The cement industry in the south bore the brunt of severe cost push without any compensating increase in the selling price of cement amid strong demand in the region, said N Srinivasan, Vice-Chairman and Managing Director of India Cements.
Addressing the 76th annual general meeting of the company through video conference, Srinivasan said the growth rate in the south for the industry was higher than that of the all-India growth rate, resulting in close to a 50 per cent increase in production in the first quarter of the year, compared to the previous year.
Despite better demand, the industry in the south was unable to pass on the increase in the cost of production due to a huge capacity overhang. Hence, compared to all-India peers who had a reasonable increase in the selling price to partially offset the cost increase, the industry in the south had to bear the brunt of a severe cost push without any compensating increase in the selling price of cement, he added.
The overall volume of sale of clinker and cement was 26.72 lakh tonnes (19.45 lakh tonnes) in the June quarter. The growth rate in cement sales for the company was marginally lesser than that of peers in the south as the company reduced its despatches to the east and far-off markets as the contribution was very low, given the increased cost.
What lies ahead?
Srinivasan stated that the cement demand is expected to remain on track with increased house building and construction activity in metros, rural, semi-urban and urban centers although cost pressure is expected to remain with a higher cost of fuel, power tariff and logistics and the consequential impact on all other materials, including packing.
Discussing the company’s new marketing initiatives, he said the company’s two value-added and application-based products — Conkrete Super King (CSK) and Halo Super King (HSK), launched in March 2022 — have been well received by channel partners and customers in different markets. Alongside, the company is focused on strengthening its sales and marketing force.