The domestic cement industry is likely to get into the negative territory of growth in November. If the statistics from cement majors are anything to go by, analysts fear November might turn out to be a month of negative growth.
“Given the fact that domestic cement majors have reported negative growth in their sales in November, it is likely that the industry would also end up with negative growth in November,” said the research head of a Mumbai-based broking house.
The cement majors control almost half the industry’s capacity. Domestic major UltraTech was hit the hardest as its sales plunged 9.25 per cent to 2.66 million tonnes (mt). This was followed by Swiss cement major Holcim-owned Ambuja Cements, which was hit by a transporters’ strike. Ambuja reported a dip of 8.65 per cent in its sales at 1.42 mt in November against 1.55 mt in the corresponding month last year.
| SALES FIGURES Cement industry's monthly sales growth so far in FY11 | ||
| Month | Sales | Growth (%)* |
| Apr | 18.12 | 8.50 |
| May | 17.78 | 7.69 |
| Jun | 17.14 | 2.51 |
| Jul | 16.21 | 1.63 |
| Aug | 15.80 | 2.13 |
| Sep | 15.62 | 6.04 |
| Oct | 18.22 | 18.54 |
| * Year on Year (In million tonnes) Source: Cement Manufacturers' Association and Companies | ||
Similarly, Shree Cement, a dominant player in the north, continued to feel the pressure as its despatches were down 7.62 per cent from 700,000 tonnes to 650,000 tonnes. The sales of JK Lakshmi, another north-based player, were down 5 per cent, while unconfirmed reports suggest that growth of Jaiprakash Associates, a north-central company, has been substantially pulled down from as high as 60 per cent to around 13 per cent year on year.
Only Ambuja’s sister concern, ACC, managed to increase its sales volume by 4.82 per cent in the month.
| TOP GAINERS Sales of top companies in November | ||
| Company | Sales | Chg (%) |
| UltraTech | 26.58 | -9.25 |
| Ambuja | 1.42 | -8.65 |
| Shree Cement | 0.65 | -7.62 |
| JK Lakshmi | 0.34 | -5.00 |
| ACC | 1.74 | 4.82 |
| Source: Companies (In million tonnes) | ||
The industry figures for November would be declared by the Cement Manufacturers’ Association next week.
In October, the industry came up with a robust growth rate of over 18 per cent. But analysts had termed it not as real demand growth. They had indicated that the October figure could be an aberration. Company officials said that in the previous month, dealers had piled up stocks in anticipation of higher demand going forward and high prices.
“In November, due to the festival season and extended monsoon, demand for cement fell,” said a chief marketing officer of a large cement house.
During the month, the nationwide average price of a 50-kg bag of cement, too, was corrected by around Rs 5. “The prices hovered around Rs 235 a bag in the month compared with Rs 240 a bag in the previous month,” said the research head of a Mumbai-based broking house, which tracks the industry.
At present, the cement industry has a capacity of 275 mt per annum, which is likely to go beyond 300 mt by 2012.
