India cement firms’ Q2 advance tax falls

India cement firms’ Q2 advance tax falls
Published: 13 October 2008

A slowdown seems to be catching up with the construction sector, if the 35 per cent decline in advance tax payments of cement companies in September 2008 is any indication. Many leading cement manufacturers such as ACC, Ambuja, Grasim and Ultratech have paid lower advance tax as compared to the previous September.

Aditya Birla group’s Grasim and Ultratech have paid 66 per cent lower advance tax paid for September 2008 quarter compared to the year-ago period. Grasim paid INR79 crore, while Ultratech paid INR42 crore. The advance tax paid by ACC and Ambuja Cement, part of Swiss cement major Holcim, was lower by 38 per cent and 12 per cent, respectively. Ambuja paid INR176 crore in the September quarter.

"High energy prices brought margins under pressure at cement companies. While higher inflation in the country saw prices of everything going up, cement prices remained where they were," says ACC chief finance officer Onne Van der Weijde.

Cement companies like ACC have often cited high energy prices as a major area of concern. But with oil prices losing steam and coal prices beginning to soften, cement companies may heave a sigh of relief.

Another pressing concern for cement firms is the slowdown in real estate, leading to a lower demand for cement. Onne says market are subdued in the north, but east and south are doing fine.

This is partly reflected in the advance tax numbers. South India’s largest cement maker India Cement paid an advance tax of Rs 36 crore, up nine per cent from last year. Other companies, which reported growth include Zuari cement (76 per cent) and Lafarge India (58 per cent). Both companies paid a tax of INR38 crore each.

Many others, which reported lower advance tax for September quarter are Madras Cement (15 per cent at INR21 crore), Prism Cement (36 per cent at INR15 crore), Chettinad Cement (23 per cent at INR10 crore) and JK Cement (75 per cent at INR3 crore).