Chances not bright for cement price to decline: JK Cements

Mudhol, Karnataka, Dec 8 (UNI) The price of cement, which had hardened during the last one year, may not show a decreasing trend in the near future in view of the heightened activities in infrastructure development and housing sector, JK Cement Chief Financial Officer A K Saraogi opined today.

Speaking to reporters after the ground breaking ceremony of the 3.5 MT cement plant, its first in South India, at Muddapur village, near here, he said that owing to the buoyant economy, cement consumption was likely to rise to 200 MT by 2010 from the present 160 MT with the annual growth rate crossing ten per cent.

''This will mean that there will be a number of vertical and horizontal expansion works taken up by the cement manufacturers in the country at an estimated cost of Rs 7,000 crore per annum in the next four years. The prices will be driven by demand. When there is such a huge demand, the price can only go up,'' Mr Saraogi reasoned.

The other reasons for the prices not likely to fall were the increasing input costs like coal, energy prices, labour and transportation.

Mr Saraogi said the 2010 Commonwealth Games in New Delhi would require seven to eight MT of additional quantity of cement, with the Government spending Rs 26,000 crore for construction of new facilities. This was apart from private spending which would see a number of hotels and other structures coming up in the capital.

Such a buoyant scenario in the sector had seen various foreign players like Holcim, Lafarge, Italcement and Heidelburg making a foray into India. Though they were not directly setting up plants, they had begun buying stakes in domestic companies, he said.

In South India, he said the demand was 70 MT while the production was 50 MT. ''This was the reason we are entering Karnataka. The demand in this State is 11 MT per annum, while the production is 10 MT. The location of our plant will be an advantage as it is nearer to the coast compared to other plants in the region. Andhra Pradesh, a surplus state in production, was the highest consumer of cement at nearly 24.89 MT, followed by Rajasthan which consumed 20.73 MT. The demand in South India will rise further.'' He said cement manufacturers supplied 35 to 40 per cent of their production to the Governments, which had to be supplied at five per cent less compared to the market price.

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