The cement consumption projections by National Council of Applied Economic Research (NCAER), on a conservative basis, have placed the cement demand at 225 mn tonne by the fiscal year (FY) 2011.

If the government went ahead with infrastructure projects as planned, consumption was likely to be much higher at 291 mn tonne.

The pressure on supply was expected to be eased by increased manufacture of blended cement.

Assuming that announced expansion and greenfield projects did not face time overrun, capacities likely to go on stream in the next 3 years were around 59.8 mt. including capacities of standalone grinding units, said a recent report issued by CARE.

The planned capacity additions in the next three years could take care of the projected demand if industry operated at utilisation levels of above 85 per cent.

However, increased blending could lead to supply overhang in the later years.

CARE indicated that prices would firm up in the medium term.

While cement prices in world markets including neighbouring Pakistan, Sri Lanka, Bangladesh, Afganistan were in the range of Rs 400-500 per 50 kg bag, prices in India were lower.

However, cement was cheaper in China, Indonesia and Thailand.

Cement prices in India were expected to stabilise at around Rs 200-230 per bag though prices in the past one year had increased owing to rising demand and costs.

The CARE report for example indicated that with the trend of consolidation in the sector leading to presence of large players, a pricing discipline would develop.

Demand for residential, commercial and retail space was expected to be strong at least till 2010, according to a recent report by the global real estate consulting group Knight Frank, with the sector growing at 30 per cent per annum overall.

Investment in residential segment alone could be above Rs 90,000 crore over next five years with the number of households estimated to be built being above 5 million over next five years.

In retail space, India was likely to be fifth among 30 emerging retail markets with predicted 20 per cent growth rate for the organised retail segment by financial year 2012.

Presently available mall space of about 30 million square feet (mn sqft) in India was expected to increase to 100 mn sqft by FY10.

Out of this total mall space to be developed, around 75 per cent was to be in cities like Mumbai, Pune, Bangalore, Hyderabad and NCR cities, and the rest will in tier-2 and tier-3 cities like Nagpur, Ahmedabad, Chandigarh and Ludhiana.

The number of malls to be developed in the country over next three years will be above 300.

Cap ore exports: Steel firms for capping ore exports
Business Standard

Miners making money at the cost of the nation, alleges ISA.

Making a case for capping iron ore exports, steel-makers said export volumes of the mineral had been swelling and its prices increasing globally, threatening expansion plans of the domestic industry.

“Iron ore is a non-replenishing commodity. What do we do if it gets exhausted? All our expansion plans will put on hold if the country is forced to become the net importer of ore. We need to analyse what economic sense it makes for the nation to allow exporting of the mineral,” a source in the Indian Steel Alliance (ISA) said.

“Iron ore exporters had already increased the prices by $21 a tonne between January and May, which is an increase of 36.20 per cent. Last month, ore exports from ports were 8.01 mt against 7.37 mt in May 2006, amounting to a growth of 8.7 per cent. This gives them a substantial growth in their top line despite the appreciation of the rupee,” the source said.

Citing the Indian Ports Association (IPA) data, sources pointed out that total exports from ports were 7.37 mt in April against 7.02 mt in April 2006, leading to a growth of 4.8 per cent. Miners, however, claim that exports have dipped by 10 per cent due to rupee appreciation, imposition of export duty and recent increase in freight charges.

“According to the data provided by the Indian Ports Association, iron ore exports have increased and will continue to increase,” the ISA sources countered.

Sources said iron ore spot prices in January were $58 and this month the prices have already touched $79.

Pointing out that no other industry in the country generated profits like the iron ore sector, the ISA sources said, “A classic example is the fourth quarter profit of NMDC. Being a PSU, if NMDC can yield an operating profit of over 90 per cent and net profit of around 57 per cent, one can easily guess the profitability of standalone unlisted private miners.”

Demanding a cap on iron ore exports, they said it had been witnessed that standalone iron ore mining did not require any substantial capital investment as in the case of steel plants. Moreover, the state and the central government exchequers do not get the revenue realised from the steel sector.

“One tonne of iron ore export gives the government Rs 17, whereas one tonne of steel produced gives Rs 4,300 as revenue, which includes VAT, excise and the royalty.

Employment-multiplier ratio between standalone mining vis-a-vis steel-making is 1:20. This is the reason that you do not see any listed companies under the mining sector except companies such as NMDC and Sesa Goa,” they pointed out.

Standalone mining not only leads to safety hazards, but also paved way for poverty, child labour, Naxal activities and other anti-social elements, besides enabling a few private mine owners to accumulate personal wealth at the cost of economic growth and national interest, they contended.

Centre aiming to get $180 billion FDI in infrastructure; SEZ policy being finetuned
Financial Express

The government is aiming to obtain around one-third of the total $550 billion worth investment in the medium term in the infrastructure sector through foreign direct investment (FDI), minister of state for industry Ashwani Kumar has said.
In this regard, the minister said, the SEZ policy was being fine tuned to ensure transparency and employment opportunities for those who were displaced from the land for developmental projects.
He said emphasis was also being placed on the manufacturing sector in India to make it grow by 12% per annum by 2010 and generate additional 1.6 million jobs every year.

The minister was delivering the keynote address at a session on “Rapid emergence of India and China as global economic powers and their impact on the developed world” at an UBS CEO Forum in Florence, Italy, on Sunday. Kumar stated that the National Rural Guarantee Programme, the Bharat Nirman Programme and the Urban Renewable Programme in addition to a host of other initiatives were intended to generate large-scale employment for the unemployed youth of India. Other key participants in the session included Mukesh Ambani, CMD, RIL and Sanjay Chandra, MD, Unitech Limited.

Six-laning project hits roadblock
Business Standard

Contentious issues like land acquisition and sharing of toll seem to have put the approval of the new model concession agreement (MCA) for highway projects on hold. Industry players feel that the above-mentioned issues have not been properly addressed in the new MCA.

However, with the Prime Minister’s Office (PMO) emphasising on six-laning of the four-lane national highways, the ministry for road transport and highways seems to be in a dilemma.

The ministry recently approved five stretches coming under the Golden Quadrilateral (GQ) for the six-laning programme, to be implemented as per norms of the new MCA.

The ministry, in fact, does not have a choice in the matter, as the Prime Minister-led Committee on Infrastructure (COI) has approved the new MCA.

In its meeting held in April 2007, it had directed the ministry to award 2,995 km of stretches for six-laning under phase five of the National Highway Development Programme (NHDP). Now the PMO is studying the ‘contentious’ provisions of the new MCA before getting the Cabinet nod.

According to the new MCA, the National Highway Authority of India (NHAI) has to acquire 80 per cent of the land before the project is put up for bidding. The concessionaires argue that the time period for acquiring the balance land is not clearly specified in the new MCA.

DS Constructions General Manager Rafi Qadar Khan said, “The issue of land acquisition has not been properly addressed in the MCA. The industry has been demanding that a major part of the land should be acquired before awarding the contract, along with an undertaking to acquire the balance land within a specified time frame. This time frame is not clearly specified in the new MCA. Land acquisition has been the single largest reason for delay in projects across the country.”

He further said that the new MCA also did not clearly mention the percentage of toll revenue that should be shared between the NHAI and the concessionaires. Echoing similar views, Soma Enterprise Ltd Director Ankineedu Maganti said, “NHAI should expedite the process of land acquisition so that the tempo of awarding projects is maintained.”

He added that the concession agreement between the NHAI and the contractor should clearly stipulate the handover schedule for the balance land.