Companies & Sectors
That sinking feeling
One of the best performing sectors in India’s growth revival is the cement sector. However, the industry is headed for overcapacity and prices are likely to come down. One immediate indication of this has surfaced in Andhra Pradesh (AP). Cement prices continue to remain low in AP since August 2009. Lack of demand and over-capacity has been responsible for this. While cement industry players expect demand to improve, analysts fear it may worsen over the long run.
 
Cement prices fell to Rs170 per bag in August 2009 from a peak of Rs235 per bag in April 2009 in AP. Cement prices continue to remain low at Rs170 per bag since August 2009. A cement industry official confirms that the cement prices for the present day are at a low of Rs170 per bag.
 
While industry sources believe the scenario is the result of low demand due to the floods in AP, it may well be the first indicators of oversupply.
 
In the next three months, analysts believe that prices may fall further in the other regions of India. “Prices are expected to fall not particularly in this region, but also in the remaining regions of India. The prices may fall steadily in the next three to six months,” said Amit Srivastava, research analyst, Karvy Stock Broking Ltd. “There could be a further correction in cement prices,” said R Gurumoorthy, executive director, corporate communications, Dalmia Cement (Bharat) Ltd.
 
In spite of low cement prices, the units in AP have been able to maintain profits due to low operating costs, analysts believe this might prove difficult for the remaining regions in India.“ Other regions are not in a position to reduce operating costs in a similar way as AP,” said Mr Srivastava.
 
Analysts believe the worst affected would be south India, as the fall in prices would be soon witnessed in the neighbouring states of  AP. “The excess supply from AP will be diverted to other regions like Tamil Nadu, Maharashtra, and Karnataka and later to the eastern parts. Thus, an excess supply is expected to occur in these regions.”
While the spokesperson for Dalmia Cement cites low demand and not over-capacity as the main reason for fall in prices, analysts look at it as a combined effect of both lack of demand and over-capacity.
 
“The reason for the fall in prices is not merely a lack in demand but also the overcapacity happening in that region. The prices will not fall so low only due to lack of demand, it is more due to the over-capacity. Even if they operate at 50% to 60% capacity utilisation there is an excess supply in the market,” added Mr Srivastava.
 
“Cement capacity in expected to grow by 8% to 10%. These capacities were planned on an expectation that demand will also grow. Current demand for cement has been driven by spending on IT projects and residential projects. For the capacity addition planned for 2010, the industry needs incremental demand over the existing construction activities in order that total cement demand grows at an expected 10% rate,” added the analyst.
 
Delayed public spending in the form of planned government infrastructure projects has also adversely affected the expected cement demand. “The main factor in the current fall in cement prices has been a delay in the offtake of public spending,” said Mr Gurumoorthy.
 
“There has not been sufficient demand in AP due to delay in expected government housing projects and IT projects. Later, the floods also acted as a spoilsport,” added Mr Srivastava.
 
All over India, 47.5 million tonnes (MT) of cement capacity is expected to be added in 2010 and 19.2MT by 2011. Out of this, the southern region is expected to add around 20MT in the year 2010. For the year 2011, the highest capacity addition of 7.8MT will happen in the eastern region
 

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Mobile banking: A safe way to transact?

Mobile banking in India is still in its infancy, but gaining in popularity. However, the primary question for any consumer remains security of the transactions. Moneylife gives you some basic precautions for safe transactions

Given the convenience and the number of mobile phone users in India, mobile banking is bound to pick up. Experts believe the two simple precautions for safe transactions through a mobile phone are secrecy and protection of mPIN and mobile number.  But there are many more details about mobile banking that you ought to know.
 
Currently, there are three modes of transactions—Short Messaging Service (SMS), Client Applications and Mobile Web. Banks offering mobile banking tie up with various mobile providers to offer the back-end solutions. PayMate is a mobile service provider offering back-end solutions to 24 leading banks and has seen a nearly 100% rise in subscribers since its inception.
 
In India SMS transactions are the most popular for conducting basic bank transactions. According to Ajay Adiseshann, founder and managing director, PayMate, “All basic banking transactions such as balance information, cheque book request etc can be accomplished via SMS or on mobile-based applications that some banks use.” Due to the use of a two-factor authentication process of mobile number and mPIN authentication over Interactive Voice Response (IVR), the risks involved in using mobile banking are lower than other modes of transactions. In mobile banking there is enhanced risk control when a consumer enrols for this facility he/she provides the mobile number through which the transactions have to be carried out.
 
mPIN is mobile PIN which works in the same manner as in the case of credit and ATM cards which is provided by the banks.  To carry out a transaction the person has to provide his mPIN. And hence the secrecy of the mPIN is of the utmost importance and a subscriber to mobile banking must pay extra attention to it. The assuring factor according to Mr Adiseshann is that, “The mPIN is never saved in any form on the handset or in any application and no financial details are divulged during the transaction process.”
 
But a customer shouldn’t save the mPIN in any manner on his/her mobile phone or share the same or have any sensitive information on the device. A word of caution from consumerforum.com, “Be aware of scammers sending SMS messages purportedly from your bank, requesting your personal identification number, or PIN; account number or other information. Any such request for information is certainly fraudulent. To make it easier to determine if the text messages are from your bank are authentic, add the bank's short code to your contact list under the bank's name.”
 
Banks associate the accounts of the holder with the mobile number provided to the bank and hence it becomes very important to notify the change of number. The most important precautions for a customer according to Mr Adiseshann are to “ensure secrecy of his/her mPIN used for transaction authorisation and to update the bank if he/she wishes to change the mobile number linked to the bank account.” If the customer loses his mobile phone, then the same must be notified to banks for stopping the updates and to de-link the number from the account.
 
These are the measures customers must carry out to protect their money and for convenient transactions: -
1. Do not divulge the mPIN to anyone or save it in any form on your phone
2. Ensure the bank is informed if there is any change in your mobile number and the account is linked to the new number
3. Set the phone to require a password to power on the handset or awake it from sleep mode
4. Notify the change of number to the bank to update the information.
-Aditya Kshirsagar [email protected]

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