Coal prices putting pressure on cement
The cement industry is facing pricing pressure due to increase in the coal and freight prices. Also, the GST on cement has not helped the industry deal with the pricing issues. The price per cement bag in Telangana now ranges from Rs 280 to 320.
“If the coal prices do not stabilise at a particular level, we will not be able to absorb the increases. We will have to pass on the burden to end customers and as a result the prices of cement in the retail market might go up. However, we will wait for about four months to take a decision on pricing,” said AtulPriyadarshi, Sr AGM, Planning and Development, Vicat (France).
This might impact the affordable housing segment. Among others, the fluctuations in the fuel prices too is making the freight costly. Most of the cement is transported through road. Though transport through rail is cheaper, reaching the last mile was possible only through road, he said.
The industry has drawn up plans to increase the capacity in Andhra Pradesh from the current about 40 million tonne per annum by another 10 million tonne in five years. This could mean an investment of over Rs 5,000 crore over five or more years, he said.
“Several companies have grown between 15 to 25 per cent last year. There was a slight slowdown in the demand in the last few months and that could be due to the election fever. With a stable Government now in place, we hope that we will grow more than last year,” said D Sai Samba Siva Rao, representing JK Cement.