Displaying items by tag: Cement Manufacturers Association of India

India: Shailendra Chouksey, president of the Cement Manufacturers Association (CMA), has warned that cement prices could rise by up to 10% due to growing fuel and transportation costs. The local industry grew by 14% in the first half of the 2018 – 2019 year, according to the Press Trust of India.

"There is a very dire need to correct the pricing. In the last year we have seen 60-70% rise in the cost of fuel. To recover at least some portion of this increase, we need to increase the prices of cement," said Chouksey. He added that cement prices had been ‘almost stagnant’ since around 2011. However, he conceded that the industry still has surplus capacity.

India: Shailendra Chouksey, president of the Cement Manufacturers Association, has complained about imports of cement from Pakistan damaging the local industry. He told the Indo-Asian News Service that cement from Pakistan was up to 15% cheaper than Indian cement. There has been no customs duty on cement imports from Pakistan since 2007, making it competitive in comparison to local production, especially in states that neighbour Pakistan. By comparison, imports of cement to Pakistan face a duty of 11%.

Data from the Directorate General of Foreign Trade shows that 1.68Mt of cement was imported into India during the 2017 – 2018 financial year that ended in March 2018. 1.27Mt or 76% of this total was imported from Pakistan.

Indian producers have also complained about the high rate of the local Goods and Services Tax (GST) in the country. They are hoping to reduce the rate to 18% from 28% at present.

India: The National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal by cement producers against a US$975m fine for alleged cartel-like behaviour. The Competition Commission of India penalised 11 cement companies in August 2016, according to the Press Trust of India. The companies included UltraTech Cement, ACC, Ambuja, Ramco and JK Cement and the Cement Manufacturers’ Association (CMA). UltraTech Cement has been fined US$171m, the highest amount in the group.

India: The Cement Manufacturers Association (CMA) says it is disappointed for the entire industry following the Goods and Services Tax (GST) Council’s decision to retain cement in a higher tax rate. The GST Council has reduced the tax rate on a wide range of commonly used items, from chewing gum to detergents, to 18% from 28%, according to the Press Trust of India. However, cement, along with paints, has remained at the 28% rate, despite the expectations of the cement industry.

"The retention of the cement in the 28% GST bracket, along with luxury items such as washing machines and air conditioners is quite unfortunate," said CMA President Shailendra Chouksey. He added that cutting the tax rate of cement could have hastened the recovery of the industry from a current slow period.

It’s been a pessimistic month for the Indian cement industry with Ministry of Commerce & Industry data showing that cement production has fallen year-on-year every month since December 2016. This was followed by the Cement Manufacturers Association (CMA) saying that the industry was sitting on 100Mt/yr of excess production capacity. Now, the credit ratings agency ICRA has followed the data and downgraded its forecast for cement demand growth to not more than 4% for the 2017 - 2018 financial year.

Graph 1: Annual cement production in India. Source: Ministry of Commerce & Industry.

Graph 2: Monthly cement production growth rate year-on-year in India: Source: Ministry of Commerce & Industry.

Graph 1 shows a production peak in the 2015 - 2016 financial year before falling monthly production broke the trend in the 2016 - 2017 period. Graph 2 pinpoints the month it started to go wrong, November 2016, when the government introduced its demonetisation policy. Production growth went negative the following month in December 2017 and it hasn’t managed to right itself since then and grow. It’s convenient to blame the government for the slump in production but it troughed in February 2017 before taking a lower level of decline since then.

The Reserve Bank of India (RBI) annual report in August 2017 suggests that the policy failed in its principal purpose of reducing the kind of corruption that a cash heavy economy can hide such as tax avoidance. People reportedly managed to find ways to bypass the bank deposit limit and may have successfully laundered large amounts of cash without being caught. However, as commentators like the Financial Times have pointed out, the longer term implications of forcing the economy towards digital payments and increasing the tax base could yet be beneficial overall.

Graph 3: Cement production capacity utilisation rates in India. Source: UltraTech Cement.

