Demand likely to grow: JK Cement

A worker unloads a sack filled with cement at a railway yard in Ahmedabad
J K Cement on Thursday said, with the help of government’s push in infrastructure, cement demand in the country is expected to touch eight per cent in FY18. The company hopes that cement price would increase in the third quarter of FY17. Chief Financial Office (CFO) A K Saraogi, said that operating costs have risen on account of higher petroleum coke and other raw material rates. “The companies will have to pass on the rise to the consumers, but the decision will be market driven,” he said.

“We expect demand to hit seven per cent in FY17 and eight percent in FY18,” he said. He added that compared to last year there has been a sizeable change in the real estate and developer market and a turnaround has started to happen.

J K Cement Special Executive Madhavkrishna Singhania said the demand in FY17 will be supported by good monsoons, which is likely to boost spending especially in the rural areas.

“Last two years, cement demand was almost muted, but in the next two-three years we will witness several projects in the infrastructure space taking-off, which will drive demand,” he added. The company hopes that projects such as ‘Bullet Train’ would help in add to the demand and that too specialised cements from the sector.

According to ratings agency ICRA, cement demand is likely to grow by six  per cent in the current financial year and will further rise to seven per cent in FY18, from the relatively muted five per cent in FY16.

J K Cement said that a host of infrastructure project would help the cement sector as a whole and the company in particular. “Railways, metro, roads and transport, the smart cities initiative would all have a trickle-down effect on the cement sector and we hope to benfit out of that. We hope to achieve a 100 per cent capacity utilisation on the back of these projects. At present it is at around 74 per cent,” said Saraogi.

On the firm’s expansion, JK Cement Special Executive Raghavpat Singhania said the company already has 10.5 million tonnes (MT) of grey cement capacity, 0.6 MT of white cement capacity in India and UAE each and 0.7 MT of wall putty.

On Competition Commission of India (CCI) orders passed in August 2016 imposing a penalty of over Rs 6,700 crore on 11 cement companies as well as their trade association Cement Manufacturers Association (CMA) for cartelisation. The company said that they are going to contest it and said that there is no cartel.

The companies that are penalised include ACC, Ambuja Cement, Binani Cement, Century Cement, Shree Cements,India Cements, JK Cements, Lafarge, Ramco, UltraTech and Jaiprakash Associates.

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