South India’s ‘should explore export opportunities’

South India’s ‘should explore export opportunities’
Published: 15 June 2011

IIFL Institutional Equities, a part of the IIFL Group believes that an increase in exports will be the key for south India’s cement industry’s volume growth in the medium term, given the dwindling demand in the domestic market.

"The south region’s export volume was a mere 0.1Mt in FY11 despite a capacity surplus of 30Mta. Demand in the south is declining and there is poor visibility of an improvement in the near term," IIFL says.

"The current demand-supply situation in south India region mirrors the conditions in Turkey during 2006-2009. To allay the negative impact of stagnant domestic consumption, Turkey’s cement industry increased export volumes from 8Mt in 2007 to 18Mt in 2009 (key export markets too were experiencing an unfavourable demand-supply situation for producers) and is the world’s largest cement exporter now," the report said.

"Ports in south India are increasing handling capacities (Krishnapatnam port handled 16Mt in FY11 against a target of 35Mt, and capacity will increase to 45Mt by next year). We believe that an increase in exports will be the key for south India’s cement industry’s volume growth in the medium term, given the dwindling demand in the domestic market," the report added.