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The cement industry in Andhra Pradesh is expected to be least impacted by the creation of Telangana.
This industry in the State is predominantly concentrated in the Telangana region, which has most of the limestone deposits. In fact, the units located in the region have easy access to the markets of Karnataka and Maharashtra. The basic building material can also drive the growth and infrastructure development in the new State, analysts feel.
The cement industry in Andhra Pradesh, one of the largest in the country, has around 40 units, with an installed capacity of about 55 million tonnes. Interestingly, international majors such as CRH of Ireland, Italicement, Vicat of France all have presence in the State.
The industry composition is also well balanced with the presence of big players such as UltraTech, Zuari, India Cements, ACC, Jaypee, JSW, Orient, Kesoram, Madras Cement.
Also present are units promoted by coastal Andhra industrialists like KCP, Anjani, Hemadri, Rain Group, DCL and NCL to name a few. There are a few major ones owned by Rayalseema entrepreneurs like Penna Cements, Bharati cement (Y.S. Jaganmohan Reddy promoted), Panyam etc.
Though, nearly 55 per cent of the units and production come from Telangana, there are only a few big players from here like the My Home Group, which has a joint venture with CRH, and Sagar, which has tie-up with Vicat Group and Visakha Cement.
The ACC unit in Mancherial has also been taken over by entrepreneurs from Adilabad district in the region.
As of now, Nalgonda district has the highest concentration of cement plants, followed by Ranga Reddy and Adilabad in Telangana. This is followed by Jaggayyapeta, Krishna district and near Guntur in Andhra region.
In the Rayalaseema area, units are spread across Kadapa, Kurnool and Anantapur districts.
Interestingly, the cluster comprising Nalgonda (Telangana) and Guntur, Jaggaypet in the Seemandhra region, which also exports to Maharashtra, Karnataka, Odisha will continue to do well despite the bifurcation.
Nalgonda accounts for 50 per cent of limestone deposits, followed by Kadapa and Adilabad districts.
“Andhra Pradesh’s bifurcation might turn into an advantage for those units in Nalgonda due to access to key markets in Karnataka and Maharashtra while those in Seemandhra region might have limited opportunities,’’ said a senior executive of a Hyderabad-based listed cement company.
However, the cement sector itself is going through tough times with power cuts and slow down in the realty sector and significant drop in funds for Government housing and irrigation projects.
This has led to increase in prices, which are hovering around Rs 300 per 50 kg bag and simultaneous cut in production (average of 50-60 per cent of capacity).
The pangs of bifurcation has already led to a lull in the realty sector.
“There are mixed views about growth of real estate after the bifurcation of Andhra Pradesh. There are also high hopes of huge funds flowing in for the creation of infrastructure for a new capital in the Seemandhra region.
“It remains to be seen how these developments work out as they will have a huge impact on the cement sector,’’ industry sources said.
somasekhar.m@thehindu.co.in
naga.gunturi@thehindu.co.in
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