Economy & Market

Budget 2011: A mixed bag

Published

15 years ago

January 3, 2011

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Given the favourable economic conditions and government’s endeavour to stimulate inclusive growth by increased spending, the cement industry will see a quick resurgence from the demand pangs. In 2011-12 demand is likely to revert to its high growth path increasing by more than 11 per cent from the five per cent in the current fiscal year, predicts Nitin Madkaikar, Economist, FirstInfo Centre.

The cement sector which has been reeling under the severe margin pressure amidst demand crunch and rising raw material costs, has not received the any immediate relief from the Union Budget 2011-12. Overall, the Budget would sustain the buoyant economic growth rate through increased spending on infrastructure creating demand for cement in the long term, while the tax proposals are likely to create implementation issues in the interim period. The Budget, within its perimeters called to resolved tax anomaly, has consolidated the specified and ad-valorem rates, the move likely to push up effective prices. As a token, it has also announced cuts in customs duty on petroleum coke and gypsum from 5 per cent to 2.5 per cent. While there are not many manufacturers using pet coke, gypsum is used in small quantities, and hence, the benefit of the cut in duty will be limited.

Further, the Budget has imposed one per cent excise duty on coal, a new introduction. It will add to the cost of coal and increased coal price will have a huge negative impact on the cement industry. Prices of A and B grade non-coking coal have already up by over 100 per cent in recent times while price rise in rest of the coal categories is about 30 per cent. Coal India, the major supplier of coal in India, has decided to revise coal prices upwards. This move would be detrimental for cement makers. Coal India, although did not devolve the quantum, the hikes are likely to be steep when they come. The imported coal contract costs continue to be firm, reeling above $228 a tonne. These hikes will increase input costs for cement majors, exerting pressure on their margins. Looking at the sluggish demand, it will not be easy for the manufacturers to pass on the hike in input costs.

During the first 10 months of 2010-11, cement production inched up four per cent while dispatches were shade higher at 4.2 per cent. The same period of 2009-10 had recorded production growth of more than 11 per cent, and dispatches were up 11.5 per cent.

In his Budget Speech on 28 February 2011, the Finance Minister said, "As a measure of relief to cement industry, I propose to replace the existing excise duty rates with composite rates having an ad-valorem and specific component with some rationalisation. The basic customs duty on two critical raw materials of this industry viz. pet coke and gypsum is proposed to be reduced to 2.5 per cent".

The new tax duty, many opine, is likely to raise the per bag price of cement and would lead to additional burden on cement makers negating their margins. A day after the Union Budget was presented, prices in the Mumbai market, the largest domestic one, were raised by Rs 10 for a 50-kg bag. Analysts and dealers believe that other regions would soon follow suit, especially northern and eastern markets. The average all-India price of a bag has surpassed Rs 265, the highest since the industry entered its downturn. Interestingly, in November the prices were around Rs 220-225 a bag. In Mumbai alone, prices have touched Rs 280 a bag of late and they may soon reach Rs 300 a bag as the peak season set in.

The Cement Manufacturers’ Association estimates the restructuring of duties would lead to an extra burden of Rs 3-4 a bag. Looking at the sluggish demand, it will not be easy for the manufacturers to pass on the hike in input costs.

Infra spending push

Historically, government spending on infrastructure, particularly in road sector had a positive impact on cement demand. The Budget proposes to increase the spending by 13 per cent to Rs 1257,729 crore in 2011-12 from the budget estimates for 2010-11. For 2011-12, an allocation of over Rs 214,000 crore is being made for the development of infrastructure sector. This implies a 23.3 per cent increase over the allocations in 2010-11. It also accounts for 48.5 per cent of the gross budgetary support to plan expenditure. Further, in order to boost infrastructure development in railways, ports, housing and
highways development, the Budget proposed to allow tax-free bonds of Rs 30,000 crore to be issued by various government undertakings in 2011-12. This includes Indian Railway Finance Corporation Rs 10,000 crore, National Highway Authority of India (NHAI) Rs 10,000 crore, HUDCO Rs 5,000 crore and Ports Rs 5,000 crore.

