Cement Sector Revival Seen After Monsoon
Indias cement industry, which spent all of last year in the doldrums, will revive soon after the monsoon ends, the chief of construction and engineering firm Larsen and Toubro said yesterday.
In my view this is a short-term problem, L&T managing director Sudhakar Kulkarni told Reuters in an interview. Maybe another three or four months. After the monsoon season is over, these things should revive.
Last year was a fairly bad year for the cement industry, he added. It was a bad market, the prices were very much depressed, industrial activity was down, infrastructure activity was not there.
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L&Ts cement production rose 42 per cent to 5.4 million tonnes during 1996/97 (April-March), the firm said in its annual report released on Monday, taking it to second place after the Associated Cement Companies among Indias cement producers.
Kulkarni said he believed Indias per capita consumption of cement, at 70/80 kgs, was abysmally low, not low. He said the world average was about 250 kgs, but in countries like Malaysia and Thailand it was more than 600 kgs ,climbing as high as 1,200/1,300 kgs in Korea and Taiwan.
So I think if youre talking about a 7 per cent growth rate, if youre talking about infrastructure development in this country then the cement demand will have to increase by at least somewhere in the region of 10 to 12 per cent per annum, Kulkarni said.
The Indian government has set itself an annual GDP growth rate target of 7 per cent for the next few years. This should create adequate demand, and so I think were taking a long term view of this industry, Kulkarni added.
There will be ups and downs in a market thats a part of the game. But if one takes the long-term view, there is bound to be an upsurge in the market.
He warned that only large players would be able to compete in the high stakes cement industry of the future. This will also be a game of the companies who are able to sustain it. This sort of playing with one million two million tonnes capacity will not do, Kulkarni said.
Larsen & Toubro recently announced a net profit of 4.11 billion rupees for the year ended March 31, up from 3.89 billion in the previous year.