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Sharp rise in input cost dents cement firms’ profitability

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Power and fuel, and freight expenses account for 50-55 per cent of the total costs for cement manufacturers and the cost of production is likely to be higher by 3-4 per cent year-on-year during the current quarter.

A significant increase in input costs has resulted in a steady increase in cement prices across India over the current quarter. However, the rise in retail prices is unlikely to benefit cement companies in the short term. In fact, cement manufacturers are likely to see an impact on their profitability during the quarter, say analysts tracking the sector.

According to research agency ICRA, cement companies have already undertaken price hikes to the tune of around 7 per cent on average year-on-year (3 per cent-8 per cent month-on-month) during March 2021 due to the increase in input costs. ??his hike is driven by the increase in the input costs, primarily power and fuel expenses and freight expenses over the last few months. Further, the prices are likely to largely sustain in the near term supported by the healthy rural demand and the significant uptick in infrastructure activity,??it said in a report.

Power and fuel, and freight expenses account for 50-55 per cent of the total costs for cement manufacturers and the cost of production is likely to be higher by 3-4 per cent year-on-year during the current quarter. Coal prices have also increased from $49 per tonne in September 2020 to $88 per tonne in February 2021, and $84 per tonne in March 2021.Pet coke, another key input resource for cement, has seen prices reach Rs 12,600 per tonne in March 2021 from Rs 8,000 per tonne in September 2020. In the fourth quarter of FY21, these prices have been higher by 73 per cent year-on-year and 29 per cent quarter-on-quarter.

The increase in the power and fuel expenses caused by higher pet coke prices and the rise in freight expenses due to higher diesel prices has resulted in a decline in cement companies??operational profit margins by 8.7 per cent compared to the previous quarter. This figure has been declining since the second quarter of the previous year??alling 7.6 per cent quarter-on-quarter in Q2 FY21 and a 9 per cent quarterly fall in Q3 FY21.

??hile the cement prices are likely to largely sustain driven by the significant uptick in the demand, the higher input costs due to the increasing crude oil prices are likely to result in moderation of PBIDTA/MT??With the decline in OPBIDTA/MT, the debt coverage metrics are expected to witness marginal deterioration in FY2022 – TD/OPBIDTA to 1.8x times from 1.6x times and interest cover to 6.4x times from 7.0x times in FY2021,??the ICRA report said.

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Concrete

Dhanekula Institute Signs MoU with Adani Cement

Agreement to expand internships, industrial visits and practical learning

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The Department of Civil Engineering at Dhanekula Institute of Engineering & Technology, Ganguru, organised an industrial interaction programme under the Adani FutureX Programme on Thursday. The programme focused on strengthening engagement between the institute and the cement industry while giving students greater exposure to professional practices.

Yedukondalu, technical head for Andhra Pradesh and Telangana at Adani Cement, delivered a technical lecture on concrete as a man-made material. The session covered the importance of concrete in construction, its properties and applications, and its significance in modern infrastructure development.

The lecture also addressed the role of quality cement and suitable concrete technology in supporting durable and sustainable construction. The discussion connected classroom learning with the technical considerations involved in infrastructure projects and construction practices.

A key part of the programme was the signing of a memorandum of understanding (MoU) between the Department of Civil Engineering and Adani Cement under the Adani FutureX Partnership Agreement. The agreement is intended to strengthen industry-academia collaboration through opportunities for student internships and industrial visits.

The initiative is expected to provide students with practical exposure, improve their understanding of industrial practices and help bridge the gap between theoretical knowledge and real-world applications. Dhanekula Institute Chairman Dhanekula Ravindranath Tagore, Secretary Dhanekula Venkata Bhavani Prasad and Director DKRK Ravi Prasad supported the initiative, with the institute leadership highlighting the importance of industry-institution interaction in enhancing students’ technical employability.

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Concrete

JK Lakshmi Cement Begins Rs. 110 bn Assam Plant Project

Project Kamakshi will produce 2.5 mn t of cement annually by FY2029.

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JK Lakshmi Cement has laid the foundation stone for Project Kamakshi, its first integrated cement manufacturing facility in Assam, marking the company’s entry into Northeast India. The groundbreaking ceremony took place at Umrangso village in Dima Hasao district in the presence of Assam Chief Minister Himanta Biswa Sarma.

The project involves an investment of Rs. 110 bn, including the mining lease. It will have annual cement production capacity of 2.5 mn t and a 1 mn t clinkerisation unit, with completion scheduled for FY2029.

The facility is expected to create more than 2,000 jobs and will primarily serve the growing Northeast market. It will also include dedicated railway sidings for transporting raw materials and finished cement, supporting supply chain reliability and regional distribution.

Chairperson and Managing Director Vinita Singhania said the project represented the beginning of a long-term relationship with Assam and the wider Northeast. She said the plant would help provide locally produced cement, employment and dependable supplies as the region’s infrastructure development accelerated, while enabling the company to grow alongside the communities it serves.

The investment supports JK Lakshmi Cement’s strategy of expanding into high-growth markets beyond its established presence in Northern, Western and Eastern India. The company expects the project to contribute to regional economic development and infrastructure growth while pursuing its long-term objective of achieving net-zero emissions by 2047.

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Kshatriya Engineering College Signs MoU with Adani Cement

Agreement to provide students with industrial exposure and training

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The civil engineering department of Kshatriya Engineering College in Nizamabad has signed a memorandum of understanding (MoU) with Adani Cement to provide students with industry-oriented training and practical exposure. The agreement is intended to connect classroom learning with workplace requirements in the construction sector.

Under the partnership, students will receive opportunities to take part in industrial visits and internships. The arrangement will also include guest lectures by industry experts and guidance on live projects, allowing students to gain first-hand understanding of industry practices and emerging construction technologies.

College secretary and correspondent Aljapur Devender said the initiative was designed to bridge the gap between academic instruction and industry expectations. He said the collaboration would help students develop practical skills and improve their employment prospects after completing their studies.

Principal Dr Katakam Srinivas said exposure to industrial practices was important for civil engineering students and would complement their academic learning. He said the MoU would support the development of their technical knowledge and confidence through greater familiarity with professional work environments.

Administrative officer B. Narender said the collaboration would familiarise students with modern construction technologies, quality standards and project management practices. Civil engineering department head N. Deepika said the agreement would help students understand recent developments in the construction sector and prepare for professional careers. The college said the partnership would give learners a broader view of the processes and standards followed in the industry, while helping them relate their academic studies to practical project requirements.

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