Economy & Market

Lack of big govt investment plans hits sentiment

Published

5 years ago

January 8, 2019

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Industry was expecting investment booster to the economy through various construction and infrastructure projects post-polls, and the demand was affected as these hopes were belied.

With increase in monsoon footprint and intensity in July 2019, pressure points were visible on cement demand, adding to the earlier pressures created by continued lull post-election, belying the expectations of the industry on increased project spending by the government.

The ET Cement Index that tracks cement price movements across the country has unusually remained flat/stable at 2,397.3 points between end-June and beginning of August 2019, after a marginal fall in June.

However, channel checks by the leading brokerage, CLSA indicated weakened cement demand trends in July across markets due to tough macro, tight liquidity, lull post elections on government spending, monsoon etc. The Union Budget 2019-20 for full year released early July proved to be a dampener, lacking in any big ticket investment plans.

Cement prices were down 7-10 per cent MoM in Andhra Pradesh & Telangana, while east has seen ~4 per cent MoM decline. Prices in north, central and Gujarat are down 1-2 per cent MoM, CLSA’s recent channel checks found.

"A part of the price correction is due to seasonality as construction activity tapers off during monsoons. However, the channel expects further pricing corrections in next few months as demand is likely to pick-up only post monsoon. We currently forecast 4-6 per cent Quarter-on-Quarter (QoQ) decline in realisations for our coverage during 2QFY20 and there is a possibility of earnings cuts in south-based players, if there are further (price) cuts," says Vivek Maheshwari, Investment Analyst of CLSA, in a report released on July 31, 2019.

"There has been a notable improvement in the cumulative rainfall received as the cumulative deficit has reduced from (-)19 per cent for the week ended 24 July to (-)9 per cent for the week ended 31 July," says Madan Sabnavis, Chief Economist, CARE Ratings in a report titled Weekly Monsoon Monitor dated August 2, 2019. Steep rise in prices in April and May 2019 have weakened the demand, curtailing the pricing power of the industry in the following months. In June, ET Cement Index eased 1.39 per cent at 2397.3 from the all time peak of 2431.1 points registered at the end of May 2019. With sharp 8 per cent Month-on-Month (MoM or compared to the previous month) hike pan-India in April, average trade prices in April-June were up by 11 per cent Quarter-on-Quarter (QoQ).

According to CLSA’s channel checks, across regions demand has been generally weak with very high pressures visible in the states of Andhra and Telangana post elections as activity has slowed down quite a bit, taking the July prices down 6-7 per cent versus 1QFY20 average for the south as a whole. In the east, prices have also been cut by 4 per cent Month-on-Month (MoM) in July, which is down 5 per cent versus 1QFY20. North, central and west (Gujarat) have seen 1-2 per cent MoM cuts in July and this is similar when compared with 1QFY20 average as there were strong hikes in the earlier quarter.

Drying up of funding sources for construction contractors has impacted construction activity in general, raising concerns over cement demand. Availability of sand has also been highlighted as an issue in some places, impacting construction activity.

Monsoon progress
The progress of the south-west monsoon reveals a notable improvement for the week ended 31 July with the cumulative rainfall deficit reducing to (-) 9 per cent and the number of sub-divisions recording deficient rainfall being 14, out of 36 divisions across the country. The rainfall deficit of (-) 9 per cent during the current season is at a 5-year high, according to Indian Meteorological Department (IMD).

Improved rainfall position coupled with relatively better distribution of rainfall bodes well for the crop production.

Spatial and temporal spread of monsoon in the sowing season will impact the agricultural crop outcomes and consequently, rural incomes, based on which the demand for cement from rural areas will be impacted. That is, a good monsoon can boost demand for cement due to increased construction activity.

The sowing crop situation as of 26 July’19 has also seen an improvement for a few kharif crops namely maize, urad, sugarcane and cotton as the sowing for the current season has been higher than the normal. However, the sowing of key crops namely rice, food-grains, bajra is significantly lower than the normal, according to CARE Ratings’ analysis.

Looking ahead
"IMD is expecting monsoon to be normal in August and September and is likely to be 100 per cent of the long period (50 years) average. In the balance two months, the progress of sowing and in turn the food production would be critical for overall consumer and wholesale inflation to remain benign," says CARE Ratings.

Maheshwari says, "Our interactions with industry players indicate that the demand is likely to pick-up only post monsoons, but we see lesser optimism at this stage on an imminent pick-up in the next few months due to tough macro conditions."

Economy & Market

RAHSTA will drive road construction innovation: Sundaresan

Published

5 hours ago

April 18, 2024

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14th RAHSTA (Roads and Highways Sustainable Technologies & Advancement) Expo – India’s biggest road exhibition – will be held as a part 10th India Construction Festival 2024 at Jio Convention Centre, Mumbai, from October 9-10, 2024.

April 10, 2024, Delhi

“We believe RAHSTA is the ideal platform for our presence, and we are confident in our participation in the upcoming expo scheduled for October,” said Anand Sundaresan, Director, Ammann India, while speaking during the launch of a road show – 14th RAHSTA Expo, which will be held from October 9-10, 2024, at Jio Convention Centre, Mumbai. RAHSTA, which stands for Roads and Highways Sustainable Technologies & Advancement, is a dedicated event to the world of road construction equipment, technology, and sustainability.

