C. OUTLOOK

CEMENT

Cement consumption has a strong correlation with GDP growth rate and rise in per capita income. Consensus among analysts is that the cement sector will be seeing strong production and consumption growth of 10% a year in the medium term. Infrastructure and construction, the two strategic sectors for the cement industry, are performing well. The scope for consumption growth is underpinned by the fact that the Indian per capita cement consumption is only 135 kg against the world average of 320 kg. Similarly, India's annual per capita cement production of 0.14 tonne is significantly below the world average 0.4 tonne. These are all pointers to consumption and production growth opportunities in India.

TYRE

The fortune of the tyre industry is linked to the automobile and transportation sectors and the outlook for the industry looks good primarily due to highly encouraging growth in vehicle demand. The world's leading automobile companies are all here to take advantage of the growing Indian market.

RAYON & TRANSPARENT PAPER

It is expected that the demand of end products made of VFY would be more or less steady and the industry would be able to maintain the growth momentum. But the outlook of Transparent Paper business is not that encouraging.

The demand for various chemical products will also be steady with improved realizations.

SPUN PIPES

With emphasis on rural water distribution projects and thrust on investment in infrastructure development, the demand for spun pipe will continue to be buoyant. The market of C.I. Spun Pipe is good and is expected to remain like that in the next financial year. Government bodies are, however, shifting from Cast Iron pipe to Ductile Iron pipe, which will adversely affect the long- term prospects of this industry.

HEAVY CHEMICALS

Higher International price of Caustic Soda may push up price level & demand for the products in the new financial year.

D. RISKS AND CONCERNS

CEMENT

Availability of Coal both in quantity and quality is a major concern for the Cement Industry. Prices of imported coal are skyrocketing and that of coal from the open market are ruling very high. Growing cement and power capacity may further aggravate the situation.

The Cement industry is heavily dependent on rail transport for outward movement of cement and clinker and for inward movement of coal and other raw materials. Hence, adequate availability of wagons from the Railways is also a cause of concern.

The removal of import duty on cement import, when domestic manufacturers are loaded with heavy taxes ,may affect the otherwise bright outlook for the Indian Cement Industry and put the domestic industry to disadvantage.

Materialisation of new capacity in a short span and the recent ban on export of cement and clinker may put pressure on prices of Cement.