Real Problem Is Demand In Market, Not Production: Shree Cement’s HM Bangur
While the central government is considering allowing certain manufacturing and services to resume to kick-start the economy, Shree Cement Ltd.’s HM Bangur said demand and not production is the real problem.
“The government has allowed us to start production after 20th, but we don’t have the market as there is fear in the minds of labourers,” the managing director at the cement maker told BloombergQuint in an interview. “We can start but we cannot store the production. Volumes have to move out every hour. Till there is demand in the market, restarting doesn’t mean much.”
The commerce ministry had sent recommendations to the home ministry to allow certain industries, including heavy electrical items, steel, cement, telecom equipment, paints and fertiliser plants, among others, to resume operations with restrictions to kick-start the economy and avoid job losses at a time the government extended the nationwide lockdown through May 3 to contain spreading of the coronavirus pandemic.
Bangur expects a 15-20 percent contraction in demand for the financial year ending March 2021. For April alone, he estimates the demand to drop 70-80 percent and the volumes to be “really bad”. Volumes got impacted by 25-30 percent in March 2020. Bangur expects demand to come in only after a gradual recovery in construction.
Though the company does not see any material impact due to non-payments from dealers, Bangur said the cost of production will go up substantially. He expects “good support” from the government for the sector, while distribution of money is to be seen.
WATCH | Shree Cement’s HM Bangur on Covid-19’s Impact On Cement Sector