Higher fuel prices

Indian cement companies are gearing up for a price increase following the hike in domestic coal prices. While companies are still working out the price increase for various grades of coke, industry observers say that the impact is significant and coupled with the likely increase in freight rates on account of the hike in petroleum prices, a price hike in cement has become imminent.

ACC, the manufacturer with the largest installed capacity, will see input prices going up by Rs 5 per bag. ³We are in the process of working out a price increase. The cost increase is significant and we will try to pass it on, maybe in two tranches,² said ACC executive director AK Jain.  ACC uses ŒE¹ and ŒF¹ grade non-coking coal which is expected to see a 15 per cent price increase. ³We also have to see the impact on power tariff,² added Mr Jain.

For Gujarat Ambuja, the per bag impact is likely to be confined to Rs 1.50 per bag, according to analyst estimates. ³Gujarat Ambuja enjoys the benefit of being a low-cost producer so the per unit impact works out much less,² said an analyst with a domestic brokerage.  ³We are still working out the impact of the coal price hike. But the impact will be definitely high,² said a Gujarat Ambuja official.  According to company estimates, the domestic coal prices for Ambuja are expected to go up by 15-17 per cent.