Demonetisation impacts cement industry
Speaking on demonetisation, Sanjay Ladiwala, Chairman, Cement Stockists & Dealers Association of Bombay, commented, ´November will see a drop of 10 per cent in sales volume. It may continue in December too in case the current cash withdrawal limits don´t change.´ Real estate sector will witness pain due to demonetisation for a longer time than other sectors, said Ladiwala adding that correction in land prices too are expected. However, infrastructure segment is unlikely to be affected, he said. For the cement sector, he said although the sales may not grow at the rate of 5-5.5 per cent as envisaged earlier, it will definitely be higher than last year. However, the demand will be lower till the end of next year, he added.
N. Srinivasan, Vice-Chairman and Managing Director, The India Cements Ltd, commenting on demonetisation, said, ´So far, in the last 15 days, we have not seen fall in sales. It is business as usual for our company. Recently, I went to some markets in Chennai. I met dealers and stockists. As it is their bread and butter business, they are somehow managing the situation. They are also said to be using cheques apart from swipe machines for card payments,´ he pointed out. Asserting that cement consumption won´t go away, he said that cement demand would not be abandoned.´It will get slightly postponed by a few months. Once the liquidity is restored in the system and more new currency notes come into circulation, it will ease the situation in the market and help the trade do business without any hardship,´ he said.
Real estate is generally seen as an industry where cash works and cement as an ingredient in construction is not insulated. With majority of cement bags sold at the retail level in cash, new purchases would be hit, analysts said.
´Cement is an organised sector and there is no problem between suppliers and wholesalers. The problem is at the retail level where customers deal in cash,´ said HM Bangur, Chairman and Managing Director, Shree Cement. According to him, unorganised parts of the construction industry like bricks and sand would be under pressure due to demonetisation.
(Courtesy: The Hindu, Moneycontrol.com)