Operating rates to remain flat in 2016-17..
Utilisation rates of the Indian cement industry, which have been consistently on a decline for last five years are expected to
remain rangebound in 2016-17, as the growth in demand and consequently production is expected to remain muted. The
year 2016-17 is expected to witness capacity additions of 17 mtpa, similar to 2015-16. On a regional level, east and west
are potentially expected to see some decline in operating rates, as significant new capacities are coming up in these
regions which would require time for ramp-up.
The industry?s operating rate in 2015-16 was ~71% and at a multi-year low. The operating rate has been persistently low,
because demand growth slowed sharply between 2012-13 and 2013-14 (grew by mere 3%) amid continuing capacity
additions despite a significant overhang. The deceleration in pan-India cement demand was due to slowdown in housing,
infrastructure and related economic activity. Pan-India operating rates were pulled down primarily by weak capacity
utilisation in the south, where there was significant overcapacity and decline in demand, especially in Tamil Nadu.
Operating rates in western and central regions were high at 80-90% as the two regions have limited production capacity,
with typically 25-30% of their demand being supplied by other regions. Operating rates in the north and east were
moderate at around 75%.
....and rise in long term
CRISIL Research projects the pan-India operating rate to average 75% over 2015-16 to 2020-21, as compared to 72% in
the previous five year period, mainly due to expected improvement in demand growth of 6.5-7.5% CAGR and slower pace
of capacity addition compared to the previous five-year period (2010-11 to 2015-16 ).
Trend in cement operating rates
Trend in cement operating rates
This document is being provided for the exclusive use of Sourabh Kishanpuria at Indian Institute of Management
No part of this Report may be published/reproduced/distributed in any form without CRISIL's prior written approval
P: Projected
Source: CRISIL Research .
Incremental demand and effective capacity additions
P: Projected
Note: Effective cement capacity is calculated on pro-rata basis, taking into account the month in which the capacity b
Source: CRISIL Research
Source: CRISIL Research
Operating rates in south
This document is being provided for the exclusive use of Sourabh Kishanpuria at Indian Institute of Management
No part of this Report may be published/reproduced/distributed in any form without CRISIL's prior written approval
P: Projected
Source: CRISIL Research
Operating rates in west
P: Projected
Source: CRISIL Research
Operating rates in central region
This document is being provided for the exclusive use of Sourabh Kishanpuria at Indian Institute of Management
No part of this Report may be published/reproduced/distributed in any form without CRISIL's prior written approval
P: Projected
Source: CRISIL Research
Operating rates in north
P: Projected
Source: CRISIL Research
Operating rates in east
This document is being provided for the exclusive use of Sourabh Kishanpuria at Indian Institute of Management
No part of this Report may be published/reproduced/distributed in any form without CRISIL's prior written approval
P: Projected
Source: CRISIL Research
Operating rates in south
Methodology
CRISIL Research has calculated operating rates based on region-wise production and region-wise effective cement
capacity, which is calculated on pro-rata basis, taking into account the month in which the capacity come on-stream. The
installed capacity numbers have been determined by adding the entire rated capacity of the plants commissioned during
the year, irrespective of the month of commissioning, to their installed capacity at the end of the previous financial year. To
estimate production at the regional level, we have looked at capacities in competing production clusters and inbound-
outbound movement of cement.
This document is being provided for the exclusive use of Sourabh Kishanpuria at Indian Institute of Management
No part of this Report may be published/reproduced/distributed in any form without CRISIL's prior written approval