India’s cement industry is likely to grow 7% to 8% in the current fiscal year due to an expected increase in spending on roads and ports by the new government, a senior executive with Gujarat Ambuja Cements.
"The industry is likely to have healthy growth this fiscal...about 7% to 8%," Executive Director Anil Singhvi told Dow Jones Newswires. "Last year, it grew only 5.5% due to a month long truckers’ strike in April and a prolonged monsoon."
Singhvi said the new government has identified roads and rural infrastructure as the main areas where major investments would be made. "This is therefore likely to boost cement consumption," he said.
India’s new government, which came to power after elections in May, is scheduled to present the federal budget in the first week of July, where it will outline the investments it will likely make in various sectors including roads and rural infrastructure.
Singhvi said the growth in the cement industry is likely to boost Gujarat Ambuja. "Since we’ve always grown at almost double the industry’s rate, I’m confident our revenue will grow 15% this fiscal year," he said.
Singhvi said growth in the Indian cement industry would be accompanied by an improvement in the supply-demand situation. "We’re now entering a mature phase where the supply overhang, which earlier depressed prices, is no longer there," he said. He added that, as there has been no new capacity in the industry, prices will strengthen: "There is more scope for cement prices in India to go up." The average price of cement in India is currently at INR155 per 50kg/bag.
Singhvi said cement consumption in the current year received a big boost after the previous government initiated work on major infrastructure projects such as the Golden Quadrilateral highway, which aims to connect the four big cities of Calcutta, Madras, Mumbai and New Delhi.
"But for the sector to grow more, certain strong steps need to be taken," Singhvi said, adding that there should be more concrete roads and lower excise duty on cement.