As cement sales fall in peak season, companies cut prices by Rs 25 a bag

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The month of December, which is considered the peak period for cement companies, has turned out to be worse than the weak season as companies had to cut prices due to subdued demand.

On an average, cement prices have corrected by around Rs 25 to 20 per bag across the country. Cement companies across the country are under huge pressure with prices declining during the peak season, industry experts said.

Vinita Lakshmi Singhania, MD of JK Lakshmi Cement, said, “Demand has just not revived even in the peak season following slowdown in sectors like real estate and infrastructure. There are no triggers for demand to revive. For some reason, demand has just vanished and there are no signs of revival in the near-future. The government should take some-steps to trigger growth.”

Singhania said the firms are pinning hope on next year general election which can lead to some uptake in demand.

Vinod Juneja, MD of Binani Cement, said that at the moment demand is on the lower side. However, things may improve from next year with elections round the corner.

A senior official from cement stockist and dealers association said, “Cement demand across the country continues to remain subdued. In the West and North prices have corrected by around Rs 20 to 25 per bag while in the central region the prices have corrected by around Rs 40 per bag. The southern and eastern part have witnessed marginal decline in prices reflecting the dire situation of the sector.”

Experts said the prices have corrected as big firms like ACC and Ambuja have a year-end mandate of clearing stock in December as they follow calendar year of accounting.

Rajesh Kumar Ravi, an analyst at Karvy Stockbroking, said, “Holcim-controlled ACC and Ambuja follows calendar year accounting structure and have a target to achieve sales by the year-end. Since this year the demand has remained subdued discounts are on the higher side.”

During the July-September quarter, cement firms like ACC, Ambuja, UltraTech all had cautioned that the economy is going through a challenging time due to which demand has been impacted. In the near-term the challenging environment is likely to continue.

Onne van der Weijde, managing director, Ambuja Cements, had earlier said, “The outlook continues to remain challenging due to difficult macro-economic condition and resultant subdued demand. The company will continue working on improving efficiencies.”

Ravi Sodah, an analyst at Elara Capital, said, apart from the discounts offered by the large firms to clear stocks the demand has also been impacted as due to elections in several states the movement of cement got restricted.

Sodah said although prices have corrected in the month of December but overall the prices are marginally better compared to a year ago as cement companies had taken significant price increase in the month of October and November.

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