Amaravati is reportedly the city in heaven, where the resident gods have attained immortality. Down in our mortal planet earth, the cement industry in south of India may have been waiting for the elixir of life for quite a long time now, which they have got in the shape and name of Amaravati, the proposed new capital of Andhra Pradesh, which is expected to herald in a big construction boom in the region. Indian cement market is broken up into 5 regions for any kind of analysis, and among these, the south region has been doing rather badly for the last 5-10 years in terms of demand growth and consequently also in terms of capacity utilisation and prices. The prolonged confusion regarding formation of Telengana state did not help matters at all. Overall a region which in the past was the darling of analysts and the driver of demand growth in India has been playing far below its potential in the last decade. As against an exciting growth of 25 per cent in 2005-06 the consumption growth slowed down to as low as -3 to +1 to +2 percent only, in the recent years of 2011-2014, bringing the region to a crawl. Now that the divided states of Telegana and Andhra Pradesh have taken shape, the business community of both these states are expected to come out of their stupor and invigorate investments. Not only that the governments in the two states are expected to kick-in infrastructure building in a big way and the new capital is just one big example.
If the southern region has been waiting for a catalyst to grow cement demand, then this may be it. We expect the other segments of cement consumption to rally round the imminent infrastructure boom and eventually, 2016 -17 could well be the year when the dark horse south region may once again be on the driver?s seat of our country?s cement demand growth. For us, the south side story, in the medium term is full of optimism which is true for India as well.
The expected demand growth will also help the bulk material handling equipment industry which has been hit by the slackness of demand and low capacity utilisation. Our comprehensive feature on BMHE industry tracks the technology and product trends. The BMHE industry is very much dependent on streamlined policy environment and clear road map for the mineral industry to thrive. As the potential for infrastructure development is tremendous, the industry expects a double digit growth in the near future.
In this issue, we have covered the branding that we see in the cement industry. While in the developed countries cement has become fully commoditised, in developing countries where the individual / retail customers still hold sway, cement is almost like a branded FMCG. In country like ours, judicious investments in brand development gives a good return on investment.Therefore, it is always very interesting to analyse the brands in terms of what they promise and how they compete with each other in terms of positioning.
Sumit Banerjee Chairman, Editorial Advisory Board
