Rate cut to boost cement demand
The Financial Express, March 5, 2009, Page 2
fe Bureau
The 207-million tonne cement industry, which was concerned about the nearing oversupply situation and sinking demand of cement that is exerting pressure on earnings, sales realisation and margins of cement manufacturers, gave a thumps up to the much needed rate cut.
Vinod Juneja, MD of Binani Cement Ltd, said on Wednesday, “This is a welcome move by RBI. The 50 bps cut in repo rate cut will boost the demand for cement as housing loan is now expected to become cheaper and affordable. This will boost the housing demand in turn benefiting the demand for steel and cement.”
Meanwhile, housing which accounts for about 65% of the cement consumption in the country is also witnessing a slowdown resulting in the fall of cement consumption in real estate, as dearer home loans on account of high interest rates and high real estate prices are leading to a decline in housing affordability.
However, Anand Gupta, chairman, Builders Association of India was of the view that, “From October 2008 till March 2009 the government had almost five times made corrections in the repo rates and cash reserve ratio. By announcing such cuts RBI has injected Rs 3 lakh in the system but the realty sector is still deprived of this benefits. This is because of the red tapism in the system that banks do not adhere to the new norms. There should be a supervisory authority to keep a check on it.”
There is a visible slowdown in the real estate and infrastructure sector on account of the current liquidity crisis. This has resulted in a slackening of demand for cement. Similarly steel industry has also been hit by the global slowdown impacting the demand and prices for steel.
Industry hopes that this move will add as filler to industry which is reeling under a slowdown pressure.
Says Pujit Aggarwal, MD of Orbit Group of Companies, “There is some positivity coming in the real estate sector currently but just a 50 bps cut has come as a bit disappointment. What will truely boost the housing sector is the fixed interest rate (7% or 8%) charged for the entire period of loan from the customers and not keep changing for the first year and the next year.”
Similarly Sunil Khandelwal, CFO of Alok Industries Ltd, “This is a positive move and was expected by the industry. This is a clear indication to the banks to reduce their PLR and once the PLR is reduced the industry will get the benefit of the reduced interest cost.”
RBI on Wednesday cut its short-term lending and borrowing rates by 50 basis points each, saying the country’s growth trajectory had been hit more than expected by the global financial crisis and downturn.
The Financial Express, March 5, 2009, Page 2
fe Bureau
The 207-million tonne cement industry, which was concerned about the nearing oversupply situation and sinking demand of cement that is exerting pressure on earnings, sales realisation and margins of cement manufacturers, gave a thumps up to the much needed rate cut.
Vinod Juneja, MD of Binani Cement Ltd, said on Wednesday, “This is a welcome move by RBI. The 50 bps cut in repo rate cut will boost the demand for cement as housing loan is now expected to become cheaper and affordable. This will boost the housing demand in turn benefiting the demand for steel and cement.”
Meanwhile, housing which accounts for about 65% of the cement consumption in the country is also witnessing a slowdown resulting in the fall of cement consumption in real estate, as dearer home loans on account of high interest rates and high real estate prices are leading to a decline in housing affordability.
However, Anand Gupta, chairman, Builders Association of India was of the view that, “From October 2008 till March 2009 the government had almost five times made corrections in the repo rates and cash reserve ratio. By announcing such cuts RBI has injected Rs 3 lakh in the system but the realty sector is still deprived of this benefits. This is because of the red tapism in the system that banks do not adhere to the new norms. There should be a supervisory authority to keep a check on it.”
There is a visible slowdown in the real estate and infrastructure sector on account of the current liquidity crisis. This has resulted in a slackening of demand for cement. Similarly steel industry has also been hit by the global slowdown impacting the demand and prices for steel.
Industry hopes that this move will add as filler to industry which is reeling under a slowdown pressure.
Says Pujit Aggarwal, MD of Orbit Group of Companies, “There is some positivity coming in the real estate sector currently but just a 50 bps cut has come as a bit disappointment. What will truely boost the housing sector is the fixed interest rate (7% or 8%) charged for the entire period of loan from the customers and not keep changing for the first year and the next year.”
Similarly Sunil Khandelwal, CFO of Alok Industries Ltd, “This is a positive move and was expected by the industry. This is a clear indication to the banks to reduce their PLR and once the PLR is reduced the industry will get the benefit of the reduced interest cost.”
RBI on Wednesday cut its short-term lending and borrowing rates by 50 basis points each, saying the country’s growth trajectory had been hit more than expected by the global financial crisis and downturn.
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