July 25,
2001
Cement Sector Update - June
2001
Cement production
recovers…
Cement production increased by 4% in
May 2001 as against the corresponding period last year. This was
the second consecutive month of growth over the corresponding month
of the preceding year. As compared to the previous month, there was
a growth of 6% in production.
During April-May 2001, production
was higher at 3.9% as compared to 2.4% in the same period last
year.
Chart 1: Cement production (in
million tonnes)
Source: CMIE
Cement consumption slowing
down…
Cement consumption recorded a growth
of 3.3% in May 2001 as compared to the corresponding period last
year. During April-May 2001, consumption growth was 4.1% as against
2.6% in April-May2000.
Chart 2: Cement consumption (in
million tonnes)
Source: CMIE
Table 1: Region wise cement
consumption
| (in '000 tonnes) |
| Consumption |
May-01
|
| Northern region |
| Punjab |
401
|
| Delhi |
231
|
| Haryana |
269
|
| Himchal Pradesh |
109
|
| J&K |
59
|
| Rajasthan |
399
|
| Total North |
1,467
|
| Eastern Region |
| Bihar |
321
|
| Orissa |
293
|
| West Bengal |
617
|
| Assam |
62
|
| Meghalaya |
31
|
| Total East |
1,325
|
| Southern Region |
| Tamil Nadu |
628
|
| Andhra Pradesh |
530
|
| Karnataka |
521
|
| Kerala |
402
|
| Total South |
2,081
|
| Western Region |
| Maharashtra |
1,256
|
| Gujarat |
771
|
| Madhya Pradesh |
293
|
| Total West |
2,320
|
Source: CMA
Cement prices
decline…
The wholesale cement prices in all
the major markets except Madras recorded a decline in May 2001 as
compared to the previous month. However, the prices improved in
FY01 as compared to the previous year. The wholesale price was
Rs180/50 kg bag in May 2001 as against Rs 150/50 kg bag in May
2000.
Chart 3: Cement Wholesale Prices
in Mumbai market (Rs/50 kg)
Source: CMIE
Table 2: Wholesale Price (Rs/50
kg)
|
Month
|
Delhi
|
Calcutta
|
Madras
|
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
|
Source: CMIE
Table 3: Company wise Performance
for May 2001
| ( in '000 tonnes) |
|
Company
|
Production
|
Despatches
|
| |
May-01
|
May-00
|
Growth
|
May-01
|
May-00
|
Growth
|
| ACC |
1,024
|
962
|
6.4
|
1,048
|
979
|
7.1
|
| Gujarat Ambuja |
822
|
773
|
6.3
|
816
|
766
|
6.5
|
| India Cements |
554
|
772
|
(28.2)
|
567
|
785
|
(27.8)
|
| Madras Cements |
277
|
243
|
13.9
|
273
|
260
|
4.9
|
| L&T |
1,142
|
1,051
|
8.6
|
1,142
|
1,036
|
10.3
|
| Grasim |
915
|
-
|
-
|
937
|
-
|
-
|
Source: CMA
Table 4: A look at the FY01
performance
| FY01 Results (Rs mn) |
|
Name of the
company
|
Sales |
Operating
profit
|
PAT |
| ACC |
29590.3
|
4056.1
|
475.00
|
| Madras Cements |
6183.3
|
1781.8
|
484
|
| India Cements |
14418.7
|
3243.5
|
481.5
|
| Grasim |
48397.4
|
9114.9
|
3779
|
Source: India Infoline
Major news
- Grasim Industries is planning to
take over three sick units of the Uttar Pradesh Cement Corporation
at Rs2bn. The company has set out a capacity expansion plan to add
3.3 million tonne in the next 18 months, which would be done
through a change in the product mix and by debottlenecking. Grasim
plans to reduce the number of employees at its cement operations by
25% over the next 2 years by implementing VRS.
- ACC has embarked upon a capex
programme of Rs 1bn to set up captive power plants of 15MW each at
Chanda in Maharashtra and Madukkarai in Tamil Nadu.
- L&T is looking out for
acquisitions in Rajasthan to challenge the Gujarat Ambuja-ACC
combined in the North. It is in the process of roping in a
strategic partner for its cement division and has agreed to offer
an equal stake of 37.5% to the partner in the demerged
entity.
- The Cement Manufacturers
Association met on July 3 to decide on another price hike. The
industry is likely to increase the prices by Rs 20-25 per
bag.
- Equity investor Warburg Pincus is
making an initial investment of Rs2bn in Gujarat Ambuja Cements, in
lieu of which the cement major is issuing a 9.8% equity
stake.
- Madras Cements has taken over the
assets of Karnataka Minerals & Manufacturing Co. Ltd, a cement
plant located in Karnataka.
- The cement manufacturers including
ACC, L&T, Grasim, Gujarat Ambuja and India Cements have decided
to cut production by about 10-15%.
- The race for roping in a strategic
partner in L&T’s cement division appears to have narrowed
down to Lafarge and Holder Bank, with the third contender Cemex
planning to pull out of the race.
- Lafarge proposes to sell assets
worth $714mn, currently owned by Blue Circle to Votorantim,
Brazil’s largest cement maker.
Sangeetha
Subramanian
