Big core sector plans build confidence

Robust demand expected, but high duties remain a worry.

DESPITE GETTING no industry-specific incentives, the 224-million-tonne domestic cement industry has welcomed the Union Budget for 2009-10. Cement manufacturers said that the government’s clear thrust on infrastructure would ultimately help the industry continue with its growth momentum.

Several of the measures announced today—the increase in allocations for national highways, the Jawaharlal Nehru National Urban Renewal Mission and the Commonwealth Games; the focus on urban housing; the rural electrification fund; and the 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 the confidence of the cement industry.

Hari Mohan Bangur, president of the Cement Manufacturers’ Association, said, “The indirect measures taken by the government 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.” The managing director of ACC, the country’s largest cement maker, Sumit Banerjee, said, “The thrust on infrastructure and housing bodes well for construction and building materials.”

However, since the cement industry yet again did not manage to get any sector-friendly measures from the Union Budget, it 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 prices 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 the government’s infrastructure push will help the industry avoid 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 excess supply will be easily consumed.”