India cement makers to hike prices

India cement makers to hike prices
Published: 23 September 2008

ACC, India’s largest cement maker, has hiked prices in south, east and Maharashtra. "We’ll have to up prices further. It is imperative that ACC raises prices to rein in the fall in margins," said Sumit Banerjee, managing director, ACC. Since August 20, cement prices in south have gone up by Rs 3-5 per bag. The western market, too, saw price hikes early this month. In Maharashtra, companies such as ACC, UltraTech and JK Lakshmi Cement have increased prices by Rs 3 per bag.

Quite a case of making hay, said analysts. "Producers are trying to earn as much as they can before oversupply hits town in the next financial year leading to a significant decline in prices," said an analyst with a domestic brokerage, who did not wish to be named.

Vinod Juneja, managing director, Binani Cements, told DNA Money, "From October-November, we will increase prices by Rs 2-3 per bag across markets. We will have to pass on some of the increase in input costs to our customers, both wholesale and retail buyers."

Binani had earlier steered clear of hiking prices. "Coal, transportation and input prices have gone so high that it is very difficult to have high EBITDA margins. Even our bank interest rates have shot up. These factors are putting pressure on our bottomline," Juneja said.

The market in north, however, may escape the price rise. ACC’s Banerjee said excess capacity and imports from Pakistan are preventing companies from increasing prices there. Imports from Pakistan constitute 7% of the market in north. Domestic players have also ratcheted up dispatches, creating oversupply.

Banerjee remained unperturbed about reports of a likely slowdown in housing construction on the back of rising interest rates impacting realtors’ sales volume. "The outlook for cement demand and pricing remains firm in 2009 and 2010, with the exception of the northern region, where prices are likely to be sluggish," he said.
Cement makers to hike prices

ACC, India’s largest cement maker, has hiked prices in south, east and Maharashtra. "We’ll have to up prices further. It is imperative that ACC raises prices to rein in the fall in margins," said Sumit Banerjee, managing director, ACC. Since August 20, cement prices in south have gone up by Rs 3-5 per bag. The western market, too, saw price hikes early this month. In Maharashtra, companies such as ACC, UltraTech and JK Lakshmi Cement have increased prices by Rs 3 per bag.

Quite a case of making hay, said analysts. "Producers are trying to earn as much as they can before oversupply hits town in the next financial year leading to a significant decline in prices," said an analyst with a domestic brokerage, who did not wish to be named.

Vinod Juneja, managing director, Binani Cements, told DNA Money, "From October-November, we will increase prices by Rs 2-3 per bag across markets. We will have to pass on some of the increase in input costs to our customers, both wholesale and retail buyers."

Binani had earlier steered clear of hiking prices. "Coal, transportation and input prices have gone so high that it is very difficult to have high EBITDA margins. Even our bank interest rates have shot up. These factors are putting pressure on our bottomline," Juneja said.

The market in north, however, may escape the price rise. ACC’s Banerjee said excess capacity and imports from Pakistan are preventing companies from increasing prices there. Imports from Pakistan constitute 7% of the market in north. Domestic players have also ratcheted up dispatches, creating oversupply.

Banerjee remained unperturbed about reports of a likely slowdown in housing construction on the back of rising interest rates impacting realtors’ sales volume. "The outlook for cement demand and pricing remains firm in 2009 and 2010, with the exception of the northern region, where prices are likely to be sluggish," he said.