Financial Daily
from THE HINDU group of publications

Tuesday, May 30, 2000



Marketing | Prev

Market share scramble puts the pressure on

Rajesh Chandramouli

THE scramble for market share among cement manufacturers has put pressure on cement prices in South India. The offtake this time around has not been as `robust' as what it was during May 1999.

Consequently, prices are also exhibiting weak trends despite the fact that this is the `season' for construction activity in the South. What is more worrying for the manufacturers is the news of a normal monsoon which would mean that cement consumption i n Kerala could reduce further. The prices for cement in Kerala is always pegged the highest among the four southern states.

Another reason for the lower prices is poor offtake in Andhra Pradesh. According to one manufacturer, the cement manufacturers from Andhra Pradesh are dumping a major part of their production in Tamil Nadu and Kerala and hence the weak trends in Tamil Na du.

In April, Kerala registered a negative growth and Andhra Pradesh posted a positive growth of three per cent, while Tamil Nadu recorded a growth of over eight per cent.

The price in Hyderabad for a 50 kg bag is around Rs.100 while in Kerala it is around Rs.160 and in Chennai the prices hover around the Rs. 140 mark.

According to sources, the politicisation of the cement industry in Tamil Nadu has also acted as a check point on prices. Late last year, the Tamil Maanila Congress (TMC) alleged that cement manufacturers were colluding with each other so as to jack up th e prices to unrealistic levels.

Though cement dealers say that the volumes are `good', they fear that any attempt to jack up the prices would see lower offtake.

On an all-India basis, cement production for April 2000 was 8.08 million tonnes as against 9.53 million tonnes in March 2000. The production for April 1999 was 8.13 million tonnes. While despatches for April 2000 was 8.02 million tonnes as against 9.46 m illion tonnes in March 2000. The despatch figures for April 1999 was 8.05 million tonnes.

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