Indian cement manufacturers have spent 14 per cent more on activities related to sales promotion, advertisements and other selling expenses during financial year 2022-23 (FY23), data from their annual reports shows.
In FY23, 13 of India’s listed cement companies (see chart) spent a combined Rs 3,076 crore on such activities.
Of these, UltraTech Cement was the highest spender, at Rs 1,296.09 crore, a rise of 16 per cent from a year ago.
Companies where a significant rise in ad and sales promotion spends was noticed include Dalmia Cement, Sagar Cement and Prism Johnson. They reported a 30 per cent or higher change in spends for promotional and related activities.
For companies where a bifurcation was made available, UltraTech Cement, JK Cement and Shree Cement marginally reduced spends on advertisements. They, however, increased funds for sales promotion and other selling expenses.
Cement companies tend to focus on market share retention and expansion in a high-growth market, a trend playing out in India’s cement sector now.
In the June 2023 quarter, while the industry’s cement demand grew over 10 per cent, large players such as UltraTech, Shree Cement and ACC outperformed the industry.
With the boost in infrastructure and construction activity in the country, demand for building materials has been on the rise. Cement demand in FY23, is estimated to have grown by 8.8 per cent and a similar trend is expected in the current financial year also.
For FY23, at a combined growth rate of 14 per cent, the growth in advertisement spends and sales promotional activities have outpaced the industry’s volume growth.
However, the spends, as a percentage of revenue, remained unchanged for most companies, in the range of up to 2 per cent.
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