Binani Cement, a subsidiary of the Braj Binani group, is set to see a fall of 8 per cent in its profit margins in the current financial year, on lesser realisation and higher input costs.
“We anticipate a reduction of around 8 per cent in our profit margins in FY09 to 25-27 per cent against last year’s 34 per cent,” said Vinod Juneja, managing director, Binani Cement. Price realisation, he added, was 5-10 per cent higher last year.
Even as the company plans to increase prices next month, it expects that within a year, cement prices will come down, which will further affect margins.
“I think cement prices will come down to Rs 200-210 for a 50-kg cement bag. In that scenario, our profit margins will further slip to 20 per cent by 2010-11,” Juneja said.
He said that 20 per cent was reasonable profit for the industry when most fresh capacities are slated to go on stream in the next two years.
The Rs 980-crore cement company is finding sales tough in the present quarter, especially due to the rainy season. “Though we are able to sell the produced cement, we had to give discounts to consumers,” he said.
