Cement despatches for August

Gujarat Ambuja Cement Limited (GACL) has reported a 6 per cent increase in despatches for August. This was lower than the growth in July, but one has to bear in mind the transporter’s strike in the latter part of August. In addition, cement demand especially in the South and Central India had shown signs of weakening in August, due to the revival of the monsoons. Nevertheless, GACL’s August despatch growth figures were more or less in tune with the all - India growth in cement dispatches of 5.3 per cent witnessed between April - July 04. Also GACL’s using alternative transport modes like ships to transport cement has helped to minimise the impact on the company.

Similar to GACL, ACC’s August despatches grew 5.59 per cent in August. In contrast, Grasim’s August despatches dropped 4.92 per cent and UltraTech CemCo fell 11.13 per cent. Analysts attribute the fall to increasing use of road transport by both the companies.

However, cement dispatches for Grasim during April - August 04 were up 3.57 per cent and for UltraTech CemCo they rose 5.12 per cent. It is understood that prices of cement in South and Central India weakened by approximately Rs 2- 3 per bag in August due to the slighter weaker demand conditions.

Going forward, analysts are expecting cement despatches to improve significantly riding on a pick up in the construction sector in the post-monsoon season. Demand - supply equilibrium in the key Northern Indian market is expected in September and this should also help cement companies’ realisations.