THE May production and sales figures of five cement companies signal healthy demand from real estate and soon is likely to put the brakes on cement usage in the near term. Sales of companies from the Aditya Birla Group, Ambuja Cement, Jaiprakash Associates, JK Lakshmi and Shree Cement indicate robust growth mainly due to higher consumption by the building industry in May
The Aditya Birla Group's cement production for May rose 5.6% to 3.4 million tonne (mt), while sales grew 5.5% to 3.3 mt. In cement industry parlance, a sale is termed as despatch, which refers to the cement sent from factory 10 distributors, who sell 10 end-consumers such as builders. The $28-billion Aditya Birla Group accounts for about 20% of the Indian cement market. The group's capacity is expected to increase to 63 mt in a few years from the present 43 mt.Ambhuja cement India's third-largest  cement marker, despatched 12.5% more in May at 1.8 mt against 1.6 mt in May last year. It said production rose 18.7% to 1.9 mt from 1.6 mt last year. Holcim, the world's second largest marker of cement, has management control of two Indian copanies, ACC and Ambuja.
However, cement companies in India have seen a decline in sales in the first half of the current calendar year due to power shortage and non-availability of wagons for transporting cement. Sectoral analysts say demand could fall in the next quarter due to overcapacity and monsoon.
"Cement sales in India are picking up year-on-year, but additional capacity will lead to an oversup-ply situation, which could affect margins and profitability," said Rupesh Sankhe, a research analyst wiih Angel Securities.
Shree Cement, a major north Indian cement maker and among the top five manufacturers in the country, despatched 8.5 mt in May, an increase of 15%, compared with 7.4 mt last year.


Article From : The Economic Times Pune: June 2, 2010