Cement sector upbeat as Telangana, AP set to buy 3 million tonnes

Cement industry will receive a mega boost as Andhra Pradesh and Telangana governments are set to procure about three million tonnes.

The process is already on with the Governments asking the cement manufacturers to commit a quantity to be supplied. As per the Request For Proposals (RFPs), AP is looking at buying two million tonnes (mt), while the Telangana wants about one mt. According to S Sreekanth Reddy, Executive Director, Sagar Cements Ltd, the RFPs come almost three years after these volumes went missing. The Telangana government is seeking cement for its low-cost housing programmes, while in Andhra Pradesh, it is to meet the needs of Panchayat Raj, irrigation and housing programmes.

However, as the RFPs were floated for the current year, it is likely that only a part of the intended purchase will happen this year. The industry is hoping that the two states will definitely take as much as they have indicated or reasonably close to that number in the next financial year. 

A senior executive of UltraTech Cement said a decision on pricing would be taken by the Governments. “It might happen very soon. The ball is in the Governments court now,’’ he said.

Cement manufactures are tight lipped about the pricing. When asked on the issue, PJ Mathai, Senior Vice President – Marketing, My Home Industries Pvt Ltd (Maha Cement) said: “There is no general rule on pricing. It will be fixed on a case-to-case basis depending on concessions such as VAT to be offered by the state government.’’

All this will augur well for the industry. “Though new projects from the Government side are yet to begin, industry outlook is bright with the projected procurement plans. The new capital of AP will also bring in some demand. Things are good for the cement makers in Kadapa (AP) and Nalgonda (Telananga) belts,’’ says K Ravi, Managing Director, NCL Industries Ltd.

There has been a slight pick up in the retail demand, especially in Andhra Pradesh, he added.

The current combined cement demand of the two States is at 15 million tonnes.