India Ratings cuts growth outlook for cement on demonetisation impact
Mumbai: India Ratings and Research revised down its growth estimates for India's cement sector to 3%-3.5% from 4%-6% earlier for the next financial year, citing the negative impact of demonetisation.
India banned currency bills of higher denomination late last year with the intention to suck the access cash from the economy into the banking system and punish cash hoarders who were illegally functioning outside the tax net. The cancelled 500- and 1,000-rupee bills made up for 86 percent of country's cash circulation.
The rating agency maintained a 'stable' outlook on Indian cement manufacturers for the next financial year, citing expected stable demand on the back on increase in government expenditure despite increased in input costs.
The rating agency said it expects the credit profile of cement manufacturers to remain stable on stable operating profitability and in the absence of debt-led capital expenditure.
It expects the cement industry to grow 4%-5% in 2018 fiscal, driven largely by the demand stemming from infrastructure activities and a revival in housing demand in rural areas, both led by government spending.
The rating agency said it believes that a 38% increase in the allocation of funds towards the housing sector under Pradhan Mantri Awas Yojna and 23% increase in spending of the ministry of road transport and highways to Rs. 290 billion and Rs. 649, respectively, would increase cement demand in FY18.
India banned currency bills of higher denomination late last year with the intention to suck the access cash from the economy into the banking system and punish cash hoarders who were illegally functioning outside the tax net. The cancelled 500- and 1,000-rupee bills made up for 86 percent of country's cash circulation.
The rating agency maintained a 'stable' outlook on Indian cement manufacturers for the next financial year, citing expected stable demand on the back on increase in government expenditure despite increased in input costs.
The rating agency said it expects the credit profile of cement manufacturers to remain stable on stable operating profitability and in the absence of debt-led capital expenditure.
It expects the cement industry to grow 4%-5% in 2018 fiscal, driven largely by the demand stemming from infrastructure activities and a revival in housing demand in rural areas, both led by government spending.
The rating agency said it believes that a 38% increase in the allocation of funds towards the housing sector under Pradhan Mantri Awas Yojna and 23% increase in spending of the ministry of road transport and highways to Rs. 290 billion and Rs. 649, respectively, would increase cement demand in FY18.
