Demands will be boosted once the stalled projects have been cleared
If the good business sentiment encouraged by Narendra Modi leads to proper growth in the GDP, the cement sector will be the first one to bounce back. They have felt pressure for quite long by the increasing cost of input and the demand that keeps falling.
The infrastructures projects will hold about 60% of the total demand have been stuck for desires of funding and clearing. The cement companies who were expecting a quick rise in the demand decided to increase their ability to produce to about 360 million tonnes. Earlier it was 340 million tonnes in the past three years. However, the demand failed to keep up with the pace due to the slowdown of economy along with the policy paralysis of the government.
Since there has been GDP growth of about 6% in the last two years, the demand for cement also raised up to 3-4%. The industry also has expected the pent up demand to materialise since the new Government has been focusing on infrastructure projects.
The Finance Ministry on the other hand is making sure that all the payments due to private companies have been released and the stalled projects are revived. This change in the infrastructure is definitely going to help all those cement firms who are currently stuck in debt.
Source – Suresh P Iyengar
Cement companies pressured by rising input cost and falling demand, cement sector will be the first to bounce backModi Government turns into real growth in GDP, Clearing stalled projects will boost demand, enhanced production capacity to about 360 million tonnes from 340 million tonnes, stalled projects to be revived
