The future is back. Cynicism is passe. We are now talking about ease of doing business, labour reforms, improving productivity, the forthcoming investment in building ports, railway stations, constructing roads and lining canals. And we are talking about building hundred smart cities.
Expansions are already being earmarked. The Chairman of UltraTech, Kumar Mangalam Birla, at the recent 14th AGM announced, ?The company has earmarked a capex of Rs 7,000 crore towards expansions, brownfield projects and grinding units at various plants, going forward. Our capex for FY?15 is expected to be Rs 3,798 crore, for FY?16 will spend Rs 3,053 crore and for FY 17 Rs 205 crore.?
The industry is rolling up its sleeves ready to go ahead full steam. Just a few days ago all were concerned about over capacity. Now all is about shortage of cement, of raw materials, of manpower to manufacture such huge volumes and run the additional units. The Modi factor has turned out to be more than a wave that subsides after its peak. At times he seems less like the Prime Minister of India and more like the CEO of India Inc. The new government has farsighted plans for the industry and it is evident from its first Union Budget, which the industry has welcomed with open arms. Promises have transpired into plans and now into projects. A flood of new orders from both domestic and foreign nationals has pushed the factory output to a 17-month high in July. The HSBC Purchasing Managers? Index (PMI) showed a rise of full 1.5 points to reach 53 points. This is the best performance since February 2013.
The policies introduced in the budget raised deduction against interest and made purchase of homes more attractive for the middle class. Banks are now allowed to raise long term funds for infrastructure and affordable housing. This will certainly give the much needed push to the housing sector that consumes more than 60 per cent of the cement produced in the country. At least Rs 600 billion worth of road projects are unfinished, primarily due to difficulties in obtaining the required land to lay, lengthen or widen roads. The government is taking steps to de-bottle neck the process and speed up project implementation with some emphasis on road concretisation. According to the Cabinet Secretariat?s estimates, infrastructure projects worth more than Rs 1.5 lakh crore are ready to start operations by the end of 2014.
No wonder then, that cement companies need to relook at their marketing plans afresh . Plant and equipment manufacturers are eager to showcase their capabilities and grab the orders from new and expanding units. If last year was a year of consolidation, the next year will be the year of brand promotions. The industry today stands at an inflexion point. The first mover is bound to get the advantage.