Date:10/03/2008 URL: http://www.thehindubusinessline.com/2008/03/10/stories/2008031050831500.htm

Back AP cement prices likely to go up

G. Naga Sridhar

Hyderabad, March 9

The cement prices in Andhra Pradesh are likely to go up soon due to an increase in input costs and buoyancy in construction activity.

The industry is studying the impact of the Re 1 hike in diesel price, which will affect inward and outward movement of raw materials and cement, according to Mr S. Srikant Reddy, General-Secretary, All-India Mini Cement Manufactures’ Association (AIMCMA).

“Already price rises are happening in different parts of the country. The hike here could be between Rs 5 and Rs 7. A clear picture will emerge in a couple of weeks,” Mr Reddy told Business Line. The ex-factory price of a bag of cement in the State is between Rs 178 and Rs 180 at present.

Input cost

The imminent price rise will be more due to the increase in input costs than the the Budget.

“The Union Budget has very little impact on the industry except a little hike in clinker prices, which resulted in a Re 1 hike in bulk cement price,” he explained.

Capacity expansion

Though the industry had earlier expected a capacity addition of about 20 million tonnes (mt) (to the existing 25 mt) by middle of 2008, the capacity augmentation programmes of many companies in the State had been delayed by about six months.

“It now appears that we have to wait till December 2009 to have over 40-mt capacity in the State,” Mr Reddy said.

Madras Cements, Penna Cements, Sagar Cements, Deccan Cements, Ultratech Cement (at Tadipatri) and Ckoramandel Cements, among others are currently executing capacity expansion projects in the State. All this would mean the continuation of the existing demand-supply gap in the State.