Moving on, the CMA has blamed production overcapacity for the current mess and Graph 3 shows the problem starkly. If anything the CMA appears to have downplayed the over capacity crisis facing India, as UltraTech Cement’s figures (using data from the Department of Industrial Policy and Promotion) show an overcapacity of 155Mt in the 2016 – 2017 year and this will grow to a forecast 157Mt in the next financial year, even though the utilisation rate is expected to rise slightly. UltraTech Cement’s estimates don’t see the utilisation rate topping 70% until the 2020 – 2021 financial year. Analysts quoted in the Mint business newspaper concur, although they reckoned it would the rate would bounce sooner, in 2019 - 2020. Last month when the CMA moaned about the industry's excess capacity it pinned its hopes on infrastructure schemes like the Mumbai-Ahmedabad bullet train. This prompted an official at JK Cements to say that he didn't think that one train line was going to make much of a difference.

This is one reason why ICRA’s and the other credit agencies’ growth rate forecasts for cement demand are important, because they indicate how fast India might be able to close the gap between production capcity and demand. Unfortunately demonetisation scuppered ICRA’s growth prediciton for 2016 – 2017. It forecast a rate of 6% but it actually fell by 1.2%! So downgrading its forecast for 2017 – 2018, with fears of weather and the implementation of the Goods and Services Tax (GST) in the second half of the year, is ominious. Major cement producers such as Ultratech Cement and Ambuja Cement have based their road to recovery in their latest investor presentations on a 6% growth rate or higher. Pitch it lower and the gap doesn’t close. Here’s hoping for a brisk second half.

India: The Cement Manufacturers Association (CMA) says that the local cement industry has 100Mt/yr of excess production capacity out of a total 425Mt/yr. The sector is sitting on over US$9.4bn of ‘sunk investment in surplus capacities’ but the CMA expects infrastructure schemes including railway projects to increase demand, according to the Press Trust of India. CMA President Shailendra Chouksey added that initiatives such as the Mumbai-Ahmedabad bullet train could raise cement consumption by 3 – 5Mt/yr.

In separate comments M P Rawal, the company administrator of JK Cements, confirmed the CMA’s assessment of the sector by saying that a slowdown in the construction industry in 2016 had led to a 70% utilisation rate of the country’s cement plants. He expected the same situation to persist in 2017. However, he warned that one bullet train project was unlikely to have a big impact on the situation.

India: The Cement Manufacturers' Association (CMA) has elected Mahendra Singhi, the group chief executive officer (CEO) and director of Dalmia Cement (Bharat), as its new vice president. Singhi has previously served as president of the Rajasthan Manufacturers Association. He is a science and law graduate by training and also a chartered accountant.

India: The Cement Manufacturers Association (CMA) says that demand for cement is likely to grow in the second half of the Indian financial year due to the new Goods and Services Tax (GST) and increased infrastructure spending. The cement industry is also expected to benefit from a 30% reduction in logistic costs due to simplified state border checks, according to the Press Trust of India. The CMA’s forecast follows a fall in growth for the cement industry in the previous financial year.

India: A Joint Action Committee (JAC) comprising of Confederation of Real Estate Developers’ Associations of India (CREDAI), Telangana Real Estate Developers’ Association (TREDA), Builders Association of India (BAI), Telangana Builders Federation (TBF), Telangana Developers Association (TDA) and other small and big member groups has reacted angrily against a 60% increase in the price of cement in Telangana. The group has described the rise as ‘unjustified’ and has asked cement producers to rescind the increase, according to the Hindu newspaper. S Ram Reddy, president of CREDAI and chairman of the JAC said that fuel and power costs had not increased for cement producers. He added that the JAC had failed to obtain a response from the Cement Manufacturers Association on the issue. The developers are considering options including importing cement into the state from the international market. They are also planning to meet Prime Minister Modi with a request to constitute a body to regulate the cement industry.

India: Shailendra Chouksey, a director of JK Lakshmi Cement, has been appointed as the new president of the Cement Manufacturers' Association (CMA) for a two year term. He replaces OP Puranmalka, the managing director of Ultratech Cement. Previously Chouksey was the vice-president of the association.

"As the newly elected president of the CMA, my priority is to device methods to work with different stakeholders, including the government of India to spur the cement demand," said Chouksey.

Chouksey holds a PhD in managerial economics, an MBA in marketing from the Faculty of Management Studies, Delhi and a post-graduate degree in physics. He has worked in the cement industry for nearly 40 years.