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Cement Producers Bump into Liquidity Woes and Logistics Challenge
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(L-R): Mr Pratik Kumar Ray, Deputy General Manager, Ramco Cements; Mr Jayakumar K, Senior Vice President (Marketing), Ramco Cements Ltd and Mr Panchanan Dash, former MSME Secretary, Odisha Government and currently President at Forum for Enterprise De
3 min read Last Updated : Feb 28 2020 | 2:43 PM IST
Faced with demand slump, the cement industry has identified liquidity woes, logistics issues and below-par capacity utilisation as the key challenges to its growth.
Industry experts have reached a consensus here at the 210th ‘Smart Business’ conclave organised jointly by Business Standard and Ramco Cements Ltd.
“Major infrastructure projects used to be handled by the CPSEs (Central Public Sector Enterprises). Today, the scenario has changed and they may be implemented in the PPP (Public-Private Partnership) model. However, there is a possibility that the projects may be slightly delayed because of liquidity woes”, said Mr Jayakumar K, Senior Vice President, Marketing, The Ramco Cements Ltd.
He admitted that the Budget for 2020-21 contains many positives for the cement industry but the difficult part is going to be the finance sector. He said, “This factor is going to be the dampener especially for the real estate which consumes 14 per cent of the cement. 65 to 70 per cent of the cement is absorbed in the infrastructure sector.”
Jayakumar said the cement industry is one that has stood by India’s growth with a capacity utilisation rate of 70 per cent. “In our industry, there are a lot of players and it is highly fragmented. In the future, we are staring at amalgamation or acquisition along with cement producers carrying on with Greenfield and organic growth”, said Mr Jayakumar.
Mr Panchanan Dash, former MSME Secretary, Odisha Government and currently President at Forum for Enterprise Development rued the woeful per capita cement consumption in the country.
“India is the second-largest cement producer in the world, next to China. But our per capita consumption is abysmally low at around 200 kg compared with the global average of 750 kg. There is enough scope to increase consumption. We have to create the demand. The government can formulate the right policies to ensure that more and more cement is used”, he said.
Speaking at the conclave, Mr Pratik Kumar Ray, Deputy General Manager at Ramco Cements said, “The cement industry has grown by 8-10 per cent. But our capacity utilisation is not to that standard. Demand in the cement industry is proportionately related to infrastructure and government spending propels the whole infrastructure spending. Ramco Cements is planning to build a rural market where there is scope to expand demand.”
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