Recent reports say that cement manufacturers in India are hopeful that the government will take the promised action to boost the country’s industrial climate. Cement demand was slightly subdued in the last financial year, forcing price hikes to maintain margins; an upswing is dependent on infrastructure investment by the government, which looks more likely in the run-up to the general elections next year.
VP Sharma, COO of Dalmia Cement, said that last quarter was very poor, one of the worst in fact, but strong growth will only come back if Union government take initiative. In the past, during election years, spending used to be higher and projects used to pick up. However, whether the recent slew of assurances by the government will actually translate into growth is something that will emerge with time. Industry will see most units operating at 80 – 85 per cent of their total capacity, he added.
Input costs have increased, putting further pressure on margins. The Indian cement industry has long been a story of ‘wait and see’, with millions of dollars of infrastructure improvements scheduled to take place in the coming years. Once these begin to take affect, the demand/supply balance will alter dramatically.