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Waiting for Godot

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Union Budget of 2021-22 presents several opportunities to give the real estate sector a shot in the arm. Given that real estate contributes more than 8 percent to the Indian economy, it has justifiable expectations.After all, the realty industry remains one of the most precise bellwethers of the state of India?? economy.

Multiple measures were announced by the Government in the year 2020 to beat the unprecedented impact of the COVID-19 pandemic on the overall economy and the real estate industry specifically. These measures are commendable, but considering the depth of pain of the industry;are not enough.The housing industry needs focused measures to foster demand. This year, the real estate industry expects much more apart from single-window clearance and industry status.

Affordable housing is very likely to get another booster dose. However,the budget also needs to focus on the larger market as more than ever before,homebuyers and investors need focused tax incentives to get mobilized. Also, as the government is aware, developers??liquidity woes need to be alleviated to forestall further market mayhem. The top one in the wish list is GST waiver for under-construction homes. Even a limited period waiver of GST will reduce overall property cost and thus push demand for under-construction homes, which have been slacking presently. The earlier one, alimited-period stamp duty cut in Maharashtra significantly boosted demand in both MMR and Pune. The most recent one has been reduction by 50 per cent in premiums charged on construction till December 31, 2021 by Maharashtra government is a welcome measure. The other expectation is hike the Rs 2 lakh tax rebate to at least Rs 5 on housing loan interest rates under Section 24 of the Income Tax Act lakh to generate healthier housing demand.

On the other hand the cost of input materials for real estateis on rise. Steel prices are set to go up further, despite the deep concern raised by the user industry.

Incidentally, hot rolled coil prices have increased 46 per cent to Rs 52,000 per tonne in November compared to Rs 37,400 per tonne in July last year. Rebar TMT, which are used in the housing and construction sectors, have touched Rs 50,000 a tonne.Amid rise in prices, Punjab industry asked Centre to ban export of steel for 6 months. Steel is one of the basic raw materials for the engineering industry. It is processed and after value addition, sold as finished products to automotive, tractor manufacturing, hand tool companies etc. It is an important component in the bicycle industry as well.

The cement industry has started recovering slowly from May 2020, given the pent-up demand and the improved rural demand.The industry overall is observing a production discipline. Prices in Maharashtra are up by around 10 per cent at Rs 354 a bag, supported by higher prices in the South, which is a key supplier to the states. The same for Gujarat remained steady up 3% YoY at Rs 350 a bag. As a result, prices in the West are currently up 1%(6% YoY) at Rs 352 a bag. The price rise is going to have a cascading effect on the cost of construction.

As the government looks to steer the pandemic-battered economy and push growth, the Finance Minister comes with a promise ??ever before??like Union Budget. That must deliver as per its promise else we will be waiting for Godot.

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Concrete

Fuel for Thought

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As the world moves towards novel exchange denominators like cryptocurrency, the cement industry is busy battling one of the oldest currencies in the world – fuel.

With the war between Russia and Ukraine continuing to rage, fuel prices have hit the roof, as can be seen from the rising cost of pet coke, diesel, freight and energy, which are important factors for cement manufacturing and mobilisation. The most likely scenario would have been a resulting increase in cement price, however the price correction did not follow through and the cement sector witnessed flat rates in May and a dip in prices in June across India. This has adversely affected the profitability of cement. Amid elevated costs of raw materials and decrease in demand, Emkay Global Financial Services has cut its earnings before interest tax depreciation and amortisation (EBITDA) estimates for the sector by 5-6 per cent for FY 23/24/25.
Apart from this, currently sustainability is also detrimental to cost efficiency for cement companies. Green energy initiatives, such as alternative fuel and raw materials (AFR) and waste heat recovery system (WHRS), are adding to the production costs. These costs are not getting translated into price hike, leaving the cement makers to bear the brunt. However, sustainable production and net zero targets are not to be toyed with, and each player has to put in their best effort. With regards to input costs, experts are hopeful of price corrections through rise in demand for cement in the months to come.
All eyes are right now on Russia, thanks to the compelling need to sourcing fuel from low-cost destinations. Giants from the steel and power industries are already dealing with Russia for its pulverised coal. India has also shown an interest in increasing its import of thermal and coking coal from Russia, and is estimated to import 40 million tonnes tonnes by 2035.
Corrections in pricing and innovations in raw materials and alternative energy might be at different ends of the spectrum but they are bound to have a long lasting impact on cement companies, as each player puts in their best effort to win this fuel fight.

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Concrete

KEC International bags orders worth Rs. 12.33 billion

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Secures an order to build India’s first 765 kV Digital Substation

KEC International, an RPG Group Company, has secured new orders of Rs. 12.33 billion across its various businesses:

The business has secured orders for T&D projects in India, Middle East and Americas: 765 kV Digital GIS Substation order in India, from Power Grid Corporation of India (PGCIL), supply of towers in Middle East, secured by subsidiary in UAE, supply of towers, hardware and poles in Americas, secured by the company’s subsidiary, SAE Towers.

The business has secured orders for infra works in the paints and metals & mining segments; laying of cross-country pipeline and associated works and various types of cables in India and overseas.

Mr. Vimal Kejriwal, MD & CEO, KEC International commented, “We are pleased with the new order wins, especially the prestigious order from PGCIL, to build India’s first 765 kV Digital substation. Our Civil business continues to strengthen and diversify its presence in the industrial segment with the addition of a very reputed client. We are also encouraged by the order in the Oil and Gas Pipelines, which further enhances the business’ order book.”

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Economy & Market

KEC International wins New Orders of Rs. 1,233 crores

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Secures an order to build India’s first 765 kV Digital Substation.

KEC International, an RPG Group Company, has secured new orders of Rs. 12.33 billionacross its various businesses:

The business has secured orders for T&D projects in India, Middle East and Americas: 765 kV Digital GIS Substation order in India, from Power Grid Corporation of India (PGCIL), supply of towers in Middle East, secured by subsidiary in UAE, supply of towers, hardware and poles in Americas, secured by the company’s subsidiary, SAE Towers.

The business has secured orders for infra works in the paints and metals & mining segments; laying of cross-country pipeline and associated works and various types of cables in India and overseas.

Mr. Vimal Kejriwal, MD & CEO, KEC International commented, “We are pleased with the new order wins, especially the prestigious order from PGCIL, to build India’s first 765 kV Digital substation. Our Civil business continues to strengthen and diversify its presence in the industrial segment with the addition of a very reputed client. We are also encouraged by the order in the Oil and Gas Pipelines, which further enhances the business’ order book.”

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