The oversupply problem is taking its toll in the region as prices have crashed to Rs 90-95 per bag. Analysts are sceptical that retail prices may drop to below Rs 75 per bag once the monsoon actually sets in.

Madhya Pradesh with its large limestone deposits is the country's largest producer of cement with a capacity of 25.7 million tonnes, although the demand is only in the region of 5 million tonnes.

"With cement prices firming up in most markets, leading players will not be hit hard due to the temporary drop in prices in the MP region, which is traditionally a cement-surplus cluster," said an analyst.

Cement prices in the region were hovering at Rs 120-125 per bag in February, and the sudden dip in prices is seen to be a temporary collapse of a cartel among local players.

Though cement companies,which have their manufacturing units in the area, deny having any knowledge of a cartel in operation, analysts say local producers had come together to cut production by as much as 25-30 per cent due to dwindling demand.

The Aditya Birla group flagship Grasim Industries has the largest single location unit in the area with a capacity of 2.5 million tonne, while others like Century Textiles, JK Industries, Birla Corp, ACC, Larsen & Toubro, Prism Cement and Binani Cement also have a sizable presence. Grasim's total capacity in the region adds up to 3.5 million tonnes.

To arrest the price slide, Grasim Industries stopped production at its third line late last year, which has a capacity of 0.75 million tonnes. A few players had also resorted to four or five-day working weeks to tide over the situation. Over the last two years, while capacity in the north has increased by 17 per cent, demand has grown by only nine per cent.

Unlike this region, the southern and western markets have been witnessing handsomegains on the price front with realisation zooming to record levels before the monsoon. Realisations for cement producers in Tamil Nadu have been steady with retail prices increasing to Rs 160-165 per bag. "Unlike other regions where monsoon is expected soon, the rising trend in the South prices may continue for some more time thus boosting bottomlines of leading players like India Cements and Madras Cements," said an analyst.