Economy & Market

The core sector in focus: Mean reversion

Published

5 years ago

January 8, 2020

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Indian economy has shown striking resilience to revert to the mean, although it is early days to make any long term projection. But in the short term, the months of May, June and July have shown results that demonstrate the ability to make an economic recovery despite the headwinds that stem from the propagation of the Coronavirus in almost all corners of India.

It would be prudent to first see the state of the core sector. Monthly Core sector Index (which tracks monthly growth) has moved positively starting from a contraction of 37 per cent in April 2020, to 22 per cent in May and 15 per cent in June. So as we read June numbers it is in fact a recovery of 22 per cent over the steep drop in April, when the core sector Index fell to the crevice in absence of working days for production or sales.

Among the core sector, cement index showed the maximum rebound, from a sharp drop of 85.3 per cent in April 2020 (virtually the entire month the production stopped), May rebounded to 21.4 (negative) and June came back to 6.9 per cent (negative). Negative 6.9 per cent compares with negative 1.9 per cent in June 2019. Among the core sectors, only fertilizer (+4.2 per cent) and crude oil (-6 per cent) has fared better for the month of June.

To see some of the complementary sectors, coal, steel and electricity show some very mixed results. Coal is showing a very steady negative growth hovering around 15 per cent throughout these three months, while steel made a recovery from a steep fall of contraction of 78.7 per cent in April to negative 33.8 per cent in June. Electricity seems to be mode steady in its modest recovery from a contraction of 23 per cent in April to 11 per cent in June.

Core sector production growth has several components to be looked at, including other drivers for example in fertilizer, which due to the onset of the Kharif season coupled with higher distribution with easing of lockdown measures have aided output.

The Oil and natural gas sector have many other issues to contend with like ageing of assets, high prices of end use fuel dampening demand or the structural factors in Natural Gas, where the contraction is a 15 month consecutive phenomenon due to restricted gas off-take by consumers.

Minus the coronavirus, the core sector was showing an upward trend till march, barring a few, although the trend showed dampening due to some structural factors, some of which are related to also demand side of the story.

To project anything forward from this June series would be fraught with risks as we now move to the monsoon season and some sectors will have natural dampening of demand thus taming output, while the virus moves to an unknown trajectory. Some risks are multiplicative, while some are additive, how the economy wades through it will depend on how the economy tackles the virus as part of the economic rebound, not treating it as an exclusion (the treatment cannot be either or).

Construction and infrastructure hold the center piece of the discourse on core sector and this would mean solving the supply side, where labor remains the biggest influence for things to take shape. But actually the solution seems plausible that if those who could be vulnerable to contracting could be segregated and the rest could insulate themselves with a mandatory mask and strict regimen, the activities actually could be brought back to normal, albeit at a slightly reduced level. If the former, segregation through contact tracing and testing, is not well orchestrated among the various constituencies, while the latter, those who should protect themselves do not follow the rules, the combined result will continue to lead to the current trajectory of the virus.

The core sector also must have the solutions to the migrant labor problem, where the activities must reach a threshold to create the reverse movement of skilled labor in larger numbers. This remains a crucial result to watch, could the core sector create its own solutions, this is where some are doing better than the others, which includes solutions for distribution and logistics as well.

ABOUT THE AUTHOR:
Procyon Mukherjee works as Chief Procurement Officer at LafargeHolcim India. The ideas presented are his personal and have no connection to the beliefs of the company where he works.

Concrete

15th Cement EXPO: A Step Forward in Cement Innovation

Published

3 weeks ago

January 17, 2025

admin

Mumbai

Following the immense success of the 14th Cement EXPO, held on December 14-15, 2023, at the Manekshaw Centre, New Delhi, the next edition of this premier event is set to take place in March 2025. The 15th Cement EXPO will be hosted at Yashobhoomi, Delhi, on 12th and 13th November 2025.

Meanwhile, the Cement Expo Forum 2025 is scheduled for 5th and 6th March 2025 at Taj Krishna in Hyderabad. This exciting 3-in-1 event, organised by FIRST Construction Council (FCC) and Indian Cement Review (ICR), will bring together industry leaders, innovators, and stakeholders to discuss the future of the cement sector.

