UltraTech Cement, Indian Oil Corporation, Coal India and Hindustan Zinc, all market leaders in their respective business segments, have reported high or record production for FY23. A common theme pushing demand for these sectors is India’s growing spending on infrastructure and the heightened need for energy.
Indian Oil, for instance, reported a crude throughput of 72.4 million tonnes in FY23, its highest ever. Refiners such as Indian Oil are direct beneficiaries of any improvement in India’s economic activity and movement of goods. Factors such as economic momentum, mobility shift towards petrol due to volatile CNG prices, and demand from tourism-heavy states were some factors contributing to the growth in demand for petrol, as noted by the Petroleum Planning and Analysis Cell (PPAC) in its consumption report for February.
India’s spending expenditure on infrastructure has been on a steady rise, with the country earmarking Rs 10 lakh crore as capital expenditure in the latest budget announcement made in February. This, coupled with increased urban housing activity, led to robust demand in FY23. Spotting the demand advantage, UltraTech Cement, India’s largest cement manufacturer, on April 1 said it dispatched more than 100 million tonnes of grey cement in FY23.
UltraTech and other cement companies can expect the momentum to continue in the current financial year. “Cement volumes are expected to grow by 7% in FY2024 to 416 million tonnes, supported by demand from the housing and infrastructure sectors,” rating agency ICRA said in a note on the sector in March.
Both Indian Oil and UltraTech Cement have used robust demand dynamics to increase their slice of the pie.
FY23 saw Indian Oil’s petroleum products market share increase to 42.9 percent from 40.8 percent a year earlier, the company said in its statement.
Similarly, for UltraTech, capacity addition may have led to higher market share, according to Mangesh Bhadang, senior vice president at Centrum Broking. “Overall industry volumes growth in the March quarter is expected at 10 percent, whereas UltraTech has grown at 15 percent, so clearly UltraTech is gaining market share on the back of capacity additions,” Bhadang said.
India’s mining segment also gained from the infrastructure and energy demand exuberance. Coal India and Hindustan Zinc both reported record mine output for FY23.
Coal India said it crossed the 700-million tonne mark of production in FY23. The volume increase of a whopping 81 million tonnes in a single year by FY23-end is the highest figure in the company’s history. “It outstrips, by nearly twofold, the previous high of a 44.5-million tonne hike reported in 2015-16,” Coal India said in its note. The miner has witnessed high demand for coal from both power and non-power sectors such as metals.
Hindustan Zinc had a similar historic high to report, at 821,000 tonnes of zinc production in FY23. Zinc demand moves in tandem with demand for steel products, as zinc is primarily used to galvanise steel. Demand for steel, and particularly galvanised steel, has been increasing helped by India’s infrastructure push.
JSW Steel, the country’s leading steel producer, reported its highest ever crude steel production in the quarter ended December 2022, primarily driven by demand from the infrastructure sector. The company said its production numbers in February were up 10 percent year-on-year. JSW Steel is yet to report volume data for March.
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