ICRA, an associate of Moody’s investor services, has said that the outlook of cement continuous to remain challenging owing to high and constantly rising input costs, overcapacity and adverse demand and supply scenario.

In a report, ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) said, “Subdued demand and significant capacity addition had put pressures on capacity utilisation of the cement industry. Apart from unfavorable demand-supply scenario, the industry is also reeling under the pressure of rising input costs.”

ICRA said that the fall in the prices of imported coal have eased cost pressure for the cement companies. However, these benefits have been offset by decline in rupee and increase in freight costs and diesel prices.

The long term prospects of the sector, according to ICRA, remains positive. The report suggests that the sector will witness higher demand from residential and commercial space, investments in the infrastructure sector and government expenditure under various schemes.