Cement consumption is likely to get back to double digit figures

Cement consumption is likely to get back to double digit figures

Vinita Singhania, Vice Chairman and Managing Director, JK Lakshmi Cement
The industry is bound to bounce back as it has now become imperative to build the infrastructure that the country needs so badly. Though the changes won´t come overnight, we might well see better days ahead. Vinita Singhania, Vice Chairman and Managing Director, JK Lakshmi Cement, talks about the growth she sees in this year and how the company is poised to meet the growing market demand. Excerpts from the interview.

What will be the likely demand-supply scenario in 2014?
Cement demand in 2014 should be driven mainly by infrastructure projects, housing and retail segment both in urban and rural areas. The year 2014 may see an upsurge in demand spurred by a good monsoon and revival of infrastructure activities, as the Cabinet Committee has cleared a number of projects in the last two months. I do not expect much change in the demand from the realty sector as there is considerable surplus housing stocks.

Are you planning on capacity addition in 2014?
We have a number of capacity expansion plans as we strongly believe that cement consumption is likely to get back to double digit growth levels, as and when a stable government is in place after the general elections.

Some of our ongoing expansion plans include:

  • Greenfield project at Durg in Chhattisgarh 2.54 MT
  • Setting of up grinding units as well as expansion at the existing plant at Jaykaypuram 1.3 MT
  • Taking over BIFR unit viz. Udaipur Cement Works (UCWL) 1.4 MT

What market trends do you foresee after the elections?
We are confident that irrespective of the party that comes to power, the focus will be on bringing back the country´s economic growth to a healthy level and to achieve that, infrastructure build-up will be a prerequisite. This would in turn, entail stepping up cement consumption. The cement market sentiments, which currently are at a low ebb, will thereafter see a change.

What will our export / import scenario look like in 2014?
I do not expect any major change in the export/import scenario as the rupee appears to be stable at the 60 62 level.

What are the policy initiatives do you expect from the government?
Concretisation of express highways could be a major policy initiative from the government´s side to improve the longevity of Indian roads and as a cement substitute. Speedy clearance of infrastructure projects and providing finance are other possible initiatives which will create an impact on cement consumption. Lowering interest rates on housing loans too will aid a spurt in cement consumption.

What is your take on the tax structure? What needs to be done for the healthy growth of the cement sector?
The cement industry has been constantly protesting at various forums the irony of treating cement as a core commodity and at the same time taxing it at par with luxury goods. The high excise duty, VAT, royalty on limestone, electricity duty and high logistic costs all peg the tax burden on ex-factory prices by over 30 per cent and this acts as a hurdle on the development of this vital industry.

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