Large Cement Companies Dominate Market Share

Backed by healthy demand prospects for the cement sector, large cement companies are looking to increase their capacity and maintain their dominant market share through organic and inorganic expansions.

ICRA estimates that the market share of the top five cement companies (UltraTech Cement Limited, Adani Group, Shree Cement Limited, Dalmia Cement (Bharat) Limited and Nuvoco Vistas Corporation Limited) witnessed a steep rise to 54 percent as of December 2023 from 45 percent as of March 2015, and expects it to further increase to 55 percent by March 2025, resulting in consolidation in the cement industry. Except the ACC and Ambuja acquisitions by the Adani Group, other mergers and acquisitions (M&As) were largely owing to the cash flow-starved nature of the acquired entity or the group’s financial stress.

Giving more insights,  Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, ICRA said , “While organic growth is expected to continue in the medium term, cement companies are also preferring the inorganic route to boost capacities rapidly, leading to consolidation in the industry. There were 15 M&As in the last nine years in the cement industry with the average cost of the M&A ($80/MT) being lower than the cost of setting up an integrated greenfield cement plant ($110–120/MT), thus leading to capex cost savings. This further entails access to readymade capacity, limestone reserves and prevents companies from the hassle of longer gestation periods for stabilisation of operations in case of a greenfield unit. Asset block of 28 MT is in pipeline for acquisition and ICRA expects M&A deals to continue, given the aggressive growth plans of the large incumbent players who want to maintain their market share.”

 MARKET SHARE OF TOP 5 CEMENT COMPANIESSource: ICRA Research

 MARKET SHARE OF TOP 5 CEMENT COMPANIES ACROSS REGIONS

The bulk of the cement produced within a region is usually consumed internally and the excess transported to adjacent regions. The consolidation, taking place across India, is primarily led by the eastern and the western regions. The share of the top five cement companies in the eastern and the western regions is estimated to increase to 76–79 percent  in FY2025 from 54 percent in FY2015. The southern region is highly fragmented with only 40 percent share held by the top five cement players in FY2015. This may go up to 50 percent by FY2025. The northern and central regions were highly consolidated in the past (65-75 percent in FY2015) and are expected to remain in the range of 75-85 percent by FY2025.