Housing push

Besides the infrastructure sector, the Budget has provided ample stimulant to the housing sector. It has liberalised the existing scheme of interest subvention of one per cent on housing loans by extending it to housing loan up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh from the present limit of Rs 10 lakh and Rs 20 lakh respectively. On account of increase in prices of residential properties in urban areas, the Budget has enhanced the existing housing loan limit from Rs 20 lakh to Rs 25 lakh for dwelling units under priority sector lending. To provide housing finance to targeted groups in rural areas at competitive rates, the provision under Rural Housing Fund is enhanced from Rs 2,000 crore to Rs 3,000 crore. To enable credit flow to Economically Weaker Sections (EWS) and LIG households a Mortgage Risk Guarantee Fund is proposed to be created under Rajiv Awas Yojana. This would guarantee housing loans taken by EWS and LIG households and enhance their credit worthiness.

Buoyant future

Demand for cement is expected to enter new growth trajectory as infrastructure spending has been stepped up, besides a growing demand for housing. Except the aberration of 2010-11, cement demand has been growing at an average rate of close to 10 per cent since 2004-05. The year 2010-11 saw production up by just five per cent while demand increased 5.1 per cent. In 2011-12, cement demand would revert back to the inflection point as growth trajectory is estimated to shift upwards from its historical average of 10 per cent to 10-12 per cent over next 5-10 years. According to industry reports, all the ingredients are in place for the cement industry to move from a cyclical to a secular growth story.

A higher GDP growth rate of nine per cent, coupled with lower population growth will accelerate per capita GDP growth. Fiscal 2011-12 will add Rs 11 trillion to the GDP, which is expected to have a higher intensity of cement consumption driven by:

A significant increase in infrastructure investment, and
Significant impetus to housing, especially rural/mass housing

Intensity of cement consumption will jump from 1.25 times of real GDP to 1.5 times in coming years.

Road to cement

Road projects having a significant potential to drive cement demand, has not lived up to expectations in India. India’s track record on road development has been dismal over the period between 2004-05 and 2010-11, when road projects awarded totalled just over 12,000 km. Some of the major reasons for the delay in project awards were the restructuring of NHAI, the formation of the PPP models and the introduction of the Model concession agreement. Besides, factors such as land acquisition, shifting of utilities and execution challenges impacted the projects.

According to the Economic Survey in 2010-11, the achievement under various phases of the NHDP up to November 2010 has been about 1,007 km and projects have been awarded for a total length of about 3,780 km. Steps have been taken to expedite the progress of the NHDP including regular monitoring of contracts and progress reviews, appointment of senior officials by state governments as nodal officers for resolving problems associated with implementation of the NHDP, setting up of a Committee of Secretaries under the Cabinet Secretary to address inter-ministerial and Centre-State issues such as land acquisition, utility shifting, environment approvals and clearances of railway over-bridges (ROBs), simplification of the procedure of issue of land acquisition (LA) notifications, and posting of a Railways officer to the NHAI to coordinate with the Ministry of Railways in expediting the construction of ROBs.

The NHAI formulated Work Plans (Work Plans I and II) for awarding of about 12,000 km each during the years 2009-10 and 2010-11. These plans lay down a specific time frame for various activities and are being monitored very closely at various levels. Under Work Plan I so far 73 projects of 6,426 km length have been awarded and bids for a further nine are at various stages. Under Work Plan II, one project of 170 km length was awarded and bids for five more projects are under various stages of process. Given that a large part of the administrative issues have been sorted, it is expected that the pace of project awards will accelerate.

Rural/mass housing

According to a working group of the Eleventh Five Year Plan, the housing shortage was estimated at 47.4 million at the start of the Eleventh Plan in 2007 and will touch 74 million at the end of the Plan in 2012. More than 90 per cent of the housing shortage is for the people in the EWS and LIG. Rural housing is expected to be a key beneficiary of higher farm income and alternative avenues of income generation due to higher government spending through the National Rural Employment Guarantee Scheme (NREGS).

While urban housing will continue to provide the much needed base for demand for the cement industry, a strong demand pull is expected from infrastructure and rural/individual housing. Due to a slowdown in real estate during the global crisis period, cement demand from this vertical had declined significantly. Despite this, the cement industry’s volumes grew close to 10 per cent during that period. Recovery in the real estate sector is critical to sustain 10-12 per cent growth over the long term, as it provides base demand for the cement industry. The real estate sector is recovering. Pick-up in demand is coupled with significant increase in the number of new project launches in the housing segment while the retail and commercial segments are expected to follow suit. This would translate into cement demand from these new projects with a lag of 6-9 months from the launch.

Slum rehabilitation: Can open up opportunity

With over 20 per cent of India’s urban population living in slums, slum rehabilitation has assumed major significance for the government to ensure inclusive growth. The Jawaharlal Nehru Urban Renewal Mission has been playing a vital role in slum improvement and in-situ slum rehabilitation. It aims to provide shelter to the urban poor at their present location or near their place of work.

