Cement production finally turns the corner
Cement

Cement production finally turns the corner

Despite registering a negative growth rate in the previous seven months, cement production increased by 2.8% in October, the latest report from CARE Ratings says. The report cites major reasons as increase in demand with the pickup in infrastructure projects that had been stalled due to the nationwide lockdown, receding of the monsoons and return of several migrant workers. Domestic cement production has fallen by 21.3% during 7M-FY21 compared with the 15% growth and 0.6% degrowth in production achieved during 7M-FY19 and 7M-FY20.

Domestic manufacturers’ capacity utilisation has been around 47% during 7M-FY21 as units have been operating at sub-par capacities along with staggered shifts but has increased from it being 45% during H1-FY21. Given the fall in demand and companies looking to conserve their capital/cash flows, cement manufacturers had cut down or deferred capex. Although lately, some players have been announcing capex expansion of capex guidance plans.

Cement demand is closely linked to the overall economic growth of the housing and infrastructure sector. Increasing demand from affordable housing and construction work for other government infrastructure projects, cheap housing loans and the need for space, non-trade segment gaining momentum with the resumption of construction work of institutional infrastructure projects drive the demand for cement.

A significant factor which aids the growth of this sector is the ready availability of limestone and coal. Due to various cost rationalisation measures and overhead controls undertaken by cement manufacturers, there has been an increase in the operating profit margins (OPM), net profit margins (NPM) and interest coverage ratio during Q2-FY21 and H1-FY21. Cost of raw materials too declined by 20.3% during H1-FY21 due to the overall fall in the prices of limestone but has increased by 3.7% on a y-o-y basis and by 44.8% on a q-o-q basis. The overall sales revenue has increased by 6% during Q2-FY21 y-o-y but has declined sharply by 11.6% during H1-FY21 y-o-y.

Despite registering a negative growth rate in the previous seven months, cement production increased by 2.8% in October, the latest report from CARE Ratings says. The report cites major reasons as increase in demand with the pickup in infrastructure projects that had been stalled due to the nationwide lockdown, receding of the monsoons and return of several migrant workers. Domestic cement production has fallen by 21.3% during 7M-FY21 compared with the 15% growth and 0.6% degrowth in production achieved during 7M-FY19 and 7M-FY20.Domestic manufacturers’ capacity utilisation has been around 47% during 7M-FY21 as units have been operating at sub-par capacities along with staggered shifts but has increased from it being 45% during H1-FY21. Given the fall in demand and companies looking to conserve their capital/cash flows, cement manufacturers had cut down or deferred capex. Although lately, some players have been announcing capex expansion of capex guidance plans. Cement demand is closely linked to the overall economic growth of the housing and infrastructure sector. Increasing demand from affordable housing and construction work for other government infrastructure projects, cheap housing loans and the need for space, non-trade segment gaining momentum with the resumption of construction work of institutional infrastructure projects drive the demand for cement. A significant factor which aids the growth of this sector is the ready availability of limestone and coal. Due to various cost rationalisation measures and overhead controls undertaken by cement manufacturers, there has been an increase in the operating profit margins (OPM), net profit margins (NPM) and interest coverage ratio during Q2-FY21 and H1-FY21. Cost of raw materials too declined by 20.3% during H1-FY21 due to the overall fall in the prices of limestone but has increased by 3.7% on a y-o-y basis and by 44.8% on a q-o-q basis. The overall sales revenue has increased by 6% during Q2-FY21 y-o-y but has declined sharply by 11.6% during H1-FY21 y-o-y.

Next Story
Infrastructure Urban

Six Bidders Vie for Rs 572 Bn Jaiprakash Associates

The scramble to rescue Jaiprakash Associates Ltd (JAL), the flagship of the debt-laden Jaypee Group, reached a decisive stage on Tuesday as the window for resolution plans shut with at least six suitors in the fray. Industry sources say Adani Enterprises, Vedanta Group, Dalmia Bharat, Jaypee Infratech (backed by the Suraksha Group), Jindal Power and PNC Infratech have all lodged bids. Jaypee Infratech confirmed its submission but declined to reveal details.Lenders will open and assess the offers at a Committee of Creditors meeting today. Although bid values remain under wraps, the National Ass..

Next Story
Infrastructure Urban

Delhi Orders Urgent MAMC Hostel Repair and Safety Upgrade

Delhi Chief Minister Rekha Gupta has instructed multiple departments to overhaul hostel infrastructure and enhance student safety at Maulana Azad Medical College (MAMC). Chairing a high-level meeting at the Delhi Secretariat with Public Works Department, Health officials and student representatives, the Chief Minister demanded immediate repairs to ageing hostel blocks, new high-intensity LED lighting, round-the-clock CCTV coverage and a larger security presence.She also ordered a special drive to clear illegal encroachments around the campus and fast-track plans for an additional hostel, delay..

Next Story
Infrastructure Transport

Vikaspuri Road Upgrade, Tree Drive to Boost Delhi Constituency

Delhi’s Health and Transport Minister Pankaj Kumar Singh has broken ground on the long-awaited Baprola Village–Harphool Vihar road while leading a record plantation of 501 saplings under the “Ek Ped Maa Ke Naam” campaign. He said the two initiatives reflect the capital’s “people-centric governance”, promising safer, faster and more dignified daily life for residents.The rebuilt thoroughfare will ease commutes for Baprola Village, G-2 Jai Vihar, Prashant Enclave, Bajrang Chowk and Harphool Vihar, directly benefiting an estimated three thousand to three thousand five hundred school..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?