Work begins on Aerospace Park in Tamil Nadu
According to MC Sampath, Industries minister, The aerospace park will come up on a 267 acre site at Vallam-Vadagal SIPCOT Industrial Park in Sriperumbudur and would attract investments of Rs 1,000 crore over a five year period.
Earlier this year, the Government said it will be allocating land for 14 companies to set up office in the park, where an advanced computing and design engineering centre at an outlay of Rs 350 crore has also been planned. Tamil Nadu Industries Development Corporation (TIDCO) has initiated the aerospace park project in a bid to help the growth of industry.
'The park, once operational, will create 10,000 direct and 25,000 indirect jobs' Sampath further added.
Smart cities count touches 90!
The Government announced a list of additional 30 cities to be developed as smart cities under the Smart City Mission launched on June 25, 2015, taking the total to 90.
According to Ministry of Urban Development and Housing & Urban Poverty Alleviation around 45 cities contested for 40 available smart city slots but only 30 were selected to ensure feasible and workable plans that match the aspirations of the citizens.
The 30 cities announced proposed a total investment of Rs 57,393 crore under respective smart city plans. This includes Rs 46,879 crore for ensuring core infrastructure in the areas identified by citizens for area based development and Rs 10,514 crore for technology based solutions for improving governance, service delivery and utilisation of infrastructure. With this, the total investment approved under the smart city plans of 90 cities has gone up to Rs 191,155 crore.
Twenty more cities contesting for the remaining 10 slots under the smart city mission include Itanagar (Arunachal Pradesh), Biharsharif (Bihar), Diu (Daman & Diu), Silvassa (Dadra and Nager Haveli), Kavaratti (Lakshadweep), Navimumbai, Greater Mumbai and Amaravati (Maharashtra), Imphal (Manipur), Shillong (Meghalaya), Dindigul and Erode (Tamil Nadu), Bidhannagar, Durgapur and Haldia (West Bengal), Meerut, Rai Bareilly, Ghaziabad, Sharanpur and Rampur (UP).
Housing for All: A Demand Booster
According to the India Rating and Research, the Housing for All (HFA) project will give the Indian economy a much needed boost. Its success, however, will depend on ramping up existing urban infrastructure, fast tracking approval processes and targeting the actual beneficiary.
The two major challenges for HFA include acquiring funding worth Rs 15 lakh crore through public-private partnerships and ramping up the supply of raw materials for construction namely steel and cement.
Municipal services such as supplying piped water, sewerage, sanitation and municipal solid waste management are also far from equipped to take on a project of this magnitude in the next seven years.
Apart from providing impetus to the construction sector, the scheme will increase employment opportunities and help the service sector grow. Other sectors likely to benefit from this scheme include cement, iron and steel.
The biggest beneficiaries of HFA will be Uttar Pradesh, followed by Maharashtra and West Bengal. These are the top three states in terms of housing shortages and increased construction activity will help these states' economies to grow.
Motilal Oswal arm to invest Rs.63 crore in Chennai project
Motilal Oswal Real Estate, the private equity real estate arm of Motilal Oswal Financial Services, will be investing Rs 63 crore in a residential project being developed by Incor Group in Chennai. The project is spread across 33 acres.
'Southern market comprises three large markets and we continue to look for fresh opportunities there. It's a structured mezzanine deal and we expect early 20 per cent kind of IRR (internal rate of return),' said Sharad Mittal, Director and Head, Motilal Oswal Real Estate.
According to Mittal, the company will invest in PBEL City through India Realty Excellence Fund III, its third real estate fund. Hyderabad-based Incor Group is promoted by Anand Reddy and Surya Reddy.
Puducherry plans low-price cement scheme after sonia gandhi
The Puducherry Government announced that it plans to offer cement at a subsidised rate to people from low and middle income groups.
The scheme will be named after Congress President Sonia Gandhi.
'We are also planning to emulate the scheme in the neighbouring state of Tamil Nadu. Cement would be available at a subsidised price and all the modalities would be worked out in consultation with the concerned officials,' M Kandasamy, Welfare Minister, Puducherry, informed the Union Territory's assembly.
This was in reply to a plea by A Anbalagan, AIADMK (Amma) Legislator, regarding the availability and cost of cement. In Tamil Nadu, the 'Amma Cement' scheme has been active for the past few years. Under this scheme, a 50 kg bag of cement is sold at Rs 190 for low and middle income groups for building houses up to 1,500 sq ft.
'Since Puducherry does not have industries manufacturing cement, it will be procured from outside and sold at subsidised price,' said V Narayanasamy, Chief Minister, Puducherry.
Indian cement producers continue to defend prices
Sagar Cements, India Cements and Bharathi Cements have continued to defend public concerns over cement pricing due to economic trends beyond their control. In a press conference, the producers reportedly blamed rising input costs, distribution costs, taxes and high margins by dealers for the same.
S Srikanth Reddy, Executive Director, Sagar Cements forecast that cement demand will rise by 10 to 18 per cent in Telangana and Andhra Pradesh over the next two to three years due to large government-run infrastructure projects. Tamil Nadu and Kerala are expected to rise by no more than 5 per cent and Karnataka is expected to rise by 2 to 5 per cent.