To attract private investment in slum rehabilitation, there will be consideration of transferable development rights (TDR) and additional floor space index (FSI) ratio in provision of shelter to the poor. Rehabilitation of slum dwellers can provide a significant demand pull, as providing permanent housing to 62 million people would consume 75 to 80 million tonne of cement. Besides, construction of related infrastructure would enhance cement consumption.

Poised for healthy growth

Given the favourable economic conditions and government’s endeavour for inclusive growth and increased spending, the cement industry will see a quick resurgence from the pangs of demand crunch. In 2011-12 production is likely to increase by over 11 per cent from the current five per cent expected this year. Though cost would continue to dog the industry, higher demand would negate this impact.

Reactions

ML Pachisia, Managing Director, Orient Paper & Industries Ltd.

The biggest impact on cement industry is on account of the recent abnormal increase in prices of coal announced by Coal India in an off-Budget announcement. The price increase has been anywhere between 30 per cent to 100 per cent. This has indeed come as a major shock to the industry and will have an impact on cost of coal used both in the process as well in the captive power plants.
The reduction in import duties on pet coke and gypsum will have minimal impact, although the move is most welcome.
Increased spending on infrastructure is the need of the hour for India and the higher allocation is a step in the right direction. This will certainly help the cement industry through higher demand for cement from this sector, subject to swift implementation of the planned projects.
The revised excise duty structure will apparently result in increased excise outlay.

Bijay Kumar Garodia, Chairman, Barak Valley Cements Ltd

The reduction in customs duty on input materials is the only relief for the cement industry in the Budget 2011. In the Budget, Finance Minister has proposed to reduce basic customs duty on pet coke and gypsum to 2.5 per cent from the existing 5 per cent. Only gypsum is used for manufacturing of cement in our company but since it does not have a significant use in the production, the change of import duty will not have material effect on our production cost. Further, the Budget also came out with restructured excise duty. In our case, if we sell the cement on FOR basis then due to the change in excise duty there will not be any significant effect on our company. In context of reduced surcharge limit on corporate tax and increase in percentage of MAT, the said increase will be nullified by the reduced surcharge limit. Thus in conclusion, the Budget 2011 has not brought anything significant to us.

Concrete

FORNNAX Appoints Dieter Jerschl as Sales Partner for Central Europe

Published

2 weeks ago

February 5, 2026

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FORNNAX TECHNOLOGY has appointed industry veteran Dieter Jerschl as its new sales partner in Germany to strengthen its presence across Central Europe. The partnership aims to accelerate the adoption of FORNNAX’s high-capacity, sustainable recycling solutions while building long-term regional capabilities.

FORNNAX TECHNOLOGY, one of the leading advanced recycling equipment manufacturers, has announced the appointment of a new sales partner in Germany as part of its strategic expansion into Central Europe. The company has entered into a collaborative agreement with Mr. Dieter Jerschl, a seasoned industry professional with over 20 years of experience in the shredding and recycling sector, to represent and promote FORNNAX’s solutions across key European markets.

Mr. Jerschl brings extensive expertise from his work with renowned companies such as BHS, Eldan, Vecoplan, and others. Over the course of his career, he has successfully led the deployment of both single machines and complete turnkey installations for a wide range of applications, including tyre recycling, cable recycling, municipal solid waste, e-waste, and industrial waste processing.

Speaking about the partnership, Mr. Jerschl said,
“I’ve known FORNNAX for over a decade and have followed their growth closely. What attracted me to this collaboration is their state-of-the-art & high-capacity technology, it is powerful, sustainable, and economically viable. There is great potential to introduce FORNNAX’s innovative systems to more markets across Europe, and I am excited to be part of that journey.”

The partnership will primarily focus on Central Europe, including Germany, Austria, and neighbouring countries, with the flexibility to extend the geographical scope based on project requirements and mutual agreement. The collaboration is structured to evolve over time, with performance-driven expansion and ongoing strategic discussions with FORNNAX’s management. The immediate priority is to build a strong project pipeline and enhance FORNNAX’s brand presence across the region.

FORNNAX’s portfolio of high-performance shredding and pre-processing solutions is well aligned with Europe’s growing demand for sustainable and efficient waste treatment technologies. By partnering with Mr. Jerschl—who brings deep market insight and established industry relationships—FORNNAX aims to accelerate adoption of its solutions and participate in upcoming recycling projects across the region.

