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MOSL: CEMENT-Capacity addition slowing-to revert to mean in FY19-Bulk of the additions to come up in the South and East

​CEMENT: Capacity addition slowing; to revert to mean in FY19; Bulk of the additions to come up in the South and East; unlikely to impact pricing

• ​We attended a conference call with cement equipment supplier, FL Smith on the likely capacity additions in India over the next two years.
  
• FL Smith expects aggregate capacity addition of ~30mt over FY17-19 - 10mt in FY18 and 20mt in FY19. This is against annual capacity addition of ~20mt over FY12-16, indicating some slowdown in the pace of capacity addition. It expects most of the addition to be in the South and the East.
  
• We estimate capacity addition of 31mt over FY17-19, with the South and the East accounting for ~58% of the incremental capacity. Given the strong pricing discipline in the South, we believe higher capacity addition is unlikely to impact pricing in the region. Similarly, given the robust demand in the East, we do not expect significant price correction due to additional supplies..