Aditya Birla Group’s flagship company, Grasim has said that slowdown in construction activity and commissioning of large capacities would lead to a fall in demand for cement and put its price under pressure.
“The slowdown in construction activity and corporate capital investments would lead to slackening of demand. The price of cement and consequently, operating margins, may witness pressure in FY’10 and FY’11 owing to the commissioning of large capacities i n phased manner over the next two years,” Grasim said in a statement.
The real estate sector continues to be plagued by inadequate demand and poor availability of funds, it added. Economic think-tank Centre for Monitoring Indian Economy in its January review also stated that the short-term demand outlook for cement continu ed to remain weak and the downward pressure on cement prices would continue.
India produced 15.8 million tonnes of cement in December, 2008, registering a growth of 11.96 per cent in the corresponding month in 2007. The cumulative cement consumption during April-November 2008 posted a rise of 8.3 per cent, slowing down against th e rise of 10.3 per cent in the same period previous year.
CMIE attributed the dip in consumption to the slowdown in the real estate sector. Meanwhile, cement companies had a poor run in the third quarter of the current fiscal.