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Improved demand from infrastructure projects pushed up cement sales in March. An average price increase of Rs 10-20 per 50 kg bag did not deter demand.
The eastern region recorded the highest price increase of Rs 20-25 a bag in March on supply constraints and improved demand. This region consists of Bihar, Orissa, West Bengal, Chhattisgarh and Jharkhand. It depends on supply from Madhya Pradesh as it does not have major production facilities.
“Supply was hit due to a temporary shut down announced by one of the major producers in Madhya Pradesh. Prices are expected to go up till the monsoon,” said a cement dealer. Prices in the western and central regions were up by Rs 10-20 a bag.
Mr V. Srinivasan, Research Analyst, Angel Broking, said the improvement in demand was highest in the northern and western regions.
“Cement sales in Gujarat picked up on the Government spends in infrastructure projects. With election round the corner, all efforts are being made to complete ongoing projects,” he said.
Better March quarter
Major cement producers — ACC, Ambuja Cements and UltraTech Cement — reported better sales in the March quarter. ACC and UltraTech Cement sales were up eight per cent at 6.72 million tonnes (6.22 mt) and 11.25 mt (10.46 mt), respectively. Ambuja's rose 10 per cent to 6.09 mt (5.55 mt).
J.P. Associates' sales jumped 50 per cent to 6 mt (4 mt) in the March quarter.
Production at ACC and UltraTech increased seven per cent each to 6.70 mt (6.22 mt) and 11.17 mt (10.44 mt), respectively. At Ambuja's it was up nine per cent at 6.10 mt (5.59 mt).
With improved demand, cement companies have managed to pass on their incremental costs to consumers. Excise duty on cement was restructured in the Budget. Excise rates were hiked by two per cent on retail selling price, with an abatement of 30 per cent. The Railways recently raised freight rates in the range of 18 to 24 per cent for cement and coal.
“Despite the recent price hikes, our margins are shrinking continuously. Almost all the costs, be it coal, limestone, gypsum, freight have gone up in last few months,” said a cement company official.
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