INDIA: Cement industry likely to regain positive growth

Positive sales growth of ACC, Ambuja coupled with UltraTech’s flat growth is likely to bring the industry back in positive territory in December.

Though, the sector’s overall statistics will be released next week, analysts said the industry would not slide further for the second consecutive month and might bounce back. “It would not be a high growth as demand was not strong across the country. But according to our estimates, cement sales would be around 2-3 per cent in the month,” said a Mumbai-based research head who monitors the cement industry.

ACC’s sales growth was 2.13 per cent while its sister concern Ambuja Cements posted a growth of 5.61 per cent. Jaiprakash Associates reported 28 per cent rise in its despatches while Shree Cement saw a decline of 3.38 per cent in its sales figures on a year-on-year basis.

Except ACC, cement majors have reported a slide in November. UltraTech’s sales had dramatically plunged 9.25 per cent during the month resulting in a negative growth of six per cent in the month.

 

December sales of top cement majors
Company	Sales	Growth (y-o-y %)
ACC	1.92	2.13
Ambuja	1.83	5.61
UltraTech	3.27	0.00
Jaiprakash	1.35	27.40
Shree	0.83	-3.38
All figures in million tonnes Source: Companies

According to a industry note from India Infoline, this would be another month of moderate growth with 0-3 per cent rise in sales. “Demand from the infrastructure segment has improved marginally,” said the note.

December saw cement prices moderating further by Rs 10 on an average across the country bringing the national average price at Rs 230 for a 50 kg bag.

Cement dealers said multi-national companies (MNC), including Holcim (which owns ACC and Ambuja Cements), that follow the calendar year cycle to maintain their accounts, were more interested in clearing off their inventories instead of maintaining prices. “Cement prices declined in most regions as pricing discipline waned,” said an analyst.

However, going forward, experts pointed out that cement majors have given an indication to the dealers for a price rise as input costs, including freight rates, are on the rise. Analysts expect there would be a rise of around 10 per cent in cement prices in the next two quarters.

On the Bombay Stock Exchange, shares of cement majors closed flat on Tuesday. Stocks of ACC traded last at Rs 1,070.10 while those of Ambuja closed at Rs 143.95 a share and shares of UltraTech traded at Rs 1,085.80.