However, despite an increase in the short term, the cement producers anticipate problems for the industry in the south, particularly in Andhra Pradesh and Telangana, One reason for this is production overcapacity since producers increased their installed capacity in expectation of high demand. At present, producers are forced to run plants at 60 per cent production utilisation rates with high volatility in price and a highly fragmented market with over 50 brands.
All India cement prices dip in June
All India cement prices saw a decline of Rs 6 per bag on an MoM basis in June 2017, eroding some of the gains seen in the preceding two months. While West retained most of its price increases, North and Central have given up a large part of the increases taken at the start of the quarter. Q1FY18 will see realisations improve by Rs 400 per ton compared to the same period last year for pan-India players.
All India cement prices decreased by Rs 6 per bag on an MoM basis to Rs 343 per bag in June 2017 as prices decreased in the North, Central and South. Price decreases was sharpest in the South followed by North and Central region even as East saw some moderation. On a quarterly basis, West will see the maximum improvement in cement prices followed by South and trailed by North and Central.
Cement prices in North and Central decreased by Rs 10 per bag on an MoM basis each and stand at around Rs 320 per bag. In the West, prices improved by Rs 2 per bag on an MoM basis and stand at Rs 335 per bag at present
Debt protection metrics of cement firms to weaken
According to Crisil Ratings, debt protection metrics of cement companies is likely to weaken in the FY18, dented by a slew of acquisitions that the sector witnessed in FY17. The report further added that FY17 was a landmark year which saw the sector signing acquisitions worth Rs 32,000 crore, the biggest consolidation the sector has seen in a year, and was financed through debt of Rs 25,000 crore.
The rating agency expects net debt to operating profit ratio (Debt/Ebitda) to rise 2.9 times by the end of FY18 from 1.5 times in FY17. However, the agency sees it swiftly improving to 1.6 times by FY20 aided by volume-led growth in operating profit. Crisil rates 26 companies in the cement sector, representing 54 per cent of the installed capacity in India.
Mizo students force shutdown on 6 cement companies' godown
The Mizo Students Union (MSU) has forced six cement companies in Aizawl to shut down their godowns as it began a campaign to lower cement prices in Mizoram. An MSU release stated that the six cement companies were forced to shut down their godowns as they refused to comply with the rate fixed by MSU for selling cement. The MSU said, it will continue a strict vigil to ensure that no cement companies sell cement higher than Rs 360 per bag.
Weak demand to keep cement prices under check
Given the Government's thrust on infrastructure and allied activities, cement makers were expecting 18 per cent goods and services tax (GST). Unfortunately, the sector was categorised in the highest tax slab of 28 per cent, dashing these rose-tinted hopes.
But while cement manufacturers profess disappointment, tax experts and analysts say that post-GST, the tax burden of cement players should come down. In the pre-GST regime, effective tax incidence for packaged cement was in the 29 to 31 per cent range including indirect taxes such as excise duty and value added tax (VAT).Tax rates vary across states since tax is levied depending on whether the sale is made for retail or bulk use.
As for key raw materials, tax rates for coal, limestone and lignite has been reduced to 5 per cent. The exact impact of these changes on production costs will depend on the fuel mix of each cement player.
Correction in cement shares is an investment opportunity
After multiple price increases since March, resulting in a rally, cement stocks such as UltraTech, ACC, Ambuja Cements and Shree Cement have fallen from their highs. This is on the back of concerns related to a less inventory at the stockist level, ahead of implementation of the goods and services tax. Additionally, the onset of monsoon will impact offtake and is a dampener for the stocks. All corrections, however, are an opportunity to buy, given the improving realisations, better demand trajectory in the second half of the finan¡cial year and improving demand-supply equation.
Andhra CM looks to cap cement prices
To thwart price manipulation through cartelisation, Andhra Pradesh's Chief Minister N Chandrababu Naidu and his team of ministers held at least three meetings with key cement manufacturers in the State over the past month. Key cement manufacturers such as UltraTech, ACC, Ambuja and The Ramco were present at these meetings. The key agenda of these meetings was to arrive at a ceiling on selling price of cement in the State. After its creation, the Andhra Pradesh government has constructed nearly 5,000 km of cement internal roads, not including state highways.
From July, the State Government will be starting its new capital development project, ahead of which the prices have shot up steeply.
In the southern region, a 50 kg bag of cement is sold at Rs 350-400 compared with the all India average price of Rs 310. In April, Gummi Ram Reddy, President, Confederation of Real Estate Developers Association of India (Credai), Telangana, observed that cement prices in Telangana and Andhra Pradesh were raised by more than Rs 100 per bag within the first 15 days of the month. He said that cement manufacturers have formed a cartel and raised prices artificially.
CHECEA demands regulation of construction material prices
The Chennai Civil Engineers Association (CHECEA) staged a protest demanding that the Tamil Nadu government resolve the sand crisis in the state and regulate the prices of construction materials. According to the Vice-president of Thayanithi, the fluctuation in cost of construction materials was hitting the sector.
'Against this backdrop, a Government regulatory body will help maintain stability in the prices of the key construction materials, sand prices have tripled from Rs 40 per cubic feet to 120 per cubic feet. Several construction works had been stalled due to the increase in sand rates and shortage of sand' he added. He further sought the government to resolve the prevailing shortage of sand, which is affecting the ongoing construction works.