Shree Cement sees sluggish demand in FY09
Posted by paragjani on September 22, 2008
New Delhi : Shree Cement expects cement demand to be sluggish in the current financial year due to a slowdown in real estate and housing sector, which may put further pressure on prices, a top official said.
Housing accounts for 50-55 percent of total cement consumption in India. Infrastructure accounts for 25 percent and commercial projects 20 percent, according to rating agency ICRA.
“We may not see the growth seen earlier last year, because of high interest rates, real estate companies don’t have capacity to raise funds,” Executive Director M.K. Singhi told reporters on the sidelines of an industry event.
Shares in Shree Cement closed up 1.4 percent at 554 rupees, having risen as much as 4 percent earlier, in a Mumbai market that closed up 5.46 percent.
India’s central bank raised its key interest rate by 50 basis points in July to a seven-year high of 9 percent, raising the cost of borrowing.
Shree Cement, which has around 4 percent of India’s market on the basis of production, expects its cement sales to grow by 20 percent in the current financial year, slower than 31 percent in the year-ago period, when it sold 6.3 million tonnes.
The production growth will also slow down to 11 percent, or 7 million tonnes, from 32 percent an year ago.
Investors in Indian stocks are dumping cement stocks, fearing over-capacity and subdued demand.
Singhi said the cement prices are under pressure as fresh capacities are being added without a pick-up in demand.
