Cement Industry To Meet Sinha Sinha, Hegde

Cement producers are planning to meet the finance minister and commerce minister to suggest ways to salvage the industry following its dismal first quarter performance.

Cement producers will make presentations to the government suggesting ways to increase domestic demand and export opportunities. Manufacturers held a series of meetings in Mumbai to discuss various proposals before approaching the government. "Cement producers are banking on the government's plan to build 20 lakh houses annually," sources said.

With no incentive package coming from the government, cement producers have decided to join hands to revive the industry. The industry has already adopted a strategy to prune production to push up prices.

 

Analysts point out that "production cuts will not help in increasing demand. The growth will come only when government plans to spend money to create infrastructure or offers incentives to the private sector which, in turn, could trigger demand of cement". They point out that the industry is not expected to turn around this year even if there is 7.5-8 per cent growth in output. The industry grew by only 6 per cent during the first quarter.

"Only if cement demand continues to grow at over 8 per cent next year, the industry will be able to turn around,'' industry sources said. Currently, there is a mismatch in cement demand and supply. Moreover, coupled with a slowdown in construction activity, several units have idle capacity. Housing and infrastructure activities together account for 60 per cent of total cement demand.

Cement production during July 1998 stood at 6.20 million tonnes and sales at 6.29 million tonnes.