Cement prices are up Rs 100 a bag in Andhra Pradesh in the last few days, arresting a fall in prices since September-October and bringing cheer to South-based manufacturers.
India Cements, a leading player in the South, has seen its capacity utilisation in the first two months of this financial year rise to 77 per cent from 67 per cent in the same period last year.
Its despatches are up 18 per cent at 1.83 million tonnes. Prices have reached reasonable levels, which is a significant development, says N. Srinivasan, Vice-Chairman and Managing Director, India Cements.
A 50-kg bag of cement now costs Rs 295 in Andhra Pradesh. He could not pin-point the reasons for this increase, but hoped that prices would hold for some more time. Capacity creation in Andhra Pradesh, he told reporters, had slowed considerably.
The Andhra Pradesh market is crucial for cement manufacturers, especially those based in the South, as it is the largest accounting for a fourth of the limestone reserves in the country.
However, according to Srinivasan, even this increase in price is not sufficient to cover the rise in input costs, including railway freight and diesel. The prices have only gone up to the levels prevailing in 2010-12.
The Andhra Pradesh cement market has been volatile since the Assembly elections in April 2009 and the then Chief Minister, Y. S. Rajasekhara Reddy’s death in September that year.
Prices in the other southern markets were also stable; in Tamil Nadu, they had fallen below Rs 300 a bag but are up at Rs 320-325. The price drop in Andhra Pradesh pushed down prices in Tamil Nadu as well.
India Cements, he said, was particularly hit by the price dip in Andhra Pradesh, as the company was buying power at almost twice the cost of grid power.
Srinivasan added that the company was evaluating all the businesses it was involved in and would decide on their future.
“It is business as usual.” This is how Srinivasan described the atmosphere in the company, unfazed by all the media focus on him and his role as President of the cricket board, in the aftermath of the spot-betting issue in the Indian Premier League cricket tournament. He was making the point that despite the media attention on him, the company continued to focus on its core cement business.