The govt decision to allow construction activities with riders to help revive economic activities in the country is unlikely to improve the situation in the cement industry any time soon, some large and medium cement companies told ET.
Mumbai: The government decision to allow construction activities with riders to help revive economic activities in the country is unlikely to improve the situation in the cement industry any time soon, some large and medium cement companies told ET. Limited transportation facilities, higher than usual inventory and stricter rules regarding labour safety are some of the factors that are forcing cement makers to approach the resumption of business activities rather cautiously.
Demand and supply constraints due to disruption of logistics channels are causing a major challenge, companies said. “A lurking concern among workers is the possibility of contracting the infection if a truck comes from a high risk zone,” said A V Dharmakrishnan, CEO of Ramco Cements. “This has impacted cement dispatches.” The government has divided districts into red (high risk), orange (medium) and green (low risk) zones based on severity of Covid-19 infection in each locality. Allowing economic activities in ea
ch district will be based on its risk assessment, with red zones remaining under complete lockdown. At present, metros and big cities are red zones. Cement companies don’t expect a significant revival in demand. “We expect just 10% consumption, hoping that it would increase gradually,” said Hari Mohan Bangur, managing director of Shree Cement NSE -0.82 %. “But, until trains start running and curfews are eased uniformly, consumption will be subdued.” Emkay Global Financial Services expects only 15-20% capacity utilisation by cement companies this month.