Mumbai: Warning signs are showing up on the country’s cement industry, as it struggles with escalating input costs and a forced inability to pass on the costs to their customers.
Two of the top four cement manufacturers in the country have seen their profits slide in the quarter ended 30 June, while the other two witnessed their slowest growth in eight quarters.
On Friday, Ambuja Cements Ltd said its net profit for the quarter fell 33% to Rs577.02 crore, year-on-year, while Grasim Industries Ltd reported a marginal 0.4% rise.
Ambuja Cements’s quarterly net sales rose 8% to Rs1,569.77 crore and its domestic despatches were up 5%, but exports fell 70% reflecting the export ban initiated by the government, which impacted six weeks in the quarter.
“Cost pressures continue to be unrelenting,” Ambuja Cements said in a statement. “Fuel and power costs in our plants are significantly higher year on year (34%), in particular cost of imported coal which has tracked global oil developments and shown no signs of abatement in the near future.”
Ambuja Cements also had an exceptional gain of Rs303 crore net of tax on the sale of its remaining stake in Ambuja Cements Pvt. Ltd to Holderin Investments Ltd, the investment subsidiary of Swiss cement major Holcim Ltd.
Grasim Industries, part of the Aditya Birla Group, said net profit for the quarter came in at Rs672 crore, while revenue grew to Rs4,430 crore from Rs4,060 crores.
Production increased by 3% at 3.99 million tonne, while ready mix concrete volumes grew by 61% due to the commissioning of new plants.
Last week, UltraTech Cement Ltd said its profit for the first quarter rose 2% while ACC Ltd, the country’s largest cement maker, on Thursday reported a near 27% drop in its second-quarter net profit hurt by a surge in fuel and input costs.
Ashwin Ramarathinam contributed to the story.