The Delhi-based Dalmia Cement Bharat, like others, is feeling the pinch of surging input costs, inflation and rising interest rates and is ready to take some serious measures on the price front.
A company source in the know said prices may be hiked by as much as Rs 20-30 per bag in the next few months to make viable its Rs 4,200-crore expansion plans. This is the first time that a cement firm will raise prices to this extent on a single bag. When contacted, Dalmia Cement chief executive and managing director Puneet Dalmia told the Ecomonic Times of India: “We may increase prices by Rs 20-30 per 50-kg bag in a phased manner. As the raw material and input costs have gone up, companies have no option but to pass it on to consumers.” Currently, cement prices are hovering at around Rs 245-260 a bag.
Mr Dalmia is optimistic about the cement industry going forward, but said the current cement prices did not justify the planned investment. The price increase is necessary to complete ongoing expansions across the country. Moreover, cement price increase is below the inflation rate, he pointed out.
The company is doubling its production capacity from 3.5Mta to 8Mta by the end of fiscal 2009-10. It is setting up two greenfield plants in Andhra Pradesh and Tamil Nadu, which are expected to be commissioned by the end of this fiscal. Harendra Kumar, head-research of Centrum Broking, said: “The cement sector has taken a beating in the past few quarters. Barring a few markets, the price remains stable, but completion of announced expansion plans will not be an easy task for cement companies.”
Dalmia Cement is focused on the South Indian market and has a market share of 2 per cent. Its cement brands include Superoof and Vajram. Its June cement shipments rose 5 per cent to 295,000t from 281,000t in the year-ago period. Cement production in the month fell around 5 per cent to 2,71,000t from 2,85,000t.