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Icra predicts cement mergers

New Delhi, Sept. 28: The cement industry will witness mergers and acquisitions amid a spurt in medium-term demand that will be fuelled by housing and road projects, according to an Icra study.

“From the demand perspective, the fundamentals look bright and cement demand should grow by 7-8 per cent. Rural housing is likely to see an increased investment due to good monsoons,” says Icra, the rating agency in which US-based Moody’s owns an equity stake.

The report, however, said the current levels of realisations of cement makers did not justify construction of new manufacturing facilities. Growth in volumes will be driven by acquisitions, production of blended cement or de-bottlenecking of existing facilities, it added.

“The increase in mergers and acquisitions currently witnessed (particularly in the recent deal between L&T and Grasim) is a pointer to consolidation in the industry,” said the report.

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