Cement demand outlook this fiscal is expected to remain healthy, driven by rising investment in construction and real estate sectors, according to Centre for Monitoring Indian Economy (CMIE). CMIE expects cement production to grow 11.5 per cent and cement consumption 12 per cent during FY09.
The total annual installed capacity of the cement sector increased by about 22 million tonnes during FY08, of which 12.7 million tonnes were added during the March 2008 quarter. The CMIE expects another 25 million tonnes of new capacity to come on-stream in FY09. Northern region, which has seen additional capacity of around 15 million tonnes in FY08, will see an addition of another 7-8 million tonnes in 2009. Western and Eastern regions would continue to face a deficit. However, surplus volumes from the North are expected to meet demand in other regions. Sales volumes would drive the sectors growth during the fiscal. With limited year-on-year rise in realisations, the measures to improve cost efficiencies would play a significant role in determining the sectors profitability.
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Nirma reported net profit of Rs 37.87 crore in the quarter ended March 2008 as against net loss of Rs 93.45 crore during the previous quarter ended March 2007. Sales declined 1.10% to Rs 629.48 crore in the quarter ended March 2008 as against Rs 636.49 crore during the previous quarter ended March 2007.
For the full year, net profit rose 106.56% to Rs 223.93 crore in the yearended March 2008 as against Rs 108.41 crore during the previous year ended March 2007. Sales rose 3.05% to Rs 2312.69 crore in the year ended March 2008 as against Rs 2244.28 crore during the previous year ended March 2007.
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SEBI has issued final guidelines on real estate mutual funds (REMFs). The schemes can be launched by existing mutual fund houses or firms that have been operating in the real estate space for at least five years. In addition to the dedicated infrastructure funds and real estate investment trusts, REMFs would be the third product for mutual funds in the real estate category. While the draft guidelines had been put on all the three, the closed-ended REMFs are the first ones to see the final guidelines coming in.
Besides directly investing in real estate, SEBI has also permitted investments in mortgage-backed securities, securities of companies engaged in dealing in real estate assets or in undertaking real estate development projects and other securities. However, it has mandated that at least 35% of net assets of the scheme should be invested directly in real estate assets. Taken together, investments in real estate assets, real estate-related securities, including mortgage-backed securities, shall not be less than 75% of net assets of the scheme. Caps will be imposed on investments in a single city (not more than 30%), single project (15%), equity or debentures issued by unlisted real estate companies (15% across all schemes and 25% of issued capital in a single scheme). The assets held by one scheme cannot be transferred to another.
However, REMFs cannot invest in vacant land, deserted land or land earmarked for agricultural use. The guidelines also suggest that the assets of real estate schemes be valued every quarter by two valuers. With this move, retail investors can invest in real estate as an asset class, which has a low correlation with equity and bonds, and enjoy the benefits of asset class diversification.
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