Government's Infra Thrust Biggest Demand Driver for Cement

The cement industry has been de-growing over the last few years. In India, fundamentally very interesting themes are emerging which are similar to countries which have grown faster than us. Take China, for instance. Demand in the initial phase of growth was driven by growth in infrastructure, followed by growth in industrial and commercial segments. In India, today, the biggest demand driver is the government's thrust on infrastructure.

When do you see cement demand picking up? There are three components which would drive demand for cement. First, it is housing, which is 60-65 per cent of the total demand. Then there is infrastructure, which forms 20-25 per cent of the total demand. And the remaining demand comes from commercial and industrial sectors. What we have observed is that in whichever areas infrastructure has done well, the housing segment has also done well. In the commercial/industrial segment, it is a matter of time that cement demand will pick up.

The demand momentum is there. It is a bit scattered now. In certain regions, the growth momentum is quite high. In the east and the south, cement demand momentum is quite high, thanks to a pickup in the infrastructure segment. There has been reasonable demand growth from the roads segment in Maharashtra. In the next year, we can expect 5-6 per cent growth in cement demand.

Will 'housing for all' agenda be a major driver of growth in cement demand? Yes. Since the Budget date is advanced, the government has full 12 months to spend. Certainly, this is a big advantage in terms of creating sustained cement demand. We have observed that in the past one year, the low-cost housing segment has done extremely well. We found that all India cement consumption in low-cost housing segment has gone up by 40 per cent to 20 MT.