The 224-million-tonne domestic cement industry, the world’s second largest after China, has yet again come up with a robust despatch growth of 12.84 per cent in June. This is the highest growth in the last four years in the month of June.
With this, the industry, with over 50 players, has managed to maintain a consistent growth of over 10 per cent for the fourth month in a row since March this year. It despatched 16.70 million tonnes of cement in June against 14.8 million tonnes last year. Production during the month rose 13.01 per cent to 16.59 million tonnes.
Similarly, on a quarterly basis too, the first quarter of the present fiscal witnessed the steepest growth since 2005, at 12.34 per cent with an overall despatch of 49.81 million tonnes. It was in June quarter of FY06 that growth was over 13 per cent. Industry experts say that the sector was riding on the back of a consistent demand from semi-urban regions and construction activities.
Hari Mohan Bangur, president of the Cement Manufacturers’ Association (CMA) and managing director of north cement major Shree Cement attributed the high growth rate to excess cash going into construction. “Demand for cement from the semi-urban and rural regions is on the rise. Moreover, there is free cash in the system which is translating into housing projects and hence, the demand.”
According to industry analysts, the growth is better than expectations. “We have assumed a despatch growth rate of around 10 per cent. However, despite the high base last year the industry numbers in June indicates a robust demand for the building material,” said a Mumbai-based cement analyst.
Amrit Lal Kapur, managing director of Ambuja Cements, said, “Monsoon was delayed during June this year whereas last year the month had seen reasonable rains. This prolonged the dry season (and construction activities continued).” He added that in the coming months as monsoon goes ahead there is a possibility that the growth will slow down.
Industry experts pointed out that major portion of the growth has emanated from the north. Though, region-wise updates from CMA are yet to be released, they maintained that activities relating to infrastructure, rural housing and Commonwealth Games have pushed up the demand for cement.
Reports, which Business Standard could not confirm, suggest that northern region is accounting for over 30 per cent of the demand rise. If despatch figures of the north-based cement makers are anything to go by, where players like Shree Cement and JP Cement recorded a growth rate of close to 30 per cent in June, the said growth appears possible.
