Cement industry hope to benefit from infrastructure spending

Despite getting no industry-specific incentives, the 224-million-tonne domestic cement industry has welcomed the Union Budget for 2009-10. The cement makers said that government's clear thrust on infrastructure will ultimately help the industry continue with its growth momentum.

The increase in allocation for national highways, Jawaharlal Nehru National Urban Renewal Mission, thrust being given on urban housing, rural electrification fund, Commonwealth Games and decision of 60 per cent refinancing of commercial bank loans by India Infrastructure Finance Company (IIFCL) for PPP projects in the next 15-18 months; have boosted confidence among the cement industry.

Hari Mohan Bangur, president of the Cement Manufacturers' Association, said, "The indirect measures taken by the goverment with its renewed thrust on infrastructure will ultimately positively impact the cement industry. We expect good demand for cement as consumption would go up on the back of various infrastructural activities."

Managing director of the country's largest cement maker, ACC, Sumit Banerjee, said, "The thrust on infrastructure and housing spells well for construction and building materials." However, since cement industry yet again did not manage to get any sector-friendly measures from the Union Budget, industry also expressed disappointment. "We are disappointed that cement fails to get any respite from the high rate of taxes and duties. In fact, the recent hike in petroleum price hike has further increased the burden on cement," added Banerjee.

The cement industry has maintained a consistent growth rate of over 8 per cent since November last year. Industry analysts had pointed out that the second half of the current financial year may prove to be a tough time for the industry.

However, players are hopeful that government's push on infrastructure will help the industry not face an over supply situation.

North-based cement makers will get a direct boost from the allocation for Commonwealth Games. Vinod Juneja, managing director of Binani Cement, said, "Indirect measures to develop infrastructure will help create a demand for cement and over supply will be easily consumed."