Cement industry sees about 10 to 18 per cent growth in demand in Telangana and Andhra Pradesh during the next two to three years due to various heavy projects being undertaken by the respective governments.
“We believe that AP and Telangana should grow anywhere between 10 to 18 per cent. It would be a good double digit growth over next two to three years. This is in terms of demand which indicates sales.
“Tamil Nadu we expect it to be 5 per cent to flat. Kerala would also see a similar demand. Karnataka we expect it to be anywhere between 2 to 5 per cent,” said S Srikanth Reddy, Executive Director of Sagar Cements Limited.
Reddy along with representatives of India Cements and Bharathi Cements held a press conference to allay apprehensions about the pricing of cement.
“Key demand drivers for the industry are individual house builders and government initiatives. Some of the initiatives taken by both Telugu states have positively impacted growth scenario,” they said.
Cement Industry in South India in general and AP and Telangana, in particular, is facing a huge capacity overhang with an installed base of around 150 million tonnes and a demand of only around 60 MT in South India and an additional 20 MT is going to neighbouring markets like East and Western India, they said.
According to them, cement industry is highly fragmented with 50 plus brands with huge divergent capacities fighting for market space even as the demand for the commodity in South Indian has been de-growing baring last year.
“Due to the demand issues overall average capacity utilisation of the industry is sub 60 per cent and there has been high volatility in the pricing,” the industry representatives said adding the prices may vary from time to time, at times weekly, indicating a perfect competition among players.
The industry vehemently denies the allegations of cartelisation by saying that the market reflects the highly competitive nature.
Industry expectation was that GST rate would have been in the lower slab than current 28 per cent considering that it is a core sector, they added.