Sundaresan added, “We predominantly specialise in road construction machinery, such as asphalt plants, concrete batching plants, pavers, and rollers, among others. Additionally, we offer ancillary equipment like supers. With the government placing significant emphasis on infrastructure development, there is a substantial demand for road construction machinery. Particularly noteworthy is the growth witnessed in the last year (2023-2024), with a surge in orders. Moreover, the construction of airports is underway, necessitating equipment for runway construction. We perceive immense potential and opportunity for growth within the industry.”

“The Ministry of Road Transport & Highways has constructed 12,349 km of national highways in 2023-24 – the second highest achievement! In 2020-21 a record 13,327 kms had been constructed, the highest so far. The experience of a well-constructed road is no accident but a badly constructed one can cause many,” stated Pratap Padode, Founder, FIRST Construction Council, a pioneering infrastructure-driven council focused on advancing India’s infrastructure development.

Padode was speaking at the launch of a road show – 14th RAHSTA Expo, which will be held from October 9-10, 2024, at Jio Convention Centre, Mumbai. RAHSTA, which stands for Roads and Highways Sustainable Technologies & Advancement, is a dedicated event to the world of road construction equipment, technology, and sustainability.

Speaking at the launch, former Managing Director of Ashok Leyland & JCB, Vipin Sondhi, also Chairman of RAHSTA Expo Committee underscored the need for specialised platforms like RAHSTA Expo for the burgeoning road construction industry.

Ashish Kumar Singh, CGM – Finance, National Highway Authority of India; RK Pandey, former NHAI member and Member of RAHSTA Expo Committee; SK Nirmal, Secretary General, Indian Roads Congress and Member of RAHSTA Expo Committee; Prof Satish Pandey, Principal Scientist, CSIR-Central Road Research Institute, Ministry of Science and Technology; Ankit Jain, CFO, Cube Highways Growth Advisors, Vijay Agrawal, Executive Director, Equirus Capital; and Subodh Dixit, Former Executive Director, Shapoorji Pallonji, participated in a round table discussion on the new BOT proposals.

The launch function at PHD Chamber for RAHSTA Expo was attended by who’s who of the infrastructure industry such Lt Gen Harpal Singh, President, International Road Federation and former Engineer-in-Chief, Indian Army; Akhilesh Srivastava, Road Safety Ambassador, International Road Federation; Sandeep Singh, Managing Director, Tata Hitachi Construction Machinery; Rajesh Menon, Director General, Society of Indian Automobile Manufacturers; Raman Kapil, President, Tata Projects; Anand Sundaresan, Director, Ammann India; Dheeraj Panda, Managing Director, Ammann India; Rajan Aiyer, Managing Director, Trimble; Satin Sachdeva, Founder & Secretary General, Construction Equipment Rental Association; Dr Swamy, Chairman, The Institution of Civil Engineers and Dr Ranjeet Mehta, Executive Director of PHDCCI, among others.

Organised by the FIRST Construction Council, the RAHSTA Expo 2024, which will be held as part of 10th India Construction Festival, will bring together industry leaders, innovators, and stakeholders for two days of exploration, collaboration, and transformation.

Besides RAHSTA Expo 2024, the India Construction Festival 2024 will include the following:

Exhibitors can use RAHSTA Expo 2024 to showcase their construction machinery, building material machines, mining machines, and construction vehicles to a targeted audience of industry professionals. RAHSTA Expo will be an ideal platform to connect with key decision-makers, generate leads, and grow business in this rapidly expanding market.

Contact:

For exhibitor enquiries (for RAHSTA Expo), contact Mr Sujoy on Mob: +91 86577 95881, or Email: sujoy.g@asappinfoglobal.com

For delegate enquiries (for conferences), contact Mr Amar on Mob: +91 86524 93000, or Email: delegate1@asappinfoglobal.com

Concrete

New appointment at TMEIC

Published

1 day ago

April 17, 2024

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TMEIC Industrial Systems India, a Group company of TMEIC Corporation, Japan, has announced the appointment of Hidekazu Matsushima as the new Managing Director. Matsushima has been associated with Mitsubishi Electric FA division for domestic market in Japan since 1991 and been assigned in Industrial division in 1994, where he rolled out his mission of sales, marketing and business development of General industry (GI) such as paper, film, Oil & Gas, petrochemical, cement, food, automobile, semiconductor industries in Japan. During the establishment of TMEIC in Japan in 2003, he was assigned with the responsibility for domestic GI market Sales in Japan HQ, and then in plant and energy sales department.

Concrete

Social Impact Award for Ambuja Cements

Published

1 day ago

April 17, 2024

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The West Bengal CSR unit of Ambuja Cements has won the 6th ICC Social Impact Award 2024 in the large industry category. It was recognised for its efforts in advancing ‘Gender Equality and Women Empowerment’. The CSR arm received a letter of appreciation from the Office of the Governor of West Bengal, further amplifying recognition of the organisation’s contributions to societal advancement. The initiatives undertaken by Ambuja Cements in West Bengal under the Women Empowerment programme harness the power of rural women as breadwinners, community leaders and change-makers. Encouraging women to form Self-Help Groups and Federations plays a key role in helping them achieve socio-economic empowerment.