The Hindu Business Line : Cement shortage hits many areas in the South

Consuming more
AP leads in the South with 33% growth in demand
Widespread movement of cement from one State to another
Manufacturers mull capacity expansion

Chennai , April 12

Fuelled mainly by the construction boom, cement consumption in the South grew at a higher rate than the all-India figure in 2005-06 compared to the previous year. Consequently, in some markets in the South, like Chennai, there is short supply of cement, especially for retail consumers. Those buying cement in bulk, like the builders, have been able to manage their requirement, according to industry sources.

The southern States — Tamil Nadu, Karnataka, Andhra Pradesh, Kerala, Goa, Pondicherry, and Andaman and Nicobar — accounted for slightly more than a quarter of the cement consumed in the country in 2005-06.

Against an all-India figure of 133 million tonnes of cement consumed in 2005-06, the South accounted for 37.5 million tonnes. The northern region consumed 27 million tonnes, west 25 million tonnes, east 22 million tonnes and central 20 million tonnes, according to figures provided by industry sources.

Cement consumption in the southern region grew by almost 20 per cent in 2005-06 over that in 2004-05, while all-India consumption grew by only 9 per cent. In 2005-06, the all-India consumption was 133 million tonnes against 121 million tonnes in the previous year.

AP leads

According to industry sources, Andhra Pradesh leads in the South with a growth in demand of 33 per cent, followed by Tamil Nadu 20 per cent, Karnataka 17 per cent. In Kerala, the demand has grown by 6 per cent.

Prices too have firmed up in the southern market with manufacturers' wholesale price in the region of Rs 160-170 a bag in Tamil Nadu, Rs 165 in Andhra Pradesh, Rs 170-185 in Karnataka and Rs 175-185 in Kerala. However, retail prices are much higher. For instance, in Chennai cement sells for Rs 190-195 a bag, against Rs 145-160 just a month ago.

According to manufacturers and cement dealers, there is also widespread movement of cement from one State to another. With the prices going up and demand in excess of supply, the market is able to absorb the transportation cost too, the sources say.

Construction boom

Industry sources say that the growth in demand has mainly come from the construction sector with the three main cities in the South — Bangalore, Chennai and Hyderabad — witnessing hectic construction activity, be it for the information technology sector, shopping malls or integrated townships. The growth in demand has prompted South-based cement companies like India Cements Ltd, Madras Cements Ltd and Dalmia Cement (Bharat) Ltd to consider expanding their capacities, both in present locations and in greenfield locations.