The margins of major cement companies of the country have declined in the September quarter. The main reason for this is the low prices, due to which the earnings of cement companies have decreased. Barring the country’s three major cement companies UltraTech Cement, Ambuja Cement and Dalmia Bharat, the profits and revenues of other small players including Nuvoco Vistas Corp, JK Cement, Birla Corporation and Heidelberg Cement have declined in the second quarter of the current financial year.

What do experts say?

Experts associated with this sector say that the increase in sales volume of UltraTech and Ambuja Cements is mainly due to several acquisitions by both the companies, which have further strengthened their position in the industry. The industry also faced challenges such as prolonged monsoon, floods and slow growth in government demand, leading to weak overall demand. However, power, fuel and other costs for the industry remained largely stable.

Currently the price of cement is Rs 348

The average price of cement at all India level in June was around Rs 348 per 50 kg bag. In September, it declined by 11 percent on annual basis to Rs 330 per bag. However, on a monthly basis it increased by two percent.

What does ICRA report say?

According to an ICRA report, cement prices declined by 10 percent on an annual basis to Rs 330 per bag in the first half of the financial year 2024-25. The average price of cement a year ago was Rs 365 per bag and in 2022-23 it was Rs 375 per bag.

Leading cement maker UltraTech has achieved 68 per cent capacity utilization in the September quarter with volume growth of three per cent. However, in the July-September period, gray cement sales realization declined by 8.4 percent on annual basis and 2.9 percent on quarterly basis.

September was the best for these companies

The sales of Ambuja Cements, the country’s second largest cement manufacturer, increased by nine percent to 14.2 million tonnes (MT) in the September quarter. However, the company’s earnings before interest, tax, depreciation and amortization (EBITDA) declined by 15 percent to Rs 1,074 crore.

However, the Adani Group company had higher margins on an annual basis in the September quarter, which was due to higher capacity utilization and reduction in production costs. During the quarter, Dalmia India’s turnover increased by 8.4 percent year-on-year to 67 lakh tonnes. However, due to sharp fall in cement prices, revenue declined by two percent to Rs 3,087 crore.

Decline in demand became a major reason

Birla Corporation’s sales volumes declined five per cent to 3.97 million tonnes as cement demand remained sluggish in the traditionally weak monsoon quarter. JK Cement’s net realization from sales increased by 0.8 percent quarter-on-quarter to Rs 4,708 crore in the September quarter. It was Rs 4,669 crore in the June quarter.

Similarly, Nirma Group’s cement company Nuvoco Vistas Corp said that all-India prices remained under pressure and declined by four per cent quarter-on-quarter in the second quarter. During this period, the company’s sales on a volume basis declined by five per cent. Heidelberg Cement India’s operating revenue declined 18.54 per cent to Rs 461.41 crore due to 15 per cent decline in volumes and four per cent decline in prices.