Lower sales realisation hit margins of cement makers in Q2

Quarterly performance of major cement producers, challenges faced, price trends, and expectations for the industry's future growth.

Major cement manufacturers reported a decline in margins in the September quarter, mainly on account of lower prices, leading to lower sales realisation.

Barring three leading cement producers — UltraTech Cement, Ambuja Cement, and Dalmia Bharat — other smaller players, including Nuvoco Vistas Corp, JK Cement, Birla Corporation, and Heidelberg Cement, reported a decline in topline and sales volume in the second quarter of the current fiscal year.

Industry observers said the increase in sales volume of UltraTech and Ambuja Cements is mainly due to the several acquisitions by both companies that consolidated their position further in the industry.

The industry also faced challenges such as extended monsoon, floods, and a slow pickup in government demand, cumulatively leading towards a weak demand.

Power, fuel, and other costs, however, largely remained stable for the industry.

The all-India average cement price was around ₹348 per 50 kg bag in June 2024. It decreased 11% year-on-year to ₹330 per bag in September, though it increased 2% on a month-on-month basis.

In the first half of FY25, cement prices declined 10% year-on-year to ₹330 per bag. A year earlier, the average prices stood at ₹365 per bag and ₹375 per bag in FY23, according to an Icra report.