The price-depression, say industry watchers, is fast spreading to the entire eastern region and cement producers may find it difficult to cover their cost of production at the current price levels.

The Satna cluster, encompassing the eastern part of MP, is the country's largest cement producer with a total capacity of 11.98 million tonnes. Grasim is the largest player in the cluster with a capacity of over four million tonnes, while ACC has a production capacity of 1.58 million tonnes at Jamul and Kymore.

Industry sources say that although demand in MP is 8 per cent higher year-on-year, the cluster output witnessed a much higher 10 per cent growth during the same period. Producers are currently into the volumes game and are operating at above 75 per cent, which industry watchers say, is a fallout of a breakdown in the cartel.

During October, Grasim operated at a capacity utilisation of 98 per cent, Lafarge India's (formerly) operated at 90 per cent. Raymond, with a capacity of close to 2.5 million tonnes, operated at 72 per cent of its capacity utilisation.

The price depression in the region, analysts say, will have its impact on the bottomlines of the country's largest producer, ACC, which has a significant presence in the eastern region.

``Although the growth in demand is a welcome development, the price situation is a matter of concern. Even as the prices in the western region are more or less stable, the same cannot be said about the eastern states where prices are quite depressed,'' said a senior ACC official.

For the second quarter ended September 30, 1999, ACC managed to stay in the black with a paltry net profit of Rs 1.67 crore (Rs 12.62 crore in the same period last year) primarily due to the sale of investments in HDFC and ICICI which generated Rs 13.61 crore. The drop in profit has been almost as sharp during the first six months as well, during which net profit fell from Rs 21.10 crore to Rs 8.69 crore.