Large-scale spending by the Karnataka government on various projects has ensured that cement consumption in south India did not decline but grew at a reasonable rate during the period April-January ’04. According to available provisional figures, demand for cement in this region grew by six per cent to 2.63Mt compared to the corresponding period of the previous year. With Tamil Nadu registering a negative growth of one per cent and Andhra Pradesh posting a flat growth, it was Karnataka’s sharp 19 per cent jump in demand that saved the day for the cement mills in the south. The state, during this 10-month period, consumed 6.89Mt as against 5.8Mt during the corresponding period of the 2002-03 fiscal. According to the cement industry, a good chunk of this demand increase came from various infrastructural projects that are being completed by the Karnataka government. All the other states in the region are facing a financial crunch of varying extent and have pulled back infrastructural spending.
Kerala has registered a nine per cent growth in demand, basically on the back of retail demand, which has grown on account of better realisation from rubber and spices last season. During January, which heralds the beginning of the peak season in the south, the demand for cement grew at a marginal rate of five per cent. As regards prices, the increase effected during Dec has been more or less holding on the support of despatch regulation by the players. The current average retail price in Tamil Nadu is around Rs160 per bag, whereas it is Rs170 in Kerala, Rs130-135 in AP and Rs145 in Karnataka.