Operating
context

Attractive
macro
dynamics

Despite overwhelming challenges in 2020, we stood our ground and focused on the long-term opportunities in our operating landscape. Our core aspiration is to partner the building of Atmanirbhar Bharat.

According to a latest research document*, 17 of the 20 fastest-growing cities in the world between 2019 and 2035 are expected to be in India. This requires significant investment in urban infrastructure development and the impetus is already reflected in several government programmes, such as the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), the Pradhan Mantri Awas Yojana-Urban (PMAY-U), Swachh Bharat Mission-Urban, and other such initiatives. The government’s substantial investment plans to ramp up the infrastructural capacity, is expected to bolster the country’s economy in the coming years.

*Oxford Economics; Global Cities: The Future of the World’s Leading Urban Economies to 2035

Strong demand surge

India continues to be the second-largest cement market, both in terms of production and consumption. With per capita consumption at ~235 kg vis-à-vis the global average of over 500 kg, the industry has significant growth opportunity.

India’s cement demand is re ecting signs of recovery, driven by strong recovery in rural areas as well as in smaller towns. Extension of various government schemes is expected to spur housing demand. Besides, the enhanced access to funds at a signi cantly lower cost will boost real estate sales, which, in turn, is likely to push demand in India. Sustained efforts of the government towards infrastructure creation over the next few years is also perceived as a demand driver.

Growth drivers

We expect that the following factors will be among the key growth drivers of cement in India:

Housing for all

The Pradhan Mantri Awas Yojana (PMAY) was launched in 2015 to provide housing for all by 2022. Under the scheme, ~10 million houses were sanctioned in the urban area, of which ~4.2 million houses were completed (as on January 25, 2021).

Cement consumption in grounded houses

(Lakh metric tonnes)

(Source: pmay-urban.gov.in)

Credit Linked Subsidy Scheme (CLSS)

The central government has extended the CLSS for the affordable housing segment from March 2020 to March 2021, with a direction to drive the segment.

Faster urbanisation

It is expected that 40% of the population, or 600 million people, will be residing in urban areas by 2030, requiring 700-900 million square metres of residential and commercial space to be built every year till 2030

(Source: m.economictimes.com/news/economy/infrastructure/ how-india-isbuilding-cities-of-the-future/articleshow/69964522. cms?_oref=cook).

(Source: Knight Frank)

Demography

India has the second largest population with 62% in the working age group of 15-59 years, and more than 54% is under the age of 25 years. The young population is likely to drive demand for real estate in the country.

Nuclearisation

The average household size in India has declined from 5.3 members in 2011 to 4.6 members in 2019. Nuclearisation is further expected to add ~6-7 million households
per year.

Focused on highways

The Centre has earmarked a `2.02-lakh crore investment plan to build highways in the next nancial year 2021-22. This along with increasing focus on road concretisation will drive demand for cement.

National Infrastructure Pipeline (NIP)

The National Infrastructure Pipeline aims to invest `111 lakh crores by 2025 in multiple projects spanning transport, energy, social and commercial infrastructure, communication, water and sanitation, among others.

Rural income

Increased Minimum Support Price (MSP) as well as allocation for various projects are helping support farming income and rural economy. Enhanced allocation of funds for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is also helping enhance rural income.

Responding to sectoral opportunities

The housing segment, including low-cost housing, accounts for over 65% of the cement demand in India. Ambuja Cement focuses on IHBs and the retail market. With an installed capacity of 29.65 MTPA across ve integrated plants and eight grinding units, we command close to ~8% market share across the North, East, North-west and West-south Indian markets with the help of ~50,000 channel partners

We are commissioning a state-of-the-art green eld integrated plant at Marwar Mundwa in Rajasthan with 3.0 MTPA clinker and 1.8 MTPA cement capacity to grow our market share and further gain from economies of scale

Our value-added offerings help consumers enhance the life of their constructions

Our technical tie-up with our parent, LafargeHolcim, helps us in streamlining our operations in line with global best practices and helps us to introduce innovative products suited to the needs of the Indian market

(Source: IBEF)