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.

Leading cement maker Ultratech reported a 68% capacity utilisation with a 3% growth in volume terms. However, its sales realisation for grey cement declined 8.4% year-on-year (YoY) and 2.9% quarter-on-quarter (QoQ), in the July-September period.

Replying to a query on cement prices in the earnings call, UltraTech CFO Atul Daga said, “August to September, we saw improvement in prices and September to October also, the prices have been steady. So we have seen an improvement from ₹347 (in August) exit to about ₹354 currently.”

Ambuja Cements, the country’s second-largest cement maker, reported a growth of 9% YoY in sales volume at 14.2 million tonnes (MT) in the September quarter. However, its earnings before interest, taxes, depreciation, and amortisation (EBITDA) was 15% lower at ₹1,074 crore.

However, the Adani Group firm had a higher margin in the September quarter on a YoY basis driven by higher capacity utilisation and reduction in the cost of production. On a quarter-on-quarter basis, though, it had a “lower margin” than the June quarter “mainly due to industry-wise lower price realisation”.

Dalmia Bharat’s volume grew 8.4% YoY to 6.7 MT during the quarter. However, revenues dropped 2% to ₹3,087 crore due to a sharp decline in cement prices, the management said in the earnings call.

Its EBITDA declined 26.8% to ₹434 crore “on a YoY basis primarily due to softness in cement prices and higher fixed costs due to the shutdown”.

“The cement prices declined during Q2 due to weak demand scenario, particularly in south and eastern markets. These markets saw a decline of 5-7% QoQ and about 10-12% on YoY basis,” Dalmia Bharat’s management said.

It further said the month-to-date October prices are on the same lines as the September quarter average.

Birla Corporation’s sales volume was down 5% to 3.97 MT as cement demand was sluggish in the traditionally weak monsoon quarter and prices plummeted to record lows in all key markets.

“The company’s EBITDA per tonne from cement sales for the September quarter was at ₹461 compared to ₹683 in the same period last year. The cement division’s EBITDA margin at 9.8% for the September quarter represents a contraction of around 300 basis points from a year ago,” it said.

M P Birla Group firm’s revenue from the cement business was down 13.88% to ₹1,874.68 crore.

JK Cement’s net sales realisation was 0.8% higher on a QoQ basis to ₹4,708 per tonne in the September quarter in comparison to ₹4,669 per tonne in the June quarter of FY25, improved due to selective sales in high realisation areas.

Similarly Nuvoco Vistas Corp, the Nirma Group cement firm, said pan-India prices “remained under pressure and declined 4 per cent QoQ in Q2”, during which its volume declined 5% YoY.

HeidelbergCement India’s revenue from operations was down 18.54% to ₹461.41 crore, driven by a 15% decrease in volume and a decrease in price by 4%.

Moreover “driven by decrease in volume and prices, the company’s EBITDA per tonne decreased to ₹380, a decrease of 36% YoY,” it said.

The makers are expecting improvement with better sales realisation in the second half, helped by an increase in demand for housing and increased government spending on infra projects.

This investment from Ambuja Cementis “the largest investment in the State by a cement industry player”. File
| Photo Credit: Reuters