Cement sector likely to return to double-digit growth path in May

Sales of Ambuja, UltaTech grow over 10 per cent during the month

Robust sales from India’s two largest cement makers, Aditya Birla Group’s UltraTech and Swiss major Holcim’s Ambuja Cements, in May are likely to bring the industry back on a double-digit growth trajectory after a gap of two months.

Amid India’s disappointing GDP growth of 5.3 per for the March quarter, strong dispatches of the building material, just before the start of the monsoon, has given hope to cement industry experts for better growth in 2012-13.

Ambuja Cements, which has a capacity of 25 million tonnes per annum, sold 1.93 million tonnes in May, against 1.73 million tonnes in the corresponding month last year, a rise of 11.9 per cent. On the other hand, its peer, UltraTech Cement, registered sales growth of 10.6 per cent.

 

However, Ambuja’s sister concern, ACC, could not match up with the other key producers and reported a growth of three per cent, as it sold 2.05 million tonnes, against 1.99 million tonnes in the year-ago period.

“With 10-12 per cent growth from country’s two top cement makers, it seems industry will hit a growth of 11-13 per cent in May,” said research head of a Mumbai-based brokerage firm.

Industry body Cement Manufacturers’ Association (CMA) will be releasing the sector’s overall statistics later this week.

UltraTech Cement, ACC and Amubja Cements, collectively control close to one-third of the country’s cement market, which has an overall capacity of 330 million tonnes per annum.

Industry officials also believe 2012-13 would be able to see the industry clock growth of eight-nine per cent. In 2011-12, the sector grew 6.5 per cent. Between November 2011 and February 2012, sales growth continued to remain a little over 10 per cent. However, in March and April, growth had dipped below 7.5 per cent. April was hit hard on the back of shortage of sand in the northern markets and in Andhra Pradesh.

“In May, shortage of sand was sorted out and companies liquidated inventories which had piled up in April,” added an industry analyst.

According to the vice-president of a brokerage, which tracks the construction sector, 2012-13 would see a better growth.

“This growth will be on the back of emanating demand from infrastructure and the construction sector and real estate,” she added.

A decline in cement prices was witnessed during May. The all-India average price for a 50-kg bag stood at Rs 290, against Rs 307 in March, a fall of 5.5 per cent.