India Cements Ltd is set to increase the price of its cements by Rs 55 per bag across three stages over the next one month in order to cope up with increa0sing variable costs, especially the cost of coal, which jumped from $60 per tonne to $300 per tonne. The company is also moving ahead with a plan to sell a portion of its surplus land and raise money to pare down its debts this year, after it posted losses in Q4FY22.
India Cements proposes to increase the price of cement per bag by Rs 20 from June 1, by a further Rs 15 from June 15 and by an additional Rs 20 from July 1. “This should help cover our variable cost, which has increased steeply in recent times. I do not know whether other cement manufacturers will follow suit,” N Srinivasan, vice chairman and MD, India Cements said, while adding he does not remember when the last time the company had effected such a steep hike in cement prices.
“There are 40 different brands selling cement in the region in the price range of Rs 320 – Rs 400 per bag. Our products are premium and we had always priced it higher in the range of Rs 360 and above,” he said.
The company reported a loss of Rs 23.7 crore in the fourth quarter of FY22 as against a net profit of Rs 71.6 crore in the comparable year-ago quarter. Revenue from operations was down at Rs 1,391.99 crore from Rs 1,449.62 crore in Q4FY21. For the whole fiscal (FY22), net profit dropped significantly to Rs 38.9 crore as against Rs 222 crore in FY21.
It attributed this to lower volumes, down by 11%, and increase in variable production costs by 33%. On the move to monetize its surplus land, Srinivasan said the company has about 26,000 acres of land and these are located largely in rural areas, besides some parcels in the city and close to the city.
“We have a formed an internal group to sell some of the surplus land to pay off debts and to invest in plant improvement. But this is not a distress sale and we will wait for the right opportunity,” he said. The company has around Rs 3,000 crore in debts and has been regularly repaying and prepaying them to banks. “Last year we paid Rs 551 crore and this year we are to pay Rs 500 crore. We will sell land only to the extent to meet these contingencies,” he said.
