Although the growth in both production and despatches was much lower compared to the previous fiscal's 9.5 per cent and 9.7 per cent, industry watchers are optimistic that the double-digit growth recorded in the last quarter may be an indication that a revival may be round the corner.

During 1998-99, industry despatches stood at 81.57 million tonnes, while production inched up to 86.71 million tonnes. Cement output in the last month of the fiscal shot up over 11 per cent to 8.69 million tonnes, while despatches were up 12 per cent over last year. Despatches during March stood at 8.75 million tonnes against 7.81 million tonnes in the same month last year.

"The double-digit growth in production and despatches seem to give the impression that demand is slowly firmingup. If the industry continues to grow at a similar pace in April, only then will there be reason to believe that a recovery is round the corner," said a cement analyst.

Traditionally, cement companies hike their despatches and produce to full capacity during the last quarter to prop up their balance sheets. Analysts say that there are indications that the higher despatches are not due to a hefty growth in demand, as prices in the western markets have taken a serious beating during the last few days following an over-supply situation.

Cement prices in Gujarat have nosedived below Rs 100 per bag, while prices in Mumbai (the largest market with a consumption of 2.5 million tonnes per month) have fallen by Rs 15-20 per bag.

Prices in Mumbai, which till recently were ruling at Rs 155-160 per bag, have dropped to Rs 135-140 per bag. In fact, apart from the supply glut, the price depression in Gujarat is also adversely affecting Mumbai prices. "Freight and octroi charges for moving cement from South Gujarat toThane (North Mumbai) work out to Rs 10-15 per bag, and, hence, a price depression in Gujarat has to have an affect on Mumbai prices," said a senior industry official.

Prices in Gujarat, which had stabilised at Rs 120-125 levels after touching a low of Rs 90-95 per bag following the South East Asian crisis, have again dipped back to around Rs 90 per bag.

"There are signs that demand has again started picking up in the region, and prices may start moving up in the next few days," said a senior official of a Gujarat-based cement company.

Cement prices in the southern markets, however, have stabilised with prices increasing to Rs 155-160 per bag, with market leader India Cements hiking prices by Rs 4 per bag earlier this month.

In south, the leap in cement prices is visible in Tamil Nadu where realisations were higher by Rs 15-20 per bag. Even in Karnataka, cement prices have crossed Rs 140, while in Andhra Pradesh they are hovering around Rs 100-105 per bag.