India has considered as the second largest producer of cement in the world after China. And after the deregulation of the industry in 1982, it has dragged huge reputed investors from both India and foreign. Apart from investors, the large infrastructure projects were also entered by it which converted cement industry into a higher growth trajectory. This growth in demand and production gives an imperative place to the SME’s (Small and Medium Enterprises) in the cement industry.
OPPORTUINITIES FOR SME’S IN CEMENT INDUSTRIES
Government Initiatives in the direction of New Schemes
- Projects by means of the new authorities such as housing for all, infrastructure spending, Atal Mission for Rejuvenation & Urban Transformation (AMRUT), concrete roads initiative & a hike in the allocation of finances to states are probably to see a good impact on the cement industry within the subsequent 4-6 months.
- Government’s initiative ‘Swachh Bharat ’has constructed a general of 1.09 crore bathrooms within the past 12 months, a positive direction for cement.
- The authorities’ recent consciousness on road projects & a boom in country allocations will pressure infrastructure & housing call for on the way to certain pressure the marketplace for the cement industry.
Swiftly increasing real property industry in India
- Speedily hiking real properties enterprises in India is anticipated to push the demand for cement
- Residential real estate demand is driven via growing population & developing urbanization
- Hiking income levels are striking to better demand for luxurious initiatives
- Demand for economical housing is developed that allows you to meet the call for from lower profit organizations
Funding in infrastructure:
- India’s investment in infrastructure is envisioned to double approximately USD1 trillion which is approximately 9 percent of GDP, throughout the twelfth Five Year Plan compared to the previous plan.
- Infrastructure is the fundamental physical structure of buildings, roads, and investment in infrastructure is the primary growth driver.
Industrialization development in the country
- Infrastructure is a primary for the government’s monetary policy; funding from personal as well as public sectors is ready to grow sharply in the near term which might count on the demand of cement industry in India.
- The new city development undertaking will cognizance on the improvement of cities and towns of Spiritual and traveller significance, thereby hiking up the demand for cement.
Unmet and Rising call for
As India’s modern in line with capita consumption of cement is an awful much lesser than the developed & different developing economies, there’s a large enterprise opportunity to cater to the unmet and growing demand.
Cement manufacturing is a standardized perspective, which does not offer any technological benefit to precise gamers. The industry is characterized with the aid of mature and strong technology with most effective minor improvements taking area over the years. The financial profitability of a unit relies upon on operational performance other than a general demand for supply scenario in the region. Any innovations within the manufacturing manner may be without difficulty diffused throughout the industry. Thus get entry into the modern-day generation isn’t an access barrier for SMEs coming into the world.
Introduction of Amma cement
The Government of Tamil Nadu has released economical cement branded ‘Amma’ Cement. The sale of the cement commenced out in Tiruchiat Rs 190 a bag via the Tamil Nadu Civil Supplies Corporation (TNCSC). Sales started in five Godowns of the TNCSC and will be turned out in stages with the low priced cement to be held across the nation from 470 shops. This cement is supplied on a sponsored cost by procured it from inside the country. This scheme has the power to create massive possibilities for producers in the country.
Adoption of cement as opposed to Bitumen
The Government of India has planned to adopt cement in place of bitumen for the construction of all new street initiatives on the grounds that cement is extra- long lasting and less expensive to preserve than bitumen inside the longer term. Again bitumen is mostly imported in crude form while cement is manufactured within the country making cement more demanded.
With the proposition to assemble one crore houses by way of 2019 for the homeless as per PM AwaasYojanais hiking up the allocation of Rs 15,000 crore to Rs 23,000 Crore, we assume to peer a boom in the demand for cement.
CHALLENGES FOR SME’S IN CEMENT INDUSTRIES
ü Extremely challenging industry
The cement industry is tremendously competitive in nature with the larger gamers being greater ruling and calling the shots. They restoration the price of per bag of cement, as a consequence making the SMEs without an alternative than to declines prices via greater productivity, a decline in power cost and logistics expenses. Due to this, the profit margins of SMEs are coming down than the larger organizations.
ü Sharp scarcity of coal
Coal is one of the main raw materials required within the cement enterprise. In the last few years, there was a steep drop in the delivery of coal to the cement industry approximately from 70% to almost 39% right now, specifically due to the diversion of coal to the power region. Cement agencies, therefore, were pressured to open market buy or imported coal which works out to almost 2 to 3% times better than the home prices. With the increasing cost of coal and different input material together with diesel, and many others, the production value of cement has gone up considerably which is not permissible SME’s to grab a top place in cement industries.
ü Convenience and Cost
The cement enterprise, one of the maximum polluting industries, fails to fulfill with the new pollution norms notified in May 2016, the deadline for which changed into 31st March 2017. And for SMEs to comply with the pollutants is costly and decreases their overall income margin.
ü Sharp fall in cement exports
With the high incidence of authorities levees, infrastructure constraints at ports and the regulation of the authorities supplying encouragement for import of cement with zero custom duties, the export of cement and clinker from India has been steadily and constantly declining from approximately 9 million tons to 3.5 million tons, notwithstanding the reality that Indian cement enterprise is presently having the substantial extra potential of cement and clinker.
ü Comeback of state-run cement manufacturing unit
The Government of India is making plans to revive the state-run cement factories throughout India, for you to provide a boost to street and reality tasks by means of bringing down their construction expenses. These country run factories ensure cement at a backed rate and for that reason create massive opposition for the SMEs.
ü Hike in Clean Energy Cess
The Schedule Rate of Clean Energy Cess levied on coal is being hiked up from approximately INR 100 per ton to Rs.400 per ton. This increase has resulted in a hiked up of power and fuel cost in the cement industries.
Though there are not many demanding situations that the SMEs overlook in the cement industry, yet the opportunities are somehow bigger for the SMEs to grow undoubtedly inside the destiny. Government projects like PM Awaas Yojana, to build 1 crore homes with the aid of 2019, or the unexpectedly hiking up real property enterprise might push the call for cement helping the cement enterprise to hike up in addition in future.