South fuels cement boom

It is the southern states of India that are fuelling the sharp improvement in the fortunes of the cement industry in the first five months of the current fiscal. The southern region witnessed an offtake growth of 18 per cent during the April-July 2005 period as against a negative growth of 6 per cent in the corresponding period of the previous year. This performance has enabled the industry to double the overall cement consumption from just 4 per cent last year to 8 per cent in the April-July 2005 period.

As against a consumption of 10.07Mt during April-July 2004, the consumption in the southern markets, according to industry estimates, during April-July 2005 stood at 11.86Mt - a growth of 18 per cent. Andhra Pradesh witnessed a strong growth of 31 per cent, followed by Tamil Nadu (21 per cent), Kerala (11 per cent) and Karnataka (10 per cent).

The sudden spurt in consumption in the southern markets was fuelled by a boom in irrigation and real estate projects in Andhra Pradesh, increased retail and industrial activities in Tamil Nadu, growth in the service industry and irrigation projects in Karnataka and better realisation of rubber prices and commodities in Kerala, apart from roads and infrastructure projects.

This strong show has already been reflected in the first quarter performance of southern cement majors such as India Cements and Madras Cements. These companies witnessed 45 per cent and 26 per cent growth respectively in revenue, while their net profits during the same period grew by 71 per cent and 5 per cent respectively. In the April-July 2005 period, northern region grew by 4 per cent as against 11 per cent in the corresponding period of the previous year. East grew by 18 per cent (4 per cent), West by 4 per cent (6 per cent) and offtake in Central India declined by 6 per cent (10 per cent).