As part of the partnership, Mr. Jerschl will also deliver value-added services, including equipment installation, maintenance, and spare parts support through a dedicated technical team. This local service capability is expected to ensure faster project execution, minimise downtime, and enhance overall customer experience.

Commenting on the long-term vision, Mr. Jerschl added,
“We are committed to increasing market awareness and establishing new reference projects across the region. My goal is not only to generate business but to lay the foundation for long-term growth. Ideally, we aim to establish a dedicated FORNNAX legal entity or operational site in Germany over the next five to ten years.”

For FORNNAX, this partnership aligns closely with its global strategy of expanding into key markets through strong regional representation. The company believes that local partnerships are critical for navigating complex market dynamics and delivering solutions tailored to region-specific waste management challenges.

“We see tremendous potential in the Central European market,” said Mr. Jignesh Kundaria, Director and CEO of FORNNAX.
“Partnering with someone as experienced and well-established as Mr. Jerschl gives us a strong foothold and allows us to better serve our customers. This marks a major milestone in our efforts to promote reliable, efficient and future-ready recycling solutions globally,” he added.

This collaboration further strengthens FORNNAX’s commitment to environmental stewardship, innovation, and sustainable waste management, supporting the transition toward a greener and more circular future.

Concrete

Budget 2026–27 infra thrust and CCUS outlay to lift cement sector outlook

Published

2 weeks ago

February 2, 2026

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Higher capex, city-led growth and CCUS funding improve demand visibility and decarbonisation prospects for cement

Mumbai

Cement manufacturers have welcomed the Union Budget 2026–27’s strong infrastructure thrust, with public capital expenditure increased to Rs 12.2 trillion, saying it reinforces infrastructure as the central engine of economic growth and strengthens medium-term prospects for the cement sector. In a statement, the Cement Manufacturers’ Association (CMA) has welcomed the Union budget 2026-27 for reinforcing the ambitions for the nation’s growth balancing the aspirations of the people through inclusivity inspired by the vision of Narendra Modi, Prime Minister of India, for a Viksit Bharat by 2047 and Atmanirbharta.

The budget underscores India’s steady economic trajectory over the past 12 years, marked by fiscal discipline, sustained growth and moderate inflation, and offers strong demand visibility for infrastructure linked sectors such as cement.

The Budget’s strong infrastructure push, with public capital expenditure rising from Rs 11.2 trillion in fiscal year 2025–26 to Rs 12.2 trillion in fiscal year 2026–27, recognises infrastructure as the primary anchor for economic growth creating positive prospects for the Indian cement industry and improving long term visibility for the cement sector. The emphasis on Tier 2 and Tier 3 cities with populations above 5 lakh and the creation of City Economic Regions (CERs) with an allocation of Rs 50 billion per CER over five years, should accelerate construction activity across housing, transport and urban services, supporting broad based cement consumption.

Logistics and connectivity measures announced in the budget are particularly significant for the cement industry. The announcement of new dedicated freight corridors, the operationalisation of 20 additional National Waterways over the next five years, the launch of the Coastal Cargo Promotion Scheme to raise the modal share of waterways and coastal shipping from 6 per cent to 12 per cent by 2047, and the development of ship repair ecosystems should enhance multimodal freight efficiency, reduce logistics costs and improve the sector’s carbon footprint. The announcement of seven high speed rail corridors as growth corridors can be expected to further stimulate regional development and construction demand.

Commenting on the budget, Parth Jindal, President, Cement Manufacturers’ Association (CMA), said, “As India advances towards a Viksit Bharat, the three kartavya articulated in the Union Budget provide a clear context for the Nation’s growth and aspirations, combining economic momentum with capacity building and inclusive progress. The Cement Manufacturers’ Association (CMA) appreciates the Union Budget 2026-27 for the continued emphasis on manufacturing competitiveness, urban development and infrastructure modernisation, supported by over 350 reforms spanning GST simplification, labour codes, quality control rationalisation and coordinated deregulation with States. These reforms, alongside the Budget’s focus on Youth Power and domestic manufacturing capacity under Atmanirbharta, stand to strengthen the investment environment for capital intensive sectors such as Cement. The Union Budget 2026-27 reflects the Government’s focus on infrastructure led development emerging as a structural pillar of India’s growth strategy.”

