Cement prices likely to rule firm till June 2012

The prices are expected to increase to about Rs300-Rs330 per 50 kg bag over the next couple of months against Rs280 per bag now and would hold on to that level till June 2012. The rise in prices would be due to increase in raw material costs like limestone and coal as manufacturers may be forced to pass on the cost to the consumer, Angel Broking analyst V Srinivasan said

Mumbai: Cement prices are expected to rule firm till June 2012, in the wake of growing demand from the construction industry, reports PTI.

“Cement prices should be on upswing till June 2012, due to demand from construction and infrastructure industry that has started picking up in north, central and western regions.

However, there is little room for price hike in south as the prices are already at a peak level,” Angel Broking analyst V Srinivasan told PTI here.

The prices are expected to increase to about Rs300-Rs330 per 50 kg bag over the next couple of months against Rs280 per bag now and would hold on to that level till June 2012, he said.

The rise in prices would be due to increase in raw material costs like limestone and coal as manufacturers may be forced to pass on the cost to the consumer, he added.

Meanwhile, cement demand is expected to grow at a 6.5% compounded annual growth rate (CAGR) in FY12-13, Angel Broking report on cement sector said.

The cement industry posted moderate 3.1% year-on-year (y-o-y) growth in dispatches in the first half of FY11-12, following 4.5% y-o-y increase in FY10-11.

Modest growth in demand was largely attributed to a continued decline in demand in the southern region due to political instability in Andhra Pradesh and minimal pick-up in demand in Tamil Nadu and Kerala post the elections.

However, the western and northern regions posted good demand growth during first half of 2012. In November 2011, dispatches of players having a significant exposure in these regions grew strongly, the report said.

The analysis showed that the topline growth of the cement majors remained impressive, but margins remained under pressure in second quarter of FY11-12.

ACC, Ambuja, UltraTech, India Cements, Madras Cements and JK Lakshmi Cement posted average topline growth of 24.1% during second quarter of FY11-12, due to adoption of a strong production discipline particularly in south.

The report pointed out that the all-India capacity utilisation is likely to decline in FY11-12, but set to improve from FY12-13. The rate of capacity addition is set to moderate, with only 31 million tonnes per annum (MTPA) of capacity expected to be added in FY12-13, much lower than 55 MTPA added in FY10-11.

But demand slowdown has become a bigger concern, it said.

For FY12-13, Angel Broking expects the central region to report the highest capacity utilisation of 87%, followed by the northern, eastern and western regions with capacity utilisation of 83%, 80% and 79%, respectively.

However, we expect the southern region to continue to be a laggard with capacity utilisation of 64% due to minimal growth in demand and 13.5 MTPA of capacity expected to be added in FY12-13, Mr Srinivasan said.

However, the western and northern regions posted good demand growth during 1H FY11-12. During November 2011 also, dispatches of players having a significant exposure in these regions grew strongly, the report said.

The analysis showed that the topline growth of the cement majors remained impressive, but margins remained under pressure in 2Q FY11-12.

ACC, Ambuja, UltraTech, India Cements, Madras Cements and JK Lakshmi Cement posted average topline growth of 24.1% during 2Q FY11-12 due to adoption of a strong production discipline particularly in south.

The report pointed out that the all-India capacity utilisation is likely to decline in FY11-12E, but set to improve from FY12-13. The rate of capacity addition is set to moderate, with only 31 MTPA of capacity expected to be added in FY12-13 which is much lower than 55 MTPA added in FY2010-11. But demand slowdown has become a bigger concern, the report said.

For FY12-13, Angel Broking expects the central region to report the highest capacity utilisation of 87%, followed by the northern, eastern and western regions with capacity utilisation of 83%, 80% and 79%, respectively.

However, we expect the southern region to continue to be a laggard with capacity utilisation of 64% due to minimal growth in demand and 13.5 MTPA of capacity expected to be added in FY12-13, Mr Srinivasan said.

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COMMENTS

JNC

5 years ago

With economic indicators failing to sustain the projected trajactory, iand capacity utilizations at their lowest, Infrastructure push lacking and continued political disaray are collectively not indicating that prices could sustain except during Jan-Mar12.
Prices have declined steeply in Central India and parts of North.

Hiring activities to accelerate in Jan-March quarter

“Job seekers will get more opportunities as data shows the India’s employment markets will experience recovery in the fourth quarter. The good news is that many markets appear to be heading in the right direction,” MyHiringClub.com CEO Rajesh Kumar said

New Delhi: The job market is set to get a boost in the next quarter—the three-month period between January and March 2012—led by increased hiring in sectors like infrastructure and information technology, reports PTI.

As per the survey of prospective employers conducted by recruitment tendering platform MyHiringClub.com, the country’s net employment outlook—an indicator of hiring intentions—stands at 29% for the quarter ending 31 March 2012.

This marks an improvement by 9 percentage points from the year-ago quarter and an increase of 11 percentage points on the quarter-on-quarter basis.

“Job seekers will get more opportunities as our data shows the India’s employment markets will experience recovery in the fourth quarter. The good news is that many markets appear to be heading in the right direction,” MyHiringClub.com CEO Rajesh Kumar said.

The survey, which was conducted among over 4,000 employers, found that all nine sectors and all four regions of the country have positive hiring plans for the next quarter.

However, the employment outlook for some sectors has weakened over the year-ago period.

The report said the infrastructure sector has the most bullish hiring plans, with a net employment outlook of an impressive 20% for the January-March period of 2011.

The hiring intentions have improved considerably for the infrastructure, as also the IT and ITeS sector, from the levels seen in the year-ago quarter.

“... After a long wait-and-watch, now IT/ITeS industry is having very aggressive plan to hire new employees, compared to what they had hired in previous 3-4 months,” Mr Kumar said.

He noted that the infrastructure sector is seeing robust hiring activities and the recruitments have gone up on a month-on-month basis too.

The infrastructure and IT sectors are followed by the automobile, manufacturing and FMCG segments, in terms of hiring optimism for the January-March 2012 quarter.

At the same time, hiring activities may witness a decline in the banking and financial services, and telecom sectors from the levels in the year-ago quarter.

A region-wise analysis also predicted a strong labour market for all four regions for the fourth quarter of FY11-12, with the south leading the pack with a net employment outlook of 31% for the period.

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‘Realty sector must focus on the needs of the elderly’

Jones Lang La Salle report says there is demand for more than 31 lakh units

Jones Lang LaSalle India’s research report ‘Senior Living Sector in India’ has underlined the need for realty sector to focus on the needs of the elderly—an area which has largely been ignored and remains unexploited.

 “Besides growth in sheer numbers, seniors are also evolving as a customer segment and have needs and wants, which are different from seniors in earlier times. A significant section of seniors today are independent, financially stable, well-travelled, socially connected, and as a result have well developed thoughts of how they want to spend time after retirement,” the report says.

The report says that an analysis of 135 urban centres found that seniors represent 12.8 million households. Demand for formal senior living facilities from across varying income sections stood at 312,000 units. Tier-3 cities’ demands comprised 49%, whereas Tier-1 cities and Tier-2 cities comprised 35% and 16% of the demand respectively.

Regionwise, 31% of the demand was from west India, followed by 27% in south and 23% in north India.

Geographically, senior living projects are coming up in the suburbs of all key metros and some traditional ‘retirement towns’ like Coimbatore, Goa and Dehradun, adds Jones Lang LaSalle. Majority of these developments have 50-100 units in the form of residential complexes, with larger ones having over 400 units. The typology varies from 1 BHK-3 BHK units, villas and studio apartments. The units range from 500 sq ft to 2,500 sq ft in super built-up (saleable) area. Most of the projects cost less than Rs3.30 crore.

“However, there has been a recent shift with more mid and high-end projects being launched in the market, showing signs of maturity of the sector and growing confidence among developers to launch niche projects,” says the report.

The report identifies social stigma, affordability, lack of manpower and absence of pro-elderly living standard laws as the main challenges facing the senior citizens living segment. Keeping in mind the needs of the elderly with progressing age, Jones Lang LaSalle has identified four kinds of living solutions: independent living, assisted living, skilled nursing care and continuing care communities (CCRCs). “CCRCs are yet to see a presence in India although a few corporate groups have now designed blue prints to come up with such projects,” says the report.

For urban areas, small-scale CCRCs would be most viable; where as for peri-urban and sub-urban settings, middle-scale and large-scale CCRCs would do. The report says that realtors should keep in mind the physical, medical and emotional problems the elderly face while developing projects. The report says that having a healthcare partner must be mandatory, and the projects should offer flexibility in disposal models and pricing to be affordable to the elderly.

However, the report says that there is a need to set up a working committee which would draft a set of development controls relevant to senior living projects. “Senior living projects, by virtue of their unique characteristics, should not be given the same FSI or development controls (E.g. density norms) as given in residential projects,” it says.

As per Census of India projections, elders would comprise 12.4% of total population in 2026 and 19.7% in 2050. In 2011, India had about 76 million seniors above the age of 60 years and it is expected that this figure will grow to 173 million by 2025, further to 240 million by 2050. Interestingly, by 2050, it is estimated that the number of dependent adults in India will be at par with the number of dependent children.

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