UltraTech sales decline 6% in February

UltraTech Cement, India’s largest cement producer, has reported a six per cent decline in February 2013 sales, amid wider concerns of subdued demand across the domestic market.

The Aditya Birla group company sold 3.31Mt of cement last month compared to 3.51Mt in the same period of last year. Production during February 2013 also dropped to 3.32Mt compared to 3.46Mt in February 2012.

The company did not elaborate as to why sales were slower, but industry experts said the winter seasons and rains in the northern region resulted in subdued demand. Industry experts say winters coupled up with rains for most of the month in the northern region resulted into subdued demand for cement.

In the first 11 months of FY13, the cement industry has seen growth of five per cent, according to local press reports, as demand has largely remained subdued. With production costs increasing (freight and power), cement producers have initiated price hikes but analysts expect realisations to be weak.

The market was factoring in a growth in economic recovery and cement demand in the second half of the year, however, with the exception of a few states, consumption continues to be muted. With interest rates  still high and the infrastructure and real estate sector continues to struggle, analysts are expecting demand in the first half of FY14 to be weak.  Cement companies are pinning their hopes on the incentives offered in the Budget to the real estate and infrastructure sector to boost demand.