Cement companies Andhra Pradesh operations continue to suffer due to lower realisations and lower demand in the state.The price of cement in the state has corrected sharply by 10%in last few weeks and is 25%down from the peak levels of Rs 300 per bag.The fall in price in the state has been more due to entry of new players than due to seasonal reasons.For instance,JP Cement is selling cement at around Rs 210-220 per bag which is Rs 20-30 lower than what is charged by bigger players like UltratechBSE 1.17%and ACCBSE 1.16%.The state has seen newer players and also the existing players expanding capacities due to huge availability of limestone,which is the primary material for cement.Andhra Pradesh,which accounts for 8-9%of the total national cement consumption,has been a worrying issue for the cement companies having exposure in the state.Non-availability of sand led to inventory pile up for the companies three to four months back.The utilisation level for the units in Andhra Pradesh,at 60%,continues to be lowest in India.The Telengana issue has caused political crisis leading to stagnancy in the infrastructure projects in the state over the last couple of years.The only rescue for the state is the housing segment.Going forward,the national and state elections in 2014,in addition to the latest macroeconomic reforms undertaken by the government shall improve the scenario in the state.Moreover,increasing diesel price and pricing discipline form the newer players will lead to improvements in realisation of cement.
