The slowing of cement demand during the September quarter, coupled with pressure on prices, has affected Swiss major Holcim’s business in India.
ACC remained a laggard in Holcim’s operations, though its sister-concern, Ambuja Cements, did relatively well. ACC continued to struggle with delivery bottlenecks.
In its third quarter interim report, Holcim, which owns a little over 46 per cent in both ACC and Ambuja Cements, said “temporary price pressure in India during the monsoon season and the significant increase in variable production and distribution costs reduced internal operating Ebitda (earnings before interest, taxes, depreciation and amortisation)”.
“In addition, ACC had to contend with delivery bottlenecks due to operational factors. While Ambuja Cements generated significantly higher sales of cement and clinker, ACC saw a fall in deliveries,” said Holcim. The global major has its presence in over 70 countries.
In the Indian market, Ambuja sold 8.55 per cent more cement, while ACC’s sales had declined 1.7 per cent during the year so far. More, in the September quarter, ACC’s net profit plunged close to 80 per cent, whereas that of Ambuja was relatively better.
A better monsoon took a toll on Holcim’s balance sheet as well. The company said the monsoon was particularly harsh this year, prompted a slide in cement prices across the country. ACC’s sales during the September quarter stood at Rs 1,759 crore, a drop of 15 per cent, while that of Ambuja dipped three per cent to Rs 1,564 crore.
However, in its India outlook, Holcim’s picture was optimistic. “In India, a rapid rise in demand for building materials is expected following the monsoon,” it said.