Higher demand pushes up cement sales in March

Mumbai: March was a good month for cement companies with ACC, Ambuja Cement, Ultratech Cement and Grasim Industries reporting higher sales than the preceding month.

ACC sales jumped 15 per cent in March to 2.01 million tonnes (mt) against 1.75 mt in February, while Ambuja Cement reported four per cent higher sales at 1.72 mt (1.65 mt). Aditya Birla Group sales rose 15 per cent to 3.37 mt (2.92 mt).

In line with demand, production at ACC was up 14 per cent at 1.99 mt (1.74 mt) while this was up eight per cent in the case of Ambuja Cement at 1.74 mt (1.61 mt). The Aditya Birla Group’s output increased 16 per cent to 3.40 mt (2.92 mt).

According to analysts, Government-sponsored infrastructure programme may keep demand up for the next few months.

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However, A.L. Kapur, Managing Director, Ambuja Cement, said, “So far both the demand and realisations are good but I do not know how it will be tomorrow.”

With a big consumer like the real estate sector (which accounts for nearly 60 per cent of production) still showing no signs of revival, long-term prospects for cement companies look uncertain.

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The cement industry is expected to add about 39 mt this fiscal with the South accounting for a lion’s share. “In such a scenario, maintaining production and price discipline will become increasingly difficult,” said an analyst. Prices may come under pressure once the new capacity additions go on stream.

On the back of growing demand, cement companies hiked prices by Rs 10 a bag across regions in two instalments during March.

“While ACC managed to reduce its inventory in March by selling more than what it produced, Ambuja Cement and Aditya Birla Group companies were not fortunate enough,” said an analyst.

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ACC produced 1.99 mt and sold 2.01 mt while in the case of Ambuja Cement, output was 1.74 mt against sales of 1.72 mt in March. Aditya Birla Group production was at 3.40 mt and sales 3.37 mt.

ACC recorded a six per cent rise in production on yearly basis while sales were up five per cent. Aditya Birla Group cement production and sales rose 12.39 per cent and 11.24 per cent in March. Ambuja Cement’s production was up two per cent year-on-year but sales increased only marginally by 0.46 per cent.

Shares of Grasim Industries, UltraTech Cement and Ambuja Cement in BSE were up three per cent each at Rs 1,602, Rs 551 and Rs 74, respectively. ACC shares rose 2 per cent at Rs 600 on Thursday.

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