Increased construction activity to keep cement demand on track: India Cements

The Centre and southern states were expected to retain their thrust in giving a push to housing and infrastructure projects leading to cement demand to remain on track, India Cements Ltd Vice-Chairman and Managing Director N Srinivasan said on Thursday.

Increased house building and construction activity in metros, semi-urban and urban centres would boost cement demand although cost pressure is expected to remain with higher cost of fuel, power tariff, he said.

"As in the last two years, the good rainfall reported this year from South -West monsoon season augurs well for improved prospects of rural economy," he told the shareholders at the 76th annual general body meeting held through virtual mode.

During 2021-22, he said a revival was witnessed in the construction sector which led to the cement demand picking up and it sustained due to increased infrastructure spending by the Centre and States.

The industry suffered from steep increase in the cost of production due to unprecedented increase-almost double in the price of thermal coal and pet coke along with the spiraling increase in price of petroleum products, he said.

He pointed out that the Russia-Ukraine conflict also led to shortage of coal and oil in the market. "All these adversely impacted profitability of the industry and it was unable to increase cement prices to cover the increase in cost."

The recovery of the cement industry in the southern region witnessed a moderate growth of 8 per cent and a marginal growth of two per cent in the July-September 2022 quarter, he said.

"The Centre and southern states are expected to retain their thrust on giving a push to housing projects and infrastructure development by implementing irrigation, road building, metro rail and other infrastructure projects," he said.

On the performance of the company, he said the overall volume marginally improved to 90.70 lakh tonnes as compared to 89.02 lakh tonnes reported in the previous year and the capacity utilisation at the company-owned factories grew to 58 per cent from 57 per cent.

"The company's operating margin came down as the uncompensated increase in variable cost alone was over Rs 400 per tonne or Rs 350 crore during the year 2021-22," he said.