Madras Cements Ltd expects the surplus capacity situation to continue and prices to be under pressure in the southern region, from which it derives 90% of its sales.

Madras Cements in its recent annual report said that "With the capacity growth outstripping demand in the southern region, prices would continue to be under pressure.” It further added that "The cement industry would continue to experience lower capacity utilisation levels. Inflation would also affect the costs of various inputs of production and distribution, thereby affecting realization.”

Mr Ajit Motwani analyst at Emkay Global Financial Services said that "Cement prices have dwindled in Andhra Pradesh, followed by other places like Tamil Nadu and Karnataka. There has been an increase in discounts in Andhra, while rise in coal prices is adding up to growth concerns. The situation is worst in the South than the other regions."

Mr Nikhil Deshpande analyst at Pinc Research said that "There has been lower demand on the one end and oversupply on the other. There has been a capacity of 100 million metric tonnes, and more capacity is going to be added. It is going to be a tough fiscal for the South focused cement makers."

(Sourced from ET)