Proposals seen long on intent

CEMENT SECTOR/ Focus on rural housing finance, airports, sea-ports welcomed

The demand for cement is expected to get a fillip following the Budget's focus on rural housing finance, airports, sea-ports, water harvesting and irrigation systems.

The industry has set itself a growth target of 8 per cent for this financial year, senior executives at major cement companies say a lot will depend on the implementation of these initiatives.

Anil Singhvi, executive director, Gujarat Ambuja, said, "The Budget is good on intent with respect to the cement sector as it focuses on fuelling growth for the sector. However, the impact can only be quantified if the initiatives are implemented."

Singhvi further added that past governments have also had similar intentions but have not implemented their initiatives. "Growth in cement demand has been very low in the last few years, and along with announcing initiatives, the implementation needs to be addressed," he said.

The cement industry grew by only 5.5 per cent in 2003-2004 versus expectations of 7-8 per cent growth.

A cement industry analyst said: "The government has lowered rural housing finance rates by 25 basis points and is looking at 2.5 lakh new houses in rural India. This should definitely help demand for cement in the rural sector."

A K Jain, executive director, The Associated Cement Companies, said, "The new government's initiatives for infrastructure and housing are welcome for the cement industry. However, the gains will only be seen in the mid-term and long-term."

Others echo the point. D D Rathi, group executive president and chief financial officer, Grasim Industries, said: "Although budgetary allocations for the cement sector do boost sentiment, the impact will be known only when expenditure is actually incurred."

Shivesh Sinha, chief financial officer, Lafarge India, said, "Although the importance given to low housing finance and infrastructure is very pleasing, there is no roll back of the Rs 50 per tonne excise duty levied last year and with the 2 per cent surcharge, higher costs will be a major consideration for the sector."

The excise duty on cement is 33 per cent of the ex-factory price currently, he added.