Political crisis, slowdown impact AP cement firms
Mar 24, 2014
Source : The Hindu


HYDERABAD: The cement industry in Andhra Pradesh is facing a crisis. Prices have nosedived by Rs 50-60 a bag, hitting a new low, below Rs 200. Production in most units is just around 50 per cent of capacity and many are in the red.

Power crisis and economic slowdown continue to trouble the sector. State capital Hyderabad today retails this essential commodity for building at rates hovering between Rs 185-195 per bag. The situation in the entire Telangana, the 29th State to be formed on June 2, is pretty much the same, with prices below the Rs 200 mark.

Beyond hope

In slight contrast, prices in the residual State of Andhra Pradesh reign between RS 220 and RS 225 per bag.

The high points are concentrated around candidate cities thrown up as potential capital, including Vijayawad, Guntur, Visakhapatnam, Ongole, and Kurnool.

In December last year prices ruled at a high of Rs 270-275 per bag.

Then came the two-month phase of intense political activity over the bifurcation of the State. Along with all other activity, the prospects of the cement industry only continued to slide.

“In the last three years, not much was expected due to the economic slowdown; so, the operation levels of plants were maintained at 50 per cent, albeit with healthy prices. But in the last few months, prices too have fallen by 50 per cent, hitting the companies hard financially,”said an industry expert.

A growth in demand is beyond hope at present, , was the sentiment expressed by companies that Business Line spoke to.

Near term issues

The situation has turned challenging in the near term. Right at the time when the demand for cement picks up (in summer), the State is set for simultaneous elections to the Assembly and Parliament.

With the State under President’s rule and the political atmosphere not clear the industry is keeping its fingers crossed.

Andhra Pradesh is among the biggest producers of cement in India.

It has been a huge consumer, with large irrigation projects (Jalayagnam), housing (Rajiv Swagruha) and real estate buoyancy. Since 2010, with the general economic slowdown, these projects were starved of funds .

Then came the power crisis, which directly impacted an industry with an installed capacity of 55 million tonnes .

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