Indian cement companies are looking at trimming costs as a bearish trend in the realty market and slo-wer pace of infrastructure projects led to slow off-take in sales in the most crucial summer season.
“In the last three months, higher inflation and the lower demand for property due to costly home loans have impacted real estate and infrastructure projects – the key drivers of cement sales,” said G. Jayaraman, the executive president of Birla Corporation Ltd, who also chaired the Green Cementech 2012.
India is the second largest producer of cement in the world, with a total capacity to nearly 300 million tonnes.
The cement demand during FY11, however, grew sluggishly at 5.3 per cent — the lowest since 2003-04.
While the industry expe-cts construction to improve in the coming months, the companies are planning to improve their manufacturing efficiencies to cut down the input costs such as import coal, which has considerable eaten into the profits.
“Coal imports (a major energy source) are costing us about two-and-a-half times higher than the normal price,” said M.A Muthaiah, the president of Cement Manufacturers Association.
Higher levies imposed by mineral-rich countries like Indonesia have upset profitability of several thermal-dependent projects, including power projects, in India.
He said some companies have already innovated and technologies like clean development mechanism (CDM) have to be adopted. “We already have 42 CDM projects which have brou-ght down emissions significantly.”
The projected growth by the end of 12th plan is 400 million tonnes per annum (mtpa) while the Planning Commission has estimated it at 600 mtpa by 2020, said Mr Muthaiah.
However, a shift to energy efficient manufacturing could entail Rs 1,500 crore of investment for the industry, which is expected to cut greenhouse emission in the next three years.