The recent fall in coal prices seems to have provided a much needed breather to cement companies in India, but it apparently is not enough to protect the depleting profit margins.
As per report, coal cost for the cement companies is likely to range between US$190/t and US$200/t in the Q2 of the financial year 2008 against US$170/t to US$240/t in the Q1.
Mr KC Birla CFO of UltraTech Cement said that “The dip in coal prices is in line with crude oil. Coal was sold at US$240/t, when crude oil was quoted at US$140 a barrel.”
He said that “One should understand that coal was as low as US$70t to US$80/t in the Q2 last year. The production cost has gone up as much.”