Cement demand set to pick up in Andhra Pradesh, Telangana

G Naga Sridhar Hyderabad | Updated on January 15, 2018

There was a sharp increase by 30 per cent in the cement prices on August 26, 2016 to the discomfiture of the builders

Polavaram project, capital construction, housing schemes provide boost

Cement manufacturers are expecting an increase in demand in Telangana and Andhra Pradesh from this month.

“The ongoing infrastructure projects in the two states along with government demand for welfare schemes are expected to drive growth for next two-three years,” S Sambasiva Rao, Executive Director, My Home Industries, which sells Maha Cement, told Business Line here.

He pegs the likely growth in demand at 20 to 22 per cent.

Construction boom

The Polavaram project and new capital construction in Andhra Pradesh are expected to boost demand while in Telangana, general spurt in construction and housing schemes for the weaker sections will be a positive differentiator for industry, Rao said.

According to industry estimates, the general cement demand in the two states is to the tune of 20-22 million tonnes. Sreekanth Reddy, Executive Director, Sagar Cements Ltd, expects the off-take in Telangana and AP to rise 5 to 7.5 per cent from this month.

Housing schemes

After discussions with cement makers, the Telangana government had last week issued orders facilitating purchase of cement at ₹230 a bag for the 2BHK housing programme.

The estimated requirement is about 10 tonnes for each house. The government sanctioned 2,72,596 houses for 2015-16 and 2016-17 for the poor.

“The construction has been slow till now but we expect it to pick up from this month which gives us relief,” said an senior executive of a Hyderabad-based listed cement manufacturer.

A group of ministers of AP Cabinet had also asked cement firms to supply at ₹230 per bag for housing scheme after a dialogue with them last week.

According to government estimates, NTR Housing Scheme requires 19 lakh tonnes. An additional 16 lakh tonnes will be needed for infrastructure projects such as ‘Chandranna Roads’.

All this might help cement companies as AP and Telangana are among the largest producers of the cement in the country with an average capacity utilisation of 55 to 60 per cent.

There are over 40 units in two states with an installed capacity of about 60 million tonnes.

Published on November 09, 2016

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