Mail Today Bureau Last Updated: July 19, 2018 | 11:04 IST
Industrialist Kumar Mangalam Birla said on Wednesday that the present positive outlook gets a bit dimmed when one views the increasing trade protectionism, rising crude prices, geo-political risks and the uncertainty about tightening monetary policies in the advanced economies.
Addressing shareholders at the annual general meeting of the group flagship Ultratech Cement, he noted that the economy has shown considerable resilience to the transitory effects on demonetisation and GST rollout. Infrastructure projects like Bharatmala, new airports and metros, along with affordable housing and smart cities will stoke growth in the medium-term, he explained.
However, there are near-term challenges. Rising oil Prices and inflation, firming bond yields and a widening current account deficit are areas of concern. The ongoing global trade war, more so between the US and China, are worrisome and will have a spillover negative effects on our economy, Birla pointed out.
Noting that the domestic cement industry has seen demand pick-up of late, he said after seven years the industry is likely to report good growth this year.
Government thrust on infrastructure development remains the key growth driver. Revival of rural housing demand and push to low-cost housing have supported strong volume offtake, Birla said.
In 2017-18, the industry was hit due to ban on sand mining and pet-coke in major states impacted construction activities. The massive duty hike on imported petcoke from 2.5 per cent to 10 and the increase in diesel prices pushed freight cost upwards.
This resulted in higher operating costs and impacted the margins, he said.
However, the cement industry is expected to post 8 per cent growth in FY19 due to slew of infrastructure projects, Birla said.