Production at 19.92 million tonnes was barely 5 per cent higher than first quarter output last year. The percentage growth in despatches, during the first three months, was even lower at 19.87 million tonnes, compared with 18.98 million tonnes during the first quarter of 1997-98. The first-quarter output last year was 18.97 million tonnes.

The low growth in output reversed the depressed price scenario and resulted in better realisation for cement makers. In the south, prices shot up to Rs 170 a bag from an unprecedented low of Rs 145-148 per bag in May, while Mumbai prices firmed up to touch Rs 160 per bag, the highest in recent months.

Industry output, which inched up to 7 million tonnes in May from 6.27 million tonnes in April, has marginally slipped to 6.65 million tonnes last month owingto the traditional production cut ahead of the monsoons. The production of cement in June last year was even lower at 6.43 million tonnes.

Despatches by the cement companies was higher at 6.56 million tonnes last month against 6.45 million tonnes in June last year. The comparative despatches during April was also higher this year at 6.37 million tonnes, up from 5.53 million tonnes during the corresponding month last year, while the May despatches dropped to 6.94 million tonnes from 7 million tonnes despatched in May 1997. Analysts say that prices across most regions have started picking up as a result of the production cut, and despite lower production companies could stand to gain through better realisations if the price surge continues. Gujarat has been the only region ,which is reeling under a severe price depression owing to a supply glut, as poor port-condition is prompting cement companies to offload export consignments in the local market.

The first quarter is traditionally a lean season for thecement industry, and the output growth in this period was lower than the annual production increase last year. For the financial year ended March 31, 1998, cement production at 75.44 million tonnes increased 7.8 per cent (last year's growth was 8.45 per cent) over the last year's output of 69.98 million tonnes.