The Hindu : Business : High input costs hit cement producers

Online edition of India's National Newspaper
Saturday, May 10, 2008
ePaper | Mobile/PDA Version

Business

Business

High input costs hit cement producers

Special Correspondent

Government exerting pressure to cut prices

NEW DELHI: While cement producers are under pressure from the Government to cut prices, they are hit by a sharp rise in the raw material costs and their profit margins have remained minimal or without growth.

An Assocham study recording these findings points out a big rise of 42 per cent in raw material costs, much higher than the growth in the profit margins of cement companies in the last quarter of 2007-08.

Leading firms, including Grasim Industries, Ambuja Cement and ACC registered minimal or no growth in their net profits, an Assocham Eco Pulse (AEP) study found.

Ambuja Cement reported a drop of 42 per cent in its net profit, while ACC showed no growth and Grasim Industries’ bottomline was restricted to nine per cent, the study said.

Wholesale prices of cement surged by 8.5 per cent during this period, it said adding that key raw materials used in production have recorded a steep rise in prices. While the wholesale prices of limestone grew by 13.9 per cent, fire clay showed a rise of 30 per cent. “Power and fuel cost, which constitute 60 per cent of the total operating expenditure of cement companies, have increased by 24 per cent in the fourth quarter. This is on account of the ten per cent rise in coal prices,” Assocham President Venugopal Dhoot said.

Printer friendly page
Send this article to Friends by E-Mail

Business