India's cement consumption has potential to grow 3-fold: Dalmia Bharat

Dalmia Bharat, the country's second-oldest cement manufacturer that began its industrial journey in pre-independent India, is investing significantly to build fresh nationwide capacity to meet surging demand from industries as diverse as housing, public infrastructure, and commercial assets. Puneet Dalmia, MD and CEO, announced a capital expenditure of ₹3,520 crore to take Dalmia Bharat's capacity to 55.5 million tonnes a year, cementing its leadership credentials in the rapidly consolidating home market.

«India is one of the fastest growing economies, and it is a large economy. So, it offers the benefit of scale,» Puneet Dalmia told ET. «Average per capita consumption is 280 kg, while the global average is 550 kg. In high growth phases, economies have seen cement consumption grow to 750-800 kg per capita. So, there is potential to go 3x from here.»

Dalmia acknowledged that short-term headwinds existed in the form of a price war that was driving down margins of players but believes that doesn't change the long-term view. He attributed the price war to a phenomenon where players were prioritising market share over margins in the backdrop of consolidation in the sector.

«In the past two decades, we have grown 18-19% both in terms of volumes and capacity. Larger players are growing faster than smaller ones,» said Dalmia. «Cement demand growth is 7-8%, but bigger players are growing at 13-14% and smaller players are growing at 3-4%. Top four players have gotten 102% of the incremental market in the past five years.»