Building on the Success of the 14th Cement EXPO

The 14th Cement EXPO was widely praised for its strong participation, attracting over 1,500 senior managers and decision-makers from across the cement industry. The event was inaugurated by Dr. Vibha Dhawan, Director General of TERI, and Ali Emir Adiguzel, Founder and Director of the World Cement Association, alongside Pratap Padode, Founder of FIRST Construction Council (FCC). The two-tiered exhibition space featured cutting-edge products and innovations from top companies within the cement industry’s supply chain.

The event also garnered significant support from key government bodies, including the Ministry of Road Transport and Highways, Government e-Marketplace (GeM), and the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India (GoI).

Recognition and Excellence in the Cement Industry

The 7th Indian Cement Review Awards celebrated excellence by presenting awards to 11 companies in various categories, recognising their contributions to growth and innovation within the industry. Notably, Parth Jindal, Managing Director of JSW Cement, was honoured with the prestigious Indian Cement Review – Person of the Year Award 2023. Meanwhile, Vinita Singhania, Vice Chairman and Managing Director of JK Lakshmi Cement Ltd, received the Lifetime Achievement Award for her outstanding leadership and contributions to the sector.

A Vision for Sustainability

With the theme of “Driving Sustainability Through Technology,” the 9th Indian Cement Review Conference hosted thought-provoking discussions and presentations, highlighting the industry’s commitment to adopting innovative, sustainable practices. The conference served as a platform for dialogue on the latest technological advancements aimed at transforming the cement sector, addressing key challenges, and fostering growth.

What to Expect from Cement EXPO 2025

The 15th Cement EXPO, along with the 10th Indian Cement Review Conference and the 8th Indian Cement Review Awards, is set to be even bigger and more impactful than the 2023 edition. With an expanded exhibition space, greater participation, and more in-depth discussions, the 2025 event will continue to drive the industry forward. This 3-in-1 event promises to be a pivotal moment in the ongoing transformation of the cement sector.

As the industry evolves, the 15th Cement EXPO 2025 will serve as a crucial platform for showcasing innovations, discussing emerging trends, and forging new partnerships to shape the future of cement and construction.

For more details:

Cement Expo Forum 2025: https://cementexpo.in/forum

15^th Cement Expo 2025: https://cementexpo.in/

FOR CONFERENCE SPONSORSHIPS

Sheetal Talreja

Mob: +91 842 2874 030

Email: sheetal@IndianCementReview.com

FOR EXHIBITION/SPONSORSHIPS

Sujoy Gomes

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Email: Sujoy.g@ASAPPinfoGlobal.com

FOR SPONSORSHIPS

Ratan Rajbhar

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Email: ratan.r@ASAPPinfoGlobal.com

Concrete

Construction sector growth slows to 8-10% for FY2025: ICRA

Published

3 weeks ago

January 15, 2025

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The revenue growth for construction companies in FY2025 is projected at 8-10 per cent, down from the earlier estimate of 12-15 per cent, according to ICRA. This marks the slowest growth in three years, driven by factors such as the Model Code of Conduct in Q1, prolonged monsoons, and milestone-based billing in Q2, particularly affecting road-focused players.
ICRA’s analysis of 19 companies with a combined turnover of Rs.1.28 trillion in FY2024 shows modest revenue growth of 1.5 per cent YoY in H1 FY2025. While execution is expected to improve in H2, FY2025 growth remains below the historical CAGR of ~15 per cent (FY2018-FY2024).
Order inflows in urban transport, water and sewage projects are healthy, but road-focused entities face challenges due to muted inflows and high competition. Operating margins are projected to remain range-bound at 10.5-11 per cent, with debt levels rising to manage working capital needs, though debt coverage metrics remain stable.

Concrete

SANY India expands Pune factory to boost production capacity

Published

3 weeks ago

January 15, 2025

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SANY India inaugurated a cutting-edge factory expansion at its 90-acre Pune facility, elevating its production capacity to over 14,000 units annually, alongside a robust fabrication capacity of 100,000 metric tonnes.

The advanced facility reinforces SANY’s commitment to ‘Make in India’ by enhancing localised manufacturing and supporting global exports. Chairman Xiang Wenbo highlighted the strategic importance of India as a global hub, while Vice Chairman Deepak Garg emphasised the expansion’s role in driving innovation and infrastructure development. This investment enhances efficiency, reduces timelines, and strengthens SANY’s leadership in the construction equipment sector.