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UltraTech Cement's sales in September were hit by the ongoing agitation over the Telangana issue in Andhra Pradesh.
The company's sales were down by three per cent at 2.76 million tonnes (mt) against 2.85 mt registered in September last year.
The drop in despatches was more pronounced when compared on a sequential basis. The company's September sales were down 10 per cent as against 3.06 mt registered in August.
ACC's numbers dip
A similar trend in sales was displayed by ACC, another prominent cement producer with substantial production capacity in Karnataka. ACC's sales in September dropped 11 per cent when compared month-on-month, while it was up six per cent year-on-year. The company had added considerable capacity at its plants in Karnataka and Maharashtra over last one year.
With an annual production capacity of 52 mt through 11 integrated plants, UltraTech Cement, an Aditya Birla Group company, has pan-India presence. It has one cement factory each in Karnataka and Andhra Pradesh, with a satellite grinding unit in Ginigera (Karnataka) catering the southern markets.
Stir hits south
Cement companies tap southern and parts of western markets through their production facility in Andhra Pradesh and Karnataka. The Telangana agitation has hampered distribution of cement from both these States particularly when the demand in markets have started reviving, said an analyst.
The unrest in Andhra Pradesh has taken the wind out of a demand recovery witnessed in the southern region. In August, the demand in the southern region was down six per cent at 22.71 mt against 24.10 mt recorded in the same period last year.
Andhra Pradesh registered the sharpest fall of 20 per cent in demand at 5.46 mt (6.83 mt) in August, while Karnataka and Tamil Nadu recorded a fall of three and one per cent at 5.19 mt (5.34 mt) and 7.92 mt (8 mt).
Mr Satish Kumar, Research Analyst, Standard Chartered Equity Research, said development activity has practically come to a standstill in Andhra Pradesh with no political solution to the Telangana issue in sight.
“The current demand in Andhra is coming primarily from the stable retail segment. So, we do not expect any dramatic improvement in south India any time soon,” he added.
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