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Rise in input costs exert pressure on manufacturer’s profitability: ICRA

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The total costs of cement manufacturers have risen over the last few months as the prices of major input materials ??coal, pet coke and diesel are on an increasing trend, resulting in higher power and fuel and freight expenses.

The rise in these costs which account for 50 to 55 per cent of total costs has been exerting pressure on profitability of industry players which as per an ICRA note is bound to adversely reflect in Q4 FY2021 performance.

On the input costs front, the increase in the coal prices in the recent months is majorly driven by the higher demand from China and other Asian countries. The price of diesel and pet coke increase in line with crude oil prices. The recent surge in oil prices led to increase in pet coke prices by 73 per cent year-on-year and 29 per cent quarter-on-quarter in Q4 FY21 and diesel prices by 20 per cent year-on-year and 10 per cent quarter-on-quarter.

Rajeshwar Burla, VP and Co Group Head, ICRA said, “The cement companies have undertaken price hikes by around 7 per cent year-on-year in March 2021 to pass on the increase in the power and fuel and freight expenses. However, the EBIDTA/MT is expected to contract in Q4 FY21 by around 8.7 per cent quarter-on-quarter to around Rs. 1,148/MT.”

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Concrete

CCU testbeds in Tamil Nadu

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Tamil Nadu is set to host one of India’s five national carbon capture and utilisation (CCU) testbeds, aimed at reducing CO2 emissions in the cement industry as part of the country’s 2070 net-zero goal, as per a news report. The facility will be based at UltraTech Cement’s Reddipalayam plant in Ariyalur, supported by IIT Madras and BITS Pilani. Backed by the Department of Science and Technology (DST), the project will pilot an oxygen-enriched kiln capable of capturing up to two tonnes of CO2 per day for conversion into concrete products. Additional testbeds are planned in Rajasthan, Odisha, and Andhra Pradesh, involving companies like JK Cement and Dalmia Cement. Union Minister Jitendra Singh confirmed that funding approvals are underway, with full implementation expected in 2025.

Image source:https://www.heavyequipmentguide.ca/

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Concrete

JSW Cement gears up for IPO

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JSW Cement has set the price range for its upcoming initial public offering(IPO) at US$1.58 to US$1.67 per share, aiming to raise approximately US$409 million. As reported in the news, around US$91 million from the proceeds will be directed towards partially financing a new integrated cement plant in Nagaur, Rajasthan. Additionally, the company plans to utilise US$59.2 million to repay or prepay existing debts. The remaining capital will be allocated for general corporate purposes.

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Concrete

Cement industry to gain from new infrastructure spending

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As per a news report, Karan Adani, ACC Chair, has said that he expects the cement industry to benefit from the an anticipated US$2.2tn in new public infrastructure spending between 2025 and 2030. In a statement he said that ACC has crossed the 100Mt/yr cement capacity milestone in April 2025, propelling the company to get closer to its ambitious 140Mt/yr target by the 2028 financial year. The company’s capacity corresponds to 15 per cent of an all-India installed capacity of 686Mt/yr.

Image source:https://cementplantsupplier.com/cement-manufacturing/emerging-trends-in-cement-manufacturing-technology/

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