Indian cement industry in a concrete state

Though the recent price hike hits cement industry, future looks positive
 Cement is one of the major industries and plays a vital role in the growth and development of a nation. India is the second largest producer of cement in the world. The cement industry in India is dominated by around 20 companies, which account for almost 70 per cent of the total cement production in India.
Current status Currently Indian cement companies are continuously losing on pricing factor, while costs continue to rise. The present scenario may bring the demand of cement stocks further down and if prices are not rolled back, the protest against the price hike in cement is likely to continue. The country is already under crisis due to input costs in this sector and price hike will result in an adverse effect on the cement business.
Though India is the second largest producer of cement in the world, India falls in the list of lowest per capita consumption of cement with 125 kg. The reason for this is the low purchase capacity of people living in hutments unable to afford to cost of cement building.
With the recent price hike there seems to be no sigh of relief for the cement manufacturers as well as consumers.
ChallengesHigh taxation, rising raw material and transportation costs and higher fuel costs are some of the major challenges faced by the Indian cement industry. The overall rate of tax on cement is around 30 per cent in India compared to 19 per cent in China and almost negligible in Thailand. Though, companies have tried to reduce transportation and fuel costs by using various alternatives and technologies, the same are still too high.
Costs for cement companies are expected to rise over the next few years as coal prices will firm up further and freight costs go up due to rising crude prices. New cement capacities may face the additional problem of not getting assured captive coal linkages.If there is a slowdown in infrastructural projects there is a possibility of it impacting with the growth in consumption of cement.
Row over price hikePresently, the Indian cement industry is going through a tough time. From June 1st, cement manufacturers in the South have increased the price. However, The Confederation of Real Estate Developers’ Association of India (Credai), along with Telangana and AP chapters, has opposed the cement manufacturers’ move to increase prices by 50 per cent.In retaliation, the real estate body has decided to stop the purchase of cement if the price hike is not rolled back in both the states. Along with this, Credai also plans to file a complaint with the Competition Commission of India (CCI) against the illogical price hike. Directly or indirectly, the ongoing tussle is affecting the Indian cement industry.
Future perspectiveAccording to a recent report of “Indian Cement Industry Outlook 2016”, the sector is expected to have a positive growth in coming years, with demand set to increase at Compound annual growth rate (CAGR) of more than 8 percent during 2013-14 to 2015-16. The report also says that it has observed maximum demand in the Southern region, which is expected to rise in future.
The Indian economy will take at least one or two years to bounce back to its earlier level. In relation with the economy the cement industry is also set to improve. Since India is emerging as one of the fastest growing economies in the world, the future outlook for cement looks to be bright. With the government formulating and facilitating growth oriented policies so that our per capita cement consumption matches with at least some of the developing economies.

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