He added, “The Rs 200 billion CCUS outlay for various sectors, including Cement, fundamentally alters the decarbonisation landscape for India’s emissions intensive industries. CCUS is a significant enabler for large scale decarbonisation of industries such as Cement and this intervention directly addresses the technology and cost requirements of the Cement sector in context. The Cement Industry, fully aligned with the Government of India’s Net Zero commitment by 2070, views this support as critical to enabling the adoption and scale up of CCUS technologies while continuing to meet the Country’s long term infrastructure needs.”

Dr Raghavpat Singhania, Vice President, CMA, said, “The government’s sustained infrastructure push supports employment, regional development and stronger local supply chains. Cement manufacturing clusters act as economic anchors across regions, generating livelihoods in construction, logistics and allied sectors. The budget’s focus on inclusive growth, execution and system level enablers creates a supportive environment for responsible and efficient expansion offering opportunities for economic growth and lending momentum to the cement sector. The increase in public capex to Rs 12.2 trillion, the focus on Tier 2 and Tier 3 cities, and the creation of City Economic Regions stand to strengthen the growth of the cement sector. We welcome the budget’s emphasis on tourism, cultural and social infrastructure, which should broaden construction activity across regions. Investments in tourism facilities, heritage and Buddhist circuits, regional connectivity in Purvodaya and North Eastern States, and the strengthening of emergency and trauma care infrastructure in district hospitals reinforce the cement sector’s role in enabling inclusive growth.”

CMA also noted the Government’s continued commitment to fiscal discipline, with the fiscal deficit estimated at 4.3 per cent of GDP in FY27, reinforcing macroeconomic stability and investor confidence.

Concrete

JK Cement Crosses 31 MTPA Capacity with Commissioning of Buxar Plant in Bihar

Published

3 weeks ago

January 30, 2026

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JK Cement has commissioned a 3 MTPA Grey Cement plant in Buxar, Bihar, taking its total capacity to 31.26 MTPA and placing it among India’s top five grey cement producers. The ₹500 crore investment strengthens the company’s national footprint while supporting Bihar’s infrastructure growth and local economic development.

JK Cement Ltd., one of India’s leading cement manufacturers, has announced the commissioning of its new state-of-the-art Grey Cement plant in Buxar, Bihar, marking a significant milestone in the company’s growth trajectory. With the commissioning of this facility, JK Cement’s total production capacity has increased to 31.26 million tonnes per annum (MTPA), enabling the company to cross the 30 MTPA threshold.

This expansion positions JK Cement among the top five Grey Cement manufacturers in India, strengthening its national footprint and reinforcing its long-term growth strategy.

Commenting on the strategic achievement, Dr Raghavpat Singhania, Managing Director, JK Cement, said, “Crossing 31 MTPA is a significant turning point in JK Cement’s expansion and demonstrates the scale, resilience, and aspirations of our company. In addition to making a significant contribution to Bihar’s development vision, the commissioning of our Buxar plant represents a strategic step towards expanding our national footprint. We are committed to developing top-notch manufacturing capabilities that boost India’s infrastructure development and generate long-term benefits for local communities.”

The Buxar plant has a capacity of 3 MTPA and is spread across 100 acres. Strategically located on the Patna–Buxar highway, the facility enables faster and more efficient distribution across Bihar and adjoining regions. While JK Cement entered the Bihar market last year through supplies from its Prayagraj plant, the Buxar facility will now allow the company to serve the state locally, with deliveries possible within 24 hours across Bihar.

Sharing his views on the expansion, Madhavkrishna Singhania, Joint Managing Director & CEO, JK Cement, said, “JK Cement is now among India’s top five producers of grey cement after the Buxar plant commissioning. Our capacity to serve Bihar locally, more effectively, and on a larger scale is strengthened by this facility. Although we had already entered the Bihar market last year using Prayagraj supplies, local manufacturing now enables us to be nearer to our clients and significantly raise service standards throughout the state. Buxar places us at the center of this chance to promote sustainable growth for both the company and the region in Bihar, a high-growth market with strong infrastructure momentum.”

The new facility represents a strategic step in supporting Bihar’s development vision by ensuring faster access to superior quality cement for infrastructure, housing, and commercial projects. JK Cement has invested approximately ₹500 crore in the project. Construction began in March 2025, and commercial production commenced on January 29, 2026.

In addition to strengthening JK Cement’s regional presence, the Buxar plant is expected to generate significant direct and indirect employment opportunities and attract ancillary industries, thereby contributing to the local economy and the broader industrial ecosystem.