Economy & Market

Cement Industries wobble in Q2

Published

9 years ago

November 30, 2017

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With GST rolling over at the start of quarter of July-September 2017, the cement industry was caught off guard about the new process, but more than euphoric on the One Nation One Tax regime. Pegged under the highest slab rate of 28 per cent, the cement industry was found wobbling under the new tax regime due to the temendous paper work, added with the inconsistency in the chain’s backward and forward link. Other problems include the temporal problem fixing by the government and above all multiple rates for buying raw materials and selling final goods.

The GST rates and the processess kept tinkering in order to overcome pointed anomalies and issues relating to filing of the returns. Nevertheless, the quarter being seasonally dull for the cement industry due to low construction activity during monsoon, and with falling production volumes, the performance of most of the companies was under strain from both, the demand and the supply side. Further, points such as the avaliability of sand, the ban on the usage of petcoke and furnace oil will continue to haunt the cement companies. Nitin Madkaikar reviews the performance of cement companies during the quarter July to September 2017, only to come to a conclusion that there is long way to go under the new tax regime for all related activities to be on the same page.

Financial results of 33 large and small cement companies which represent around 50 per cent of the sales for the quarter ended September 2017 showed a growth of 12 per cent in top line in a year on year (YOY) comparison but down 16per cent sequentially (September over June). The bottom line was negative in both comparisons declining sequentially by 5.6 per cent and 42 per cent respectively. These companies are categorised into large (those with quarterly net sales of over Rs.1,000 crore), medium (those with net sales of Rs.200-1,000 crore) and small (companies with net sales of less than Rs.200 crore). The financial results of quarters ending September 2016, June 2017 and September 2017 are considered for review in this analysis.

In the previous quarter, (June 2017) the cement business had suffered due to the wholesalers and retailers reducing stocks prior to the Goods and Services Tax (GST) roll out. This quarter was mired by the implementation of the new tax regime, the GST, resulting in performance below market expectation. Nevertheless, the quarter is seasonally dull for cement business due to low construction activity during the South West monsoon.

Of the 33 companies under review, 10 companies posted declined in yoy sales (including 4 large) but QoQ decline was posted by 23 companies (including 6 large companies). So top line was down across categories and not for a particular category. Similarly, yoy net profits were down in 18 companies (including 7 large companies) while QoQ saw net profits down in 24 companies (including 8 large companies). This implies, the bottom line was adversely affected across all size of companies.

The overall profitability (Net Profit/Net Sales) was at 6.1 per cent in September 2017 quarter, down from 7.3 per cent in quarter of September 2016 and 9 per cent in quarter of June 2017. Almost all companies could manage to post positive margin excepting five companies who recorded net loss during the September 2017 quarter. Only three companies Ambuja Cements, Ramco Cements and OCL India could manage to maintain their margins across three quarters under review. 16 companies saw profitability drop below their levels a year ago while 24 companies saw profitability levels below previous quarter.

The weak performance can also be drawn from the macro factors like production. In Q1 2017-18, total cement production was down 3.3 per cent year on year (at 73 million tons) which could not revive in Q2 and fell again although marginally by 0.4 per cent (68 million tons). Thus, the first half of 2017-18 saw production fall 2 per cent compared to 5 per cent increase (in similar comparison) in the same period a year ago. The GDP growth also tapered in Q1 2017-18 to 5.7 per cent but recovered slowly to 6.3 per cent in Q2. Many GDP growth predictions for the year are revisited but mostly points towards a lower economic growth for the year.

Prospects
As per the predictions of industry experts, there will be a growth in the industry at 5-6 per cent CAGR between FY’17 and FY’20 and the domestic consumption is set to out pace the supply in the next three fiscal years. In the Union Budget 2017-18, Rs 22,500 crore was allocated to achieve government’s mission of ‘Housing for All by 2022’. the housing sector alone accounts for nearly 67 per cent of the total cement consumption in India. The increased allocation to rural low-cost housing under Pradhan Mantri Awaas Yojana- Gramin scheme to Rs 23,000 crore is likely to result in a rise of 2 per cent in the cement demand.

For the year, the cement demand is expected to register a modest rise of 1 per cent in 2017-18 pushed by pick-up in affordable and rural housing and road and irrigation projects, said rating agency ICRA. As per the agency, the cement offtake was weak in first half of the year which extended into October due to factors like weak real estate activity, sand shortage and GST implementation issues. However, new project announcements from private sector will remain weak. The demand is expected to rebound in from the fourth quarter of the year as against the earlier expectation of the third quarter, the rating agency said.

Company-wise Performance Ambuja Cement
Ambuja Cement delivered strong numbers while focusing on brand building, through differentiated offerings for individual home builders, building and infrastructure segments. According to Ajay Kapur, Managing Director and CEO, the company’s strategy to focus on key markets, premium products and value based pricing has paid off, leading to strong net sales and EBITDA growth.

During July-September 2017 quarter Ambuja Cement recorded higher sales and growth in value-added pricing, but it also faced cost pressures relating to rising fuel costs, packaging and raw material prices. Thus, there has been a move to increase the use of petcoke and alternative fuels further, as against 67 per cent it achieved in June 2017. Ambuja Cement’s net sales rose 14 per cent YOY to Rs 2,320 crore even as sales volume grew slower at 11.6 per cent to 5.02 million ton. Net profits, however, moderated 2 per cent to Rs 272 crore for the quarter. EBITDA per ton rose 3 per cent to Rs 706.

UltraTech cement
UltraTech Cement reported a 28 per cent decline in net profit (in standalone) to Rs 431 crore for the quarter ended September 2017. It had clocked net profit of Rs 601 crore in the July-September 2016. The company’s net sales were up 6.1 per cent at Rs 6,571 crore during Q2 2017-18 as against Rs 6,196 crore in same quarter the year-ago.

This quarter continued to witness increasing cost trends, attributable to increase in fuel price while total expenses were up 11per cent at Rs 6,095 crore as against Rs 5,491 crore. Depreciation increased 59 per cent to Rs 499 crore while interest cost doubled to Rs 376 crore due to cost involving new cement plant acquisition. Meanwhile, EBITDA increased 24 per cent to Rs 1,350 crore, translating into EBITDA/ton of Rs 1,028 and margin of 21per cent.

The company stated that the acquisition of cement plants of Jaiprakash Associates and Jaypee Cement Corp had helped it augment capacity to 93 million ton per annum. The acquisition has also enhanced its footprint in the high growth markets of central India, eastern UP and coastal Andhra Pradesh, where the company has been focusing to increase its presence.

ACC
Ace cement maker ACC reported over two-fold increase in net profit to Rs 178 crore for the quarter ended September 2017, largely driven by increased productivity and cost optimisation. Net sales was up 24 per cent Rs 3,116 crore for the quarter under review against Rs 2,519 crore in the corresponding period a year ago.

According to the company, the strong result is the reflection of increased focus on premium products, improved customer service levels and relentlessly driving productivity and cost optimisation.

The company expect demand for cement to remain favourable in the coming quarter spurred by the government’s increased spending on infrastructure.

Prism Cement
The company reported net sales for Q2 at Rs 2,238 crore but posted net loss of Rs 24 crore in quarter versus net profit of Rs 17 crore in the corresponding quarter of 2016-17.

The company’s volumes were impacted due to near complete sand mining ban in UP and Bihar, which together constitutes approximately 70 per cent of the sales. Further, a slowdown in the execution and new launches of real estate projects due to RERA registration of existing projects impacted volumes of tiles and ready mixed concrete segment.

Shree Cement
Financial results of Shree Cements were a mixed set of earnings in quarter ended September 2017, as it was slightly better than the low expectations.

According to H M Bangur, Managing Director, the worst seems to be over for the cement industry – the impact of demonetisation, GST now behind. The company expect better results in Q3 because of low base effect.

Availability of sand was a problem for the cement makers but believes to be over soon. Historically, demand for cement in Q3 is maximum, Bangur pointed out.

Shree Cement expects demand to grow 15per cent in next three years with sales volumes up 12per cent in 2017-18 for the company and able to achieve sales of 20 million tons against 18 million tons last year. However, pressure on margins will increase in transportation costs and freight costs. The freight costs have increased 17per cent YoY, at Rs 200 a ton during the quarter.

The Supreme Court’s ban on use of petcoke and furnace oil in Delhi-NCR region will not impact the company since it follows all emission standards of using Petcoke.

India Cements
India Cements reported net profits of Rs 24 crore for the quarter ending September 2017 against Rs 62 crore during the same quarter previous year. Net sales during the quarter came down to Rs 1,268 crore as against Rs 1,314 crore last year. The financial numbers are not comparable with last year since sales include excise duty besides its subsidiary Trinetra Cements was merged with it.

According to N Srinivasan, Vice-Chairman and Managing Director, the ‘sluggishness’ in performance cannot be attributed alone to demonetisation introduced last year or GST or general economic slowdown, but a combination of all three factors. However, absence of freely availability of sand was also a reason. In Tamil Nadu cement volume could not rise despite the demand. He also stated that this was the first time the company witnessed a de-growth.

OCL India
Although performance of OCL in the Q2 improved, it fell short of expectations as the numbers were weaker than expected. While net sales declined 3 per cent , net profit fell 8 per cent.

JK Cement
The company reported over two-fold increase in its net profit to Rs 93.14 crore for the quarter ended September 2017 and net sales up 3 per cent at Rs 1,108 crore in the quarter. The company, part of the US$4 billion JK Group, operates integrated cement facilities at Sirohi (Rajasthan), Durg (Chhattisgarh), Kalol and Surat (Gujarat) and Jharli (Haryana).

Birla Corp
Birla Corporation, a large cement company, saw net profit plunge 84 per cent to Rs 4 crore on higher expenses. Net sales declined 10 per cent to Rs 797 crore in the September quarter compared to Rs 887 crore in the year-ago period. Total expenses increased 17.6 per cent in Q2 while finance cost almost doubled to Rs 105 crore during the quarter under review.

Concrete

Cement Makers Reaffirm Commitment to Sustainable Growth

Published

1 week ago

June 5, 2026

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World Environment Day spotlight on innovation and circularity

On World Environment Day, the Indian cement industry reiterated its commitment to supporting India’s climate ambitions through sustainable manufacturing, resource efficiency and the adoption of cleaner technologies.

The Cement Manufacturers’ Association (CMA) said the sector remains aligned with the Government of India’s Net Zero commitments and is accelerating efforts to reduce its environmental footprint while supporting the country’s infrastructure and development agenda.

Parth Jindal, President, CMA and Managing Director, JSW Cement, said the industry is increasingly adopting cleaner technologies, improving energy efficiency and expanding the use of alternative fuels and raw materials. He also highlighted the growing importance of circular economy practices, where industrial by-products and waste streams from one sector are utilised as resources in another.

“The Indian Cement Industry is aligned to the Government’s commitments on carbon mitigation and is accelerating the adoption of cleaner technologies, resource efficiency and circular economy practices while actively exploring the potential of Carbon Capture, Utilisation and Storage (CCUS) as a critical pathway for deep decarbonisation,” said Jindal.

He added that coprocessing industrial waste and by-products helps conserve natural resources, reduce disposal requirements and lower the environmental footprint across multiple sectors.

According to Jindal, sustainability is no longer limited to manufacturing processes but is increasingly influencing investment decisions, innovation strategies and long-term growth plans within the industry.

Echoing similar views, Dr Raghavpat Singhania, Vice President, CMA and Managing Director, JK Cement, said sustainable development extends beyond emissions reduction and must also focus on responsible resource utilisation and waste minimisation.

“Sustainability in the built environment cannot be measured by emissions alone. It is equally about how efficiently we use resources, how effectively we minimise waste and how responsibly we create the infrastructure that will serve future generations,” said Singhania.

He noted that the cement industry is advancing its sustainability agenda through greater resource efficiency, increased circularity, technological innovation and continuous improvements in manufacturing practices. As a key contributor to India’s infrastructure development, the sector has a critical role to play in balancing economic growth with environmental responsibility.

On the occasion of World Environment Day, industry leaders reaffirmed their commitment to supporting India’s climate goals while delivering the materials required for resilient, durable and sustainable infrastructure.

Concrete

Building a Greener Future Together

Published

1 week ago

June 4, 2026

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Environmental sustainability requires immediate action, not just long-term commitments and discussions. Recycling, circular economy practices, and technology-driven waste management can help industries reduce environmental impact while supporting sustainable growth.

Author: Jignesh Kundaria, Director and CEO, Fornnax Technology

World Environment Day serves as an important reminder that environmental sustainability can no longer remain confined to discussions, reports, or long-term commitments. The environmental challenges facing the world today demand immediate, measurable, and collective action. Across industries and communities, waste generation continues to outpace our ability to process it responsibly, placing increasing pressure on ecosystems, natural resources, public health, and the well-being of future generations.

One of the most significant shifts required today is a change in how society perceives waste. Rather than being viewed as a material to be discarded, waste must be recognised as a valuable resource that can contribute to both economic growth and environmental protection when managed through the right technologies and systems. This mindset forms the foundation of the circular economy model that countries across the world are increasingly adopting to reduce landfill dependence, recover valuable materials, and create more sustainable industrial ecosystems.

India has made meaningful progress in strengthening awareness around sustainability, recycling, and environmental responsibility over the past decade. Significant efforts are being made to formalise the recycling sector through improved infrastructure, technology adoption, policy implementation, and broader stakeholder participation. These developments are creating a stronger foundation for responsible waste management and resource recovery across the country.

However, achieving long-term environmental impact requires collaboration from all stakeholders. Industries, policymakers, technology providers, and communities must work together with greater accountability to strengthen recycling ecosystems, encourage responsible waste management practices, and create sustainable outcomes through consistent execution rather than temporary interventions.

As someone closely associated with the recycling industry, I firmly believe that technology will play a decisive role in addressing future environmental challenges. Advanced recycling systems have the potential to recover valuable resources, reduce pollution, minimise landfill burdens, and conserve energy, creating a more sustainable future for generations to come. This belief is deeply reflected in Fornnax’s motto, “Committed to Create a Green Future,” which embodies our commitment to building long-term environmental value through innovation and responsible action.

At the same time, technology alone cannot deliver meaningful change. Real progress requires intent, awareness, participation, and a shared sense of responsibility. Sustainable development can only be achieved when innovation is supported by collective action and a genuine commitment to environmental stewardship.

On this World Environment Day, let us move beyond conversations and take meaningful steps towards creating a cleaner, greener, and more sustainable planet. By embracing innovation, strengthening recycling ecosystems, and acting responsibly today, we can create lasting environmental impact and secure a better future for generations to come.

Concrete

Dalmia Bharat Acquires Jaiprakash Associates Cement Assets for ₹2,850 Crore

Published

3 weeks ago

May 25, 2026

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Dalmia Cement executed a Business Transfer Agreement with Jaiprakash Associates and Adani Infra, to acquire 5.2 MnTPA of cement capacity across Madhya Pradesh and Uttar Pradesh.

Dalmia Cement (Bharat) announced on May 22, 2026 that it had signed a Business Transfer Agreement with Jaiprakash Associates Limited and Adani Infra (India) Limited for the acquisition of cement plants located at Rewa in Madhya Pradesh and Churk, Chunar and Sadwa in Uttar Pradesh. The deal was struck at an enterprise value of ₹2,850 crore and is expected to close within two weeks of execution.

The acquired assets from Jaiprakash Associates include 5.2 MnTPA of cement capacity and 3.3 MnTPA of clinker capacity. The package also covers 99 MW of thermal power capacity and railway sidings at Rewa, Chunar, and a common siding at Churk. This infrastructure gives the acquisition immediate operational utility beyond just production tonnage.

The transaction has a long backstory. Dalmia Cement had originally entered into a framework agreement with Jaiprakash Associates in December 2022, covering the sale of these business assets along with a long-term clinker supply arrangement. However, before the deal could be completed, Jaiprakash Associates was admitted to insolvency proceedings under the Insolvency and Bankruptcy Code. The earlier agreements could not be consummated as a result.

In an official statement, Puneet Dalmia, Managing Director & CEO, Dalmia Bharat, said, “I am very excited about addition of these assets in our portfolio. This serves as a great strategic fit for Dalmia. It helps us move forward in our journey to be a pan India player and provide a strong head start to serve the high potential markets in Central region. I am optimistic that the expansion potential of these assets along with close proximity with Dalmia’s captive mines will help us create a capacity hub for the future”.

Following the approval of Adani Group’s resolution plan for Jaiprakash Associates under the IBC framework, Dalmia approached the new management to revive discussions. The fresh Business Transfer Agreement was executed to settle all pending disputes, legal proceedings, and arbitration matters arising from the original framework agreement with Jaiprakash Associates.

Expanding market reach

Dalmia added, “Our familiarity with these assets under the earlier tolling arrangement gives us a deep understanding of the facilities and helps us establish strong connect with channel partners and vendors. We believe that this will help us in faster ramp up of capacities and quicker inroads into the market. As we look forward, I am very confident that we will be able to leverage the strengths of Dalmia to operate these assets in a manner where we can maximise value creation for all our stakeholders.”

With the addition of these plants, Dalmia Bharat’s total installed cement capacity will rise to 54.7 MnTPA upon consummation. The company has further expansion projects underway at Belgaum, Pune, and Kadapa, which are expected to take overall capacity to 66.7 MnTPA by Q2 to Q3 FY28.

The Central India location of the Jaiprakash Associates plants gives Dalmia Bharat faster access to markets in Madhya Pradesh and Uttar Pradesh than a greenfield build would have allowed. The company also cited debottlenecking and brownfield expansion as near-term opportunities at the acquired sites. Dalmia Bharat said the assets were expected to contribute positively to EBITDA and overall returns, given the pricing environment in the region and the company’s cost structure.