Lower pricing hits July-September profits, India

Lower pricing hits July-September profits, India
Published: 15 November 2013

Tagged Under: India Pricing Production costs 

Indian cement companies saw their profits drop over the July-September period due to higher cement prices and freight expenses.

Average dispatches across the country were estimated to have increased by 3.5 per cent, according to Business Line. Meanwhile, coal expenses were also lower as the international market price was down 11 per cent YoY to US$78/t.

However, the average cement prices were at INR279/50kg bag during the quarter, down seven per cent from INR300/50kg bag. In South India, a market where price discipline is usually observed, prices dropped as players tried hard to drive better volumes. But offtake was muted over the statehood tension in the Telangana region, which brought construction activities to a standstill in Andhra Pradesh, the largest market in the South. Overall, the extended monsoon in some parts of the country and a slowdown in infrastructure orders were also behind the decline. 

Moreover, although international coal prices have dropped sharply, cement makers are still facing pressures from the high price of inputs such as limestone, gypsum and fly-ash.  An increase in rail freight charges for bulk transport of cement and an increase in road freight cost due to the higher price of diesel have also hit cement makers.