The Indian cement industry is back on a double-digit growth trajectory. Reviving demand, especially in the northern and western markets, has helped companies post better sale volumes.
The sector giants such as UltraTech, ACC, Ambuja, Shree Cement and JP Associates had robust sales in December.
For the second month in a row, the nearly 300-million tonne industry posted 14 per cent growth (year-on-year) in despatches. It sold 19.78 mt against 17.35 mt during the same month in the previous year.
Experts say it would help the industry do better this financial year against the earlier estimate of around five per cent growth. Executives had earlier told Business Standard that 2011-12 may see more or less the same growth witnessed in 2010-11. However, experts now say growth could be six to seven per cent, provided the January-March quarter maintains the momentum. It is the peak construction period. The sector, struggling till the beginning of the December quarter with growth a little above three per cent, has so far (April-December) clocked growth of 5.31 per cent.
UltraTech Cement, part of the Aditya Birla Group, beat analysts’ expectation with Rs 619 crore as net profit during the quarter. According to K C Birla, chief financial officer, the northern and western markets saw surges in demand. Analysts said rural demand was reviving fast in Punjab, Haryana, Rajasthan, Gujarat and Maharashtra. The east showed revival signals, too, but could not beat the overall growth.
Interestingly, double-digit growth is being witnessed during months when all-India average cement prices were at an all-time high of Rs 280 for a 50-kg bag (though, these then declined by Rs 15-20 a bag in the later part of the quarter).
In 2010-11, the industry reported the poorest growth in a decade, of less than five per cent. Currently, manufacturers’biggest concern is rising coal prices and sustainability of demand. The capacity target set for the 11th Five-Year Plan (2007-12) is already met. Companies added close to 120 mt during this period, with capital outlay of Rs 50,000 crore. However, on growth, the industry missed its 10-plus per cent annual target. After 2009, excess supply started taking a toll on the companies.
