The A. P. scene

By P. Vikram Reddy

Having registered a growth rate of 25 per cent last year, as against the national average of 17 per cent, and with demand and prices showing signs of picking up in February, the cement manufacturers in Andhra Pradesh are looking forward to entering the much awaited `boom' period.

Prices, which slumped from a high of Rs.130 per bag in August 1999 to Rs.90 to Rs.95 per bag in December, have shown signs of picking up and are now around Rs.102 in Hyderabad. Industry sources say prices are expected to go up by Rs.10 this month in Maharashtra, Karnataka, Tamil Nadu and Kerala, and by an equal amount in March. The demand is expected to go up from about 8.2 lakh tonnes per month to nine lakh tonnes.

Of the 12.50 lakh tonnes produced per month by major cement A. P. units, 6.4 lakh tonnes to 6.9 lakh tonnes (fluctuating) go to the neighbouring States of Tamil Nadu, Maharashtra, Karnataka and Kerala, according to Mr. K. V. Venkataraman, Chief Executive, Andhra Pradesh Cement Manufacturers' Association.

``We see a good future and expect boom conditions to begin in the next one or two months'' says Mr. S. R. B. Ramesh Chandra, Joint Managing Director, Coromandel Cements (a mini cement unit), and a former president of Mini Cement Manufacturers Association, adding optimistically ``Once the Express Highway (Jammu and Kashmir to Kanya Kumari) takes off, there will be a decade long boom''.

India Cements is the single largest player in the Andhra market, and commands an estimated 25 per cent of the State's consumption (including mini plants). L&T is another big player, with around 11 per cent share, followed by Madras Cements at 8 per cent. Priya, Orient, and Kesoram together have a grip on about 18 per cent of the market. Mini plants contribute about 14 per cent of the market.

Of the 300 mini and tiny plants in India, only 60 are working. Of the 30 mini plants in Andhra Pradesh 13 are operational, according to the Mini Cement Manufacturers Association.

Consolidation moves were led by India Cements, which has acquired five units- Raasi Cement, Coromandel, Vishnu, Yerraguntla plant of Cement Corporation of India, and the Visakha plant in recent years.

Notwithstanding the fact that prices had fallen to unworkable levels in the South, manufacturers are quite bullish. Already prices have been hiked. One more hike is coming from Monday. The firming up of prices, it is argued, may dissuade small capacity units from contemplating sale of their units.

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