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JK Lakshmi Cement has said demand for cement is likely to grow by 8-9 per cent in the current fiscal, but the prices will remain stable in the absence of any pricing war.
“The demand for cement grew by just 5 per cent in the last fiscal compared with 12 per cent in the previous one. It is likely to grow by 8-9 per cent this fiscal,” the JK Lakshmi Cement Whole-Time Director, Mr Shailendra Chouksey, told PTI.
The demand growth will stem from the government’s increased spending on infrastructure, particularly in the terminal year of the current Five-Year Plan (2007-12), and a spike in demand for housing, mainly in rural areas.
However, he said that last fiscal’s subdued demand due to low housing activity and the slow pace of development of the country’s infrastructure as a result of the prolonged monsoon was expected to impact demand in the first quarter of the current fiscal as well.
Elections in various states also hampered the demand for cement, he said.
Coupled with poor demand and increased capacity addition, cement makers’ plant utilisation plummeted to just 76 per cent last fiscal in the western and northern regions, where JK Lakshmi Cement primarily markets its product.
Cement players in India added 42 million tonnes per annum in 2009-10 and 29 mtpa in 2010-11, taking the industry’s installed capacity to 290 mtpa.
Mr Chouksey said that though 2010-11 capacity addition was less in comparison to the previous fiscal, the “effective capacity addition” was nearly 40 mtpa in the last fiscal, as a lot of capacity addition projects implemented in 2009-10 only came onstream in 2010-11.
“This impacted the demand-supply balance in 2010-11,” he said.
On cement prices, Mr Chouksey said the price of the building material would remain stable in the current fiscal as raw material prices have reached their peak and the price war, mainly fanned by the industry’s new entrants, is nearly over now.
The average price for a 50-kg bag of cement is around Rs 254 in the country at present. Being a regionally traded commodity, cement prices differ across regions.
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