Construction boom spurred cement industry growth in 2004

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New Delhi, Dec 29: Propelled by the boom in construction sector, the Rs 30,000 crore cement industry recorded a growth of over 7%, even though a slump in prices was seen towards the end of 2004.

Intense construction work of road and highways during the year spurred demand for cement, though the transporters’ strike came in the way of higher growth by affecting despatches of cement to various destinations.

The positive factors led to fresh investment plans in the sector as several companies realised the potential of creating new capacities due to sharp increase in demand.

The year also saw the successful de-merger of Larsen and Toubro’s (L&T) cement division in favour of Grasim Industries.

L&T demerged its 17.5 million tonne cement division after rechristening it as Ultra Tech cement in favour of Grasim.

This made Aditya Birla group company the eighth largest global player with 31 million tonne installed annual capacity.

The Birla group also announced a Rs 200 crore expansion plan for raising capacities at various plants by two million tonne through debottlenecking in the next two years.

ACC made its intentions clear that it wants to tap the lucrative Chinese market although cement exports from India are yet to make to any mark in the global arena.

The Ambuja group also took a major decision to invest Rs 100 crore to set up a cement grinding plant at Dadri in Uttar Pradesh during the year.

The year also saw Grasim’s initiatives to strengthen its ready mix concrete (RMC) wing by announcing its intention to set up 200 RMC units in the next 2-3 years.

Extended rainy season and consequent fall in construction activities from July to September affected demand for cement.

Fears were expressed that with the change in guard at the Centre, the focus would shift towards creating disposable income in rural areas rather than creating physical assets.

Finance minister P Chidambaram, however, announced that the Golden Quadrilateral and other rural roadway development projects would go ahead as per scheduled.

It is also felt that the phase of housing boom witnessed during the last couple of years, seems to have mellowed down a bit during the second half of the year.

Growth in housing industry seems to have shifted gear as the rate of interest that touched as low as 7% has shown signs of moving up.