'Cement prices may go up if input cost continues to rise': India Cements MD N Srinivasan

"Variable cost for the quarter was high. If there is an increase in the input cost, we will have to increase the price," said Srinivasan in an interaction

Vice Chairman and Managing Director of cement major, India Cement Ltd, N Srinivasan today said that the company expects cement prices to go up if the input cost continues to rise. Srinivasan also said that demand is now improving in Western and Northern Indian where lockdown is gradually being eased. 

Maintaining that the company will stick to its capital expansion plans despite the second wave, Srinivasan also said that he expected the lockdown restrictions to be eased by mid-June after which pent up demand will drive sales and growth. 

In an interaction after the company's result for Q4, FY21 and FY21, Srinivasan said, "Variable cost for the quarter was high. If there is an increase in the input cost, we will have to increase the price. In May, cement prices were up by Rs 10 per bag. Prices may go up in the month of June by another Rs 10 to Rs 15 per bag." 

It may be noted that in the fourth quarter, cement sector witnessed a steep hike in the prices of input materials like fuel and petroleum products as well as packing costs. 

Srinivasan said that the company will stick to its expansion plans. "In Gujarat the lockdown is easing. We expect the lockdown in the North to be relaxed as we go on. Overall the lockdown effect may get minimised by the mid of June. I do not think there is a need to rethink the business and expansion plan for the current financial year, which includes Rs 600 crore debt reduction unless something really drastic comes up. So our capital expenditure will continue." 

Going forward, the company will continue its expansion plans at the New Cement Mill in Shankarnagar and Waste Heat Recovery plant in Chilamkur. This is the second waste heat recovery plant of India Cements Ltd.  

Srinivasan expressed hope that the "direct impact of Covid" will disappear in June even while he maintained that it is a small interruption and pent up demand will come up once the restrictions are relaxed. "Budget did not bother about the fiscal deficit. There is a big thrust on infrastructure. There is an interruption because of Covid. But I do not foresee a problem as far as demand is concerned," he added.  

Srinivasan also said that the company will continue to operate on cash and carry model unlike last year when the national lockdown was imposed by the central government, this time local lockdowns have been imposed by the states, which can provide relief on bank loans like the Centre last year. "The idea is you need cement, you pay for it," Srinivasan quipped.    

India Cements Ltd has reported a profit of Rs 222 crore in 2020-21 compared with loss of Rs 36 crore loss in the previous fiscal year. 

The company reported a consolidated net profit of Rs 43.97 crore for the fourth quarter ended March 2021, on the back of strong sales, while its EBIDTA stood at Rs 213 crore, which was more than double the previous year figure of Rs 85 crore.

Also read: India Cements FY21 profit rises to Rs 222 cr; EBIDTA up 35%

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