The Rs 85,000-crore domestic cement industry's realisation is squeezed by around 5-10 per cent on an average in the financial year 2008 owing to higher input costs and inability to pass on the cost increase to the end consumers.
N Srinivasan, vice-president and managing director, India Cements, said, "There has been no price reduction by the company. To offset the soaring input costs, we have increased the prices marginally in the June quarter."
This is in sharp contrast with the industry's trend that suggests a decline of at least Rs 4 on a 50 kg bag of cement under continuous government's pressure.
"The net realisation of the company in FY08 was Rs 2,784 a tonne and in the current quarter the realisation is Rs 2,960 a tonne," said Srinivasan. In the March quarter of the previous financial year, the company registered a realisation of Rs 2,834 a tonne, which is more than the year's realisation by Rs 50 a tonne.
H M Bangur, managing director, Shree Cement, a North India-based cement maker, said, "The realisation is not at all higher this quarter. In the north and central zone, there is a decline of Rs 50-100 a tonne in net realisation on cement."
Binani Cement, which is increasing its overall capacity to 13 million tonnes by 2012 from the current six million tonnes, also reported a decline in net realisation.
"There is pressure on profitability. The net realisation of the current quarter will certainly be lower by 10-15 per cent for the company as compared to last year," said Vinod Juneja, managing director, Binani Cement.
Kanpur-based JK Cement, which managed to maintain the same profits in March quarter, said that the current quarter will remain the same.
"For the financial year 2008, the company's net realisation was Rs 2,600 a tonne, but during the current quarter we see it is falling to Rs 2,400 a tonne," said Prashant Seth, general manager (finance, JK Cement.
According to a top executive with a leading multi-national cement companies having operations in India, "Situation is not good as input costs are shooting up and volumes are down. The prices also not improving."
The 196-million tonne cement industry is adding around 30 million tonne of fresh capacity in the financial year 2009.
