Cement Industry’s Performance
The Cement Industry witnessed slowdown in cement demand in the year 2013-14 due to fall in construction activity, prolonged monsoon, with floods and cyclones that hit some parts of the country, financial constraints and increasing rate of interest, and virtual drop in Government spending which had led to slowdown in realty and infrastructure sectors. During the year 2013-14, cement production, as per the Office of the Economic Advisor, Department of Industrial Policy & Promotion (DIPP), was 255.57 Mn.t. as against 248.23 Mn.t. in the previous fiscal, registering a growth of 2.96% as against 7.7% in the previous year 2012-13. New capacities in the pipeline materialized and lack of demand resulted in further decline of capacity utilization of the Cement Industry. Cement is one of the core industries and an important contributor in infrastructure growth. Cement has a direct co-relation of 1:1.2 with the GDP. But, it has witnessed lower growth than GDP.
In view of the downward revision of the previous year’s production figures from 251.12 Mn.t. to 248.23 Mn.t. by the Govt.,the percentage growth has gone down by 1.25 points from 8.95% to 7.7%.
Cement Industry’s Outlook - (2014-15)
As per the Economic Survey 2013-14, GDP growth is expected to be 5.4% – 5.9% in 2014-15, and will increase gradually thereafter.
The capacity utilization in the Cement Industry was 94% in 2007-08 which has been declining since then to around 70% mainly due to mismatch between the supply and cement demand. This has created a situation of excess idle capacity of over 100 Mn.t., a dead investment to the magnitude of Rs.62,500 crores in cost. The Cement Industry is optimistic that the thrust and importance given in the Union Budget 2014-15 for the development of National Highways, Rural and Urban Roads, Affordable Housing, Port Connectivity, Development of 100 Smart Cities, etc. should help in boosting the muted growth of the Cement Industry.
The Govt. has finally realized the value of concrete roads over bitumen. Shri Nitin Gadkari, Hon’ble Minister of Road Transport, Highways and Shipping, has unequivocally expressed his preference for cement concrete over bitumen for road construction.
These measures are likely to generate considerable cement demand, which is much needed to bring back Indian Cement Industry on the growth trajectory.