February spurt an exception, 2010-11 growth unlikely to exceed five per cent.
Despite rising sales through the March quarter, the domestic cement industry is unlikely to meet the earlier expectation of eight to nine per cent growth for the current financial year. Industry analysts say it will end in growth of around five per cent this year.
Sales for March from cement majors ACC and UltraTech Cement signal that overall growth for the industry in the month may not accelerate, compared with what was seen for February, when sales growth was 7.2 per cent overall.
Swiss major Holcim-owned ACC posted sales growth of 12.4 per cent in March on a year-on-year (y-o-y) basis; it was 17 per cent in February. Similarly, UltraTech’s sales rose 2.2 per cent in March compared to a year before; in February, the rise was 6.4 per cent. Only, Ambuja Cements, sister concern of ACC, continued with an upside trend, at 6.8 per cent in March, after 4.7 per cent in February.
The three majors control a third of the cement market in the country. Other prominent cement players are Jaiprakash Associates, Shree Cement, India Cements and Madras Cements. The Cement Manufacturers’ Association will issue overall statistics next week.
In a note, J Radhakrishnan, research analyst at IndiaInfoline, said, “Cement demand in the central and northern regions, and Gujarat, has turned sluggish in the past one week, after strong demand seen till mid-March.”
According to Care Research, the industry is expected to miss the growth multiplier this financial year. “In 2010-11, cement demand growth is expected to take a slight breather. Construction activities remained subdued during the year on account of prolonged monsoon, delay in execution of infrastructural projects due to environment hurdles and the end of construction activities related to the Commonwealth Games, which all led to slowdown in cement offtake,” said a note from the rating agency.
With demand falling short of supply, prices in the central region have declined by Rs 5-15 a bag (50 kg) during the last fortnight. Producers in the north and Gujarat have started offering discounts of Rs 3-10 a bag.
According to dealers, further discounts are expected as the peak season comes to an end. Industry experts agreed. They said with no major projects taking off, the demand growth may start tapering much before May. The current installed capacity of the industry is 290 million tonnes per annum.
