Indian Cement Makers to Spend Rs 125,000 Crore on Expansion by 2027, Says Crisil Ratings
Indian cement manufacturers are planning to invest Rs 125,000 crore in capital expenditure during the financial years 2025-2027. This move is driven by a strong demand outlook and the desire to capture more market share, according to Crisil Ratings.
The projected investment is 1.8 times higher than the capital expenditure over the past three years. The credit risk profiles of these manufacturers are expected to remain stable. Capital expenditure, or capex, is used to set up long-term physical or fixed assets.
Manish Gupta, Senior Director and Deputy Chief Ratings Officer at Crisil Ratings, stated that the cement demand outlook remains healthy with a compound annual growth rate of 7% over the fiscal years 2025-2029. He added, “The surge in capex over the next three fiscals will primarily cater to this growing demand as well as to the aspirations of the cement makers to improve their national presence. A total of 130 million tonnes of cement grinding capacity (nearly a fourth of the existing capacity) is likely to be added by players over this period.”
Ankit Kedia, Director at Crisil Ratings, mentioned that the low capex intensity will keep the balance sheets of cement manufacturers strong and ensure stable credit profiles. He said, “Over 80% of the projected capex over the three fiscals through 2027 is likely to be funded through operating cash flows, resulting in minimal requirement of additional debt.”
Doubts Revealed
Cement Makers -: Cement makers are companies that produce cement, a material used to make buildings and roads.
Rs 125,000 Crore -: Rs 125,000 crore is a huge amount of money. One crore is 10 million, so 125,000 crore is 1.25 trillion rupees.
Expansion -: Expansion means growing bigger. Here, it means the cement companies are planning to build more factories or improve their current ones.
2027 -: 2027 is a year in the future. It is four years from now.
Crisil Ratings -: Crisil Ratings is a company that checks how good and safe it is to invest in other companies.
Capital Expenditure -: Capital expenditure is money spent by companies to buy or improve things like buildings or machines.
Demand -: Demand means how much people want to buy something. Here, it means many people want to buy cement.
Market Expansion Goals -: Market expansion goals are plans to sell more products or reach more customers.
1.8 times higher -: 1.8 times higher means almost double. If you had 10 rupees before, now you have 18 rupees.
Cement Grinding Capacity -: Cement grinding capacity is how much cement a factory can make by grinding raw materials.
Operating Cash Flows -: Operating cash flows are the money a company makes from its regular business activities.
Credit Profiles -: Credit profiles show how good a company is at paying back money it borrows.