India Ratings and Research (Ind-Ra) has said that the recent government's demonetisation initiative is expected to derail the growth of the cement sector.
Commenting on the issue, an Ind-Ra Official told the media, "Cement production is likely to grow by around 4 per cent in FY17; as against our earlier estimation of 4 to 6 per cent growth for FY17. We expects the credit profile of pan India cement players and strong regional players to remain stable; however the credit profile of small and medium cement companies, with high debt levels will come under stress in the next two quarters."
“The impact of this policy measure will flow to the economy mainly through the real estate/construction sector, which has strong linkages with sectors such as cement and steel and they will turn credit negative in the short-run,” he added.
As per reports, the lower cement output for FY17 is expected due to the fall in production of the sector in the month of November-December 2016. Cement production has grown by 4.3 per cent during April-November 2016 and it recorded a growth of 0.5 per cent in November 2016, 6.2 per cent in October and 5.5 per cent in September last year.