Cement shortage hits many southern areas

Cement shortage hits many southern areas
Published: 13 April 2006

Fuelled mainly by the construction boom, cement consumption in the south of India 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 133Mt of cement consumed in 2005-06, the South accounted for 37.5Mt. The northern region consumed 27Mt, west 25Mt, east 22Mt and central 20Mt, 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 133Mt against 121Mt in the previous year.


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.


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.