Cement industry growth at 11-month low

The growth of the domestic cement industry hit an 11-month low of 6 per cent in September. The spread of monsoon across the main cement consuming regions, festival season and the relatively high base of the corresponding month last year, when the industry registered a growth of over 9 per cent in despatches, were the major reasons for the fall.

On a month-on-month basis, the fall is steep, from 17 per cent in August to 5.7 per cent in September.

For instance, Birla firms Grasim and UltraTech registered 15.8 per cent growth in despatches, which in August stood at 32.15 per cent. Likewise, despatches of Jaiprakash Associates and Shree Cement fell from 42.64 per cent to 12.74 per cent and 29.76 per cent to 13.81 per cent, respectively, on a monthly basis. The country’s leading cement maker, ACC, went in the negative territory and saw a decline of 2.4 per cent in despatches, whereas its sister company Ambuja Cements’ despatches dipped marginally. Hari Mohan Bangur, president of the Cement Manufacturers’ Association and managing director of Shree Cement, said sustaining a double digit growth through the year was not possible. “Festivals in September affected the demand for cement. In October too, we expect the growth to be a little lower,” he added.

Industry analysts said the Supreme Court order to stop construction of memorials in Uttar Pradesh, coupled with rain in Bihar, Orissa, Jharkhand and Bengal, were behind the fall in demand. In the southern region, the demand was affected in Andhra Pradesh and Karnataka. “September has always seen a low-growth month. Prices came down in the central region while they remained flat in the north,” said Kamlesh Bagmar, an analyst at Prabhudas Liladhar.

Ajay Kapur, head of marketing and commercial services at Ambuja Cements, said, “Though the despatch growth has come down, it is not so that there is an overall decline in demand. August saw a growth of 17 per cent in despatches but that does not mean the entire quantity was consumed. Cement remained in the pipeline and therefore affected the despatches in September.”