India: hopes of Budget boost
After registering a robust advance of 10 per cent during the April-September 2014 quarter, Indian cement demand is expected to have slowed to just five per cent over the final six months of FY15. With full-year demand likely to have fallen short of expectations, a sustained high growth trajectory is now forecast in FY16. On the corporate front, M&A activity is hitting the headlines as Lafarge and Holcim receive country clearance for their proposed merger, while UltraTech Cement increases capacity further through acquisitions.
Contrary to expectations back in mid-2014 that Narendra Modi’s BJP government would help stimulate Indian cement demand, hopes of a return to higher growth rates for FY15 (ending 31 March 2015), have been grounded as consumption in the final two quarters is likely to fall short of estimates.
Recent analysis puts demand growth over the October-December quarter at less than five per cent, with similar expectations for the January-March 2015 period. Taking these figures into account, the industry is likely to miss full-year forecasts of 8.5-9 per cent. Under the current scenario, annual growth for FY15 is unlikely to have exceeded 7-7.5 per cent. After a weak ending to fiscal 2015, expectations now see demand recovering in FY16 which began in April.