Cement prices to rise 5-10% in south, west

Cement prices are expected to harden by 5 per cent to 10 per cent in west and south India in the coming months.

A senior Associated Cement Companies (ACC) official said that prices in these regions traditionally went up after the monsoons and this time around the rise seems more likely as prices fell along with falling demand at the start of the year.

Ashok K Jain, executive director ACC, who launched the ACC Help Center (a first in India which will inform people on construction practices, choice of material and process planning) here, said prices were slashed particularly in south India this fiscal start as consumption trends turned negative.

Andhra Pradesh and Tamil Nadu's first five months' consumption fell by 6 per cent to 8 per cent over the previous year. This in turn pulled down the national growth to 6 per cent, which otherwise could have been 10 per cent.

However, in the last three months, the three states have picked up and the sector will grow by seven per cent in 2004-05. Last year the industry grew 5.5 per cent.

As a result of this slump the 4.6 million tonne plant at Wadi in Karnataka, ACC's and the country's largest single cement plant has managed just 80 per cent capacity utilisation. ACC hopes this plant will return to full capacity, following reports of large infrastructure projects in south.

Jain blamed the drought in the states and lack of infrastructure projects for the dismal first half.

"While Bangalore accounts for 35 per cent of Karnataka consumption, the remaining comes from rural and semi-urban areas, which are influenced by factors like drought."

Another reason is the slowing down of the National Highway programme. This programme is taking in well under a million tonne a year now, compared to between 1-2 million tonne earlier.

He said that ACC will continue to better industry growth, this year too and marginally improve on its performance of the previous eyar. By the end of this fiscal ACC's capacity will grow to 20 million tonne from 18.3 million, thanks to the Rs 400 crore expansion at Jharkand and Himachal Pradesh.