“Cement prices are likely to remain high in the coming months. The growth is expected to moderate as the base effect sets in. Prices are expected to recover and rise by 6.4% in FY11-12, after falling in the previous year,” CMIE said in its monthly review
Mumbai: Cement prices are expected to rule firm in the coming months due to rising input costs and manufacturing expenses, reports PTI quoting the Centre for Monitoring Indian Economy (CMIE).
“(Cement) prices are likely to remain high in the coming months. The growth is expected to moderate as the base effect sets in. Prices are expected to recover and rise by 6.4% in FY11-12, after falling in the previous year,” the think-tank said in its monthly review.
The prices are expected to average 3.8% higher in FY12-13, it said.
During the third quarter of FY11-12, power and fuel cost rose by 10.7% year-on-year (y-o-y) due to twin effects of higher coal prices (both domestic and imports) and cheaper rupee against the dollar.
Freight costs were also higher by 12.5% y-o-y due to increase in diesel costs and surcharge levied by the railways.
The cement price in Mumbai, one of the largest markets, shot up by Rs42 per 50 kg bag, from Rs248 in January 2011 to Rs290 in January 2012. The average price of cement bag was Rs292 in January 2012, CMIE said.
Meanwhile, the demand of cement is expected to improve in the coming months and growth in despatches is likely to be modest at around 4% during the March 2012 quarter, the research outfit added.
Leading cement producer ACC said its production for February 2012 stood at 2.14 metric tonnes per annum (MTPA) as against 1.97 MTPA in the corresponding period in 2011. The despatches increased from 2 MT in February 2011 to 2.15 MT last month.
Ambuja Cements’ output shot up from 17.91 lakh tonnes in February 2011 to 19.93 lakh tonnes in February 2012. The despatches rose from 17.74 lakh tonnes in February 2011 to 20 lakh tonnes in February 2012.
Cement production of Aditya Birla Group-owned UltraTech moved up by 3.02% at 357.28 lakh tonnes for the period April-February FY11-12 as against 346.82 lakh tonnes during April-February FY10-11.
The company’s despatches moved up by 3.2 per cent at 357.41 lakh tonnes in April-February 2011-2012 compared to 346.33 lakh tonnes in the corresponding period last fiscal.
Cement output of UltraTech for February 2012 stood higher by 4.96% at 34.68 lakh tonnes and despatches at 35.17 lakh tonnes, up 5.67% over February 2011.
The cement industry expansion is set to moderate, with only 31 MTPA of capacity expected to be added this fiscal, much lower than 55 MTPA added in 2010-11, CMIE said.
However, a slowdown in demand has become a bigger concern, Angel Broking analyst Sourabh Taparia said.
“The sector should be given an industry status that will enable developers to have access to debt lending at competitive rates from banks and financial institutions,” said Sunteck Realty chairman and managing director Kamal Khetan
Mumbai: Developers in the realty sector, which is facing severe credit crunch due to higher interest rates, expect the government to relax norms for repatriation of foreign direct investment (FDI) and external commercial borrowings (ECBs) in the forthcoming Budget for 2012-13, reports PTI.
“The real estate sector has witnessed rapid growth in the recent past. However, raising funds continues to be a big constraint for us. We expect some policy decision on FDI in real estate that will benefit the market greatly,” Puranik Builders managing director Shailesh Puranik said.
The industry expects the Budget, to be announced on 16th March, to relax norms for FDI and ECBs, especially for township projects that will give developers source funds at a much reasonable cost.
Currently, it is not possible for foreign investors to repatriate real estate investment proceeds for three years, which is hampering investment flows, Jones Lang LaSalle chairman and country head Anuj Puri said.
“Relaxing norms for repatriation of realty FDI is the need of the hour. The market environment needs to be rendered more investment-friendly,” he said.
Besides this, the sector is hoping to get industry status as it is a major driver for economic growth and generates jobs across various verticals.
“The real estate sector is the second largest employer contributing 5% to the gross domestic product (GDP) and generating large-scale jobs across its varied verticals.
“The sector should be given an industry status that will enable developers to have access to debt lending at competitive rates from banks and financial institutions,” said Sunteck Realty chairman and managing director Kamal Khetan.
Realty players are also expecting sops for affordable housing and want it to be given priority in lending in order to address the acute housing shortage.
“We expect revision in tax for affordable housing projects in order to address the acute housing shortage in the country. The government should consider abolition of service tax for residential apartments up to Rs50 lakh to promote affordable housing.
“Besides, affordable housing should be classified as priority sector lending to ensure easy availability of funds for projects,” Housing Development & Infrastructure (HDIL) vice-chairman and managing director Sarang Wadhawan said.
Developers are also expecting the government to increase the subvention of 1% on interest rate to be available to broader price band.
They said that while tax incentives should continue for developers in the affordable segment, the subvention of 1% on interest rate should be available to broader price band.
To benefit home buyers, it is necessary that the last year’s interest rate subsidy of 1% is continued. The limit for the scheme should be raised from Rs20 to Rs30 lakh due to increase in cost of raw materials and various taxes incurred during home buying,” Sanghvi Group director Shailesh Sanghvi said.
NBCC proposes to make an initial public offer of 1.2 crore equity shares of face value of Rs10 each, the draft paper said but did not specify the total capital that the firm planned to raise through IPO
New Delhi: With one more issue of National Building Construction Corporation (NBCC) in the pipeline, the government will be able to achieve only a little over 36% of the disinvestment target of Rs40,000 crore in the current fiscal, reports PTI.
The government had filed draft prospectus with the Securities Exchange Board of India (SEBI) for 10% stake sale in NBCC last month and the approval from the market regulator is expected shortly.
“We are working hard to bring the NBCC issue in the current fiscal. Most probably the IPO will come after 16th March,” an official source said.
NBCC proposes to make an initial public offer (IPO) of 1.2 crore equity shares of face value of Rs10 each, the draft paper said but did not specify the total capital that the firm planned to raise through IPO.
“We will conduct road shows in Delhi, Mumbai, Chennai and Singapore between 7th and 9th March. The Empowered Group of Ministers will decide on the pricing of the issue,” the official added.
So far in the current fiscal, the government has been able to raise about Rs14,000 crore through disinvestment in public sector undertakings (PSUs), against the budgeted Rs40,000 crore.
While Rs1,145 crore was raised through an follow-on public offer (FPO) of PFC, Rs12,767 crore came from 5% stake auction in ONGC.
The ONGC stake auction was the first such issue after the market regulator SEBI allowed promoters to sell up to 10% stake through the auction window of the stock exchanges.
Although there was confusion regarding the ONGC auction as the bids could not be uploaded because of technical reasons, the government expressed satisfaction over the auction process and said it would consider more stake sale through the same route after analysing it.
The government has already identified a host of companies as possible candidates for disinvestment. These include Oil India, SAIL, BHEL, Hindustan Copper and GAIL among others.
Sources said the government is considering Oil India (OIL) as the next possible candidate for disinvestment through the auction route. However, it is unlikely that it could happen in the current fiscal.
BHEL which was also under consideration for stake sale through auction route has been postponed to next fiscal.