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September 13,  2001 Cement  Sector Update - August 2001 Cement production declines… Cement production declined by 7% in July 2001 as compared as against a 7% growth in July 2000. This was the first month of decline after three consecutive months of growth. The production trend reflects the continuing strength of the cement cartel, which is consciously keeping production down in order to prevent a weakening of prices. Chart 1: Cement production (in million tonnes) Source: CMIE Cement consumption dips… Cement consumption during August 2001 dipped by 7% as compared to the corresponding period last year. This was the second consecutive month of decline over the corresponding month of the previous year. The consumption growth in July 2000 stood at 5%. Chart 2: Cement consumption (in million tonnes) Source: CMIE  Table 1: Region wise cement consumption Consumption (in '000 tonnes) Jul-01 Jul-00 % change Northern region Punjab 306 298 2.8 Delhi 204 201 1.2 Haryana 243 228 6.6 Himchal Pradesh 91 75 21.5 J&K 66 50 31.5 Rajasthan 366 390 (6.0) Chandigarh 29 23 30.1 Total North 1,305 1,264 3.2 Eastern Region Bihar 227 402 (43.5) Orissa 107 202 (46.8) West Bengal 319 394 (19.1) Assam 58 83 (30.2) Meghalaya 32 34 (4.8) Total East 744 1,116 (33.3) Southern Region Tamil Nadu 749 869 (13.8) Andhra Pradesh 479 503 (4.7) Karnataka 477 455 4.8 Kerala 328 398 (17.5) Total South 2,033 2,224 (8.6) Western Region Maharashtra 976 923 5.8 Gujarat 476 555 (14.1) Madhya Pradesh 288 487 (40.8) Total West 1,740 1,964 (11.4) Source: CMA Cement prices remain firm… In July 2001, wholesale prices in Mumbai remained steady at Rs180/50 kg bag for the third consecutive month. This is much higher than the price level of Rs 155/50 kg bag in the corresponding month last year. As compared to the previous month, wholesale cement prices in Calcutta and Bangalore remained firm in July 2001. In Delhi, prices increased to Rs 144/50 kg bag from Rs 136/ 50 kg bag last month. However, in Chennai, prices dipped by Rs 10 to Rs 170/50kg bag. A sharp slowdown in demand have led to the decline in prices in the South In Tamil Nadu, retail prices have decreased to Rs 125/ bag. New capacities have increased the supplies, which in turn has led to a decline in prices. New capacities include Madras Cements one million tonne plant in Tamil Nadu and ACC’s 2.6 million tonne plant in Karnataka. In Kerala, retail prices are in the range of Rs 140-145/ bag. In late August, retail prices in Karnataka slid to Rs 145 from Rs 160/ bag. Chart 3: Cement Wholesale Prices in Mumbai market (Rs/50 kg) Source: CMIE Table 2: Wholesale Price (Rs/50 kg) Month Delhi Kolkata Chennai Bangalore Jan-01 155 165 190 180 Feb-01 152 165 190 180 Mar-01 146 163 185 173 Apr-01 152 158 180 172 May-01 145 157 180 170 Jun-01 136 150 180 170 Jul-01 144 150 170 170 Source: CMIE Table 3: Company wise Performance for July 2001 ( in '000 tonnes) Company Production Dispatches   Jul-01 Jul-00 Growth Jul-01 Jul-00 Growth ACC 949 901 5.3 909 840 8.2 Gujarat Ambuja 611 584 4.7 605 578 4.7 India Cements 528 610 (13.4) 517 596 (13.4) Madras Cements 268 277 191.5 259 265 (2.3) L&T 807 984 (18.0) 797 931 (14.4) Grasim 729 797 (8.6) 708 782 (9.5) Source: CMA Major news Cement Corporation of India Ltd is planning to recommission all its 10 manufacturing units in the country before each plant is put on the auction block. Grasim has embarked on a major restructuring of its cement brands. All its four brands would carry the Aditya Birla Group logo in order to differentiate between them and the other Birla brands. L&T expects to get bids for its cement division by the end of September and is currently in talks with Lafarge, Cemex and Holderbank. India Cements has expanded the production base in subsidiary company, Sri Vishnu Cement from 2700 tonnes per day to 3400 tonnes per day. Cement sales have dipped by 5% to 7.23 million tonne in July 2001 as against 7.63 million tonne in the corresponding period last year.    Sangeetha Subramanian

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