Input costs hit cement firms

By OUR CORRESPONDENT

New Delhi, May 9: The Union finance minister, Mr P. Chidambaram, said on Friday that the government is in talks with cement industry to cut prices.

"We are in the process of persuading the cement industry to roll back prices," he said.

Cement industry has come under intense pressure from the government to cut prices after steel to control rising inflation. Cement prices are presently between Rs 200-260 a bag across the country with rates being higher in southern and western parts of the country. Steel companies have reduced prices upto Rs 4,000 a tonne.

A study by an industry chamber showed that the cement industry has borne a sharp rise of 42 per cent in its raw material cost in last quarter even as the wholesale prices of cement surged by only 8.5 per cent.

The power and fuel cost, which constitute 60 per cent of the total operating expenditure of the cement companies have incr-eased by 24 per cent the last quarter.

Due to high input cost, the top three cement firms accounting for one-third market share of industry, have registered minimal or no growth in their profit for quarter ended on March.

ACC Ltd with about 11 per cent market share has witnessed 7.2 per cent growth in sales with no growth in net profit.

Ultratech Cement recorded 35 per cent rise in its raw material cost in Q4 with only 9.3 per cent growth in sales. The increase in input cost was 86 per cent in case of Binani cement and 51 per cent per cent in Dalmia Cement.

Seven prominent industry players have reported 42 per cent jump in the raw material cost against 25 per cent increase in sales in the last quarter.he continued rise in the raw material cost of the cement companies may prove detrimental to their expansion plans in view of their inability to share the cost burden with the consumers.