However, Jaiprakash Associates bucked this industry trend and reported a growth of nearly 57% on a YoY basis in its cement despatches in the first quarter of the current financial year, given the rapidly expanding capacity coming on stream in the past few quarters.
However, rising operational costs are a cause for concern. For instance, c Also, power & fuel costs are expected to rise, as imported coal prices are at US$100-105/t at the end of the June 2010 quarter, a rise of nearly 50% y-o-y, as per various estimates. However, large players like ACC and Ultratech have expanded their captive power facilities which should help minimise the impact of higher coal prices.
On the demand side, there is no visible pick-up in the key southern region, which has amongst the largest capacities on a region-wise basis. As a result, the entire cement industry capacity utilisation was estimated at 82% levels at the end of May 2010. This was primarily due to capacity utilisation in southern states, which was estimated at 70% levels. In the cement industry, when capacity utilisation falls below 85% levels, it leads to a dip in retail prices.
