INDIA: Retreating monsoon shows signs of revival for cement sales in Sept

Cement sales in September showed signs of revival with monsoon subsiding in most parts of the country. However, despatches of ACC were hit due to the ongoing unrest over Telangana issue in Andhra Pradesh. The company's plant at Wadi in Karnataka, which accounts for 29 per cent of its total capacity, caters parts of southern and western markets.

UltraTech Cement, which has an annual production capacity of 52 million tonnes, has not yet announced the production and sales numbers for September. The company has one cement plant each in Karnataka and Andhra Pradesh, with a satellite grinding unit in Ginigera (Karnataka) catering the southern markets.

BUILDERS ON FAST-TRACK

Cement demand from real estate sector has improved with many builders putting their projects on fast track to keep up their promise of timely delivery during the festival season, said a cement company official.

However, there are no substantial developments in the infrastructure sector even as some government projects have been announced. The real offtake from infrastructure companies may be a few months away, he said.

With concern over rising input cost and increase in lending rates still lingering, cement companies have kept their production under check in order to align with the demand.

“It is too early to predict a recovery in cement demand as there is no marked improvement in economic health of the country. Besides, the unstable global developments emanating from the US and euro zone are also not encouraging,” said an analyst.

POWER SUPPLY HIT

Besides transportation hiccups, the Telangana agitation, which lasted for over 20 days, paralysed power supply. Though big factories have their captive power plants, the smaller cement units were the most affected. The supply of coal from Andhra Pradesh was also hit pushing up the cost of power production for captive plants that had to rely majorly on imported coal shipments.

Mr V. Srinivasan, Research Analyst, Angel Broking, said cement companies are expected to face margin pressures due to higher fuel costs because of increased domestic and international coal prices.

The demand revival has helped cement companies to hike prices on an average by Rs 5-10 a 50-kg bag across the country. Despite the hike in prices, cement producers' profitability may be under pressure due to rising cost.

STOCKS UP

Despite the benchmark Sensex losing 287 points, the top three major cement company stocks managed to close with a gain on Tuesday. ACC was up 0.07 per cent at Rs 1,101, UltraTech rose 0.20 per cent to Rs 1,105 and Shree Cement jumped 1.70 per cent at Rs 1,885. Ambuja Cement remained unchanged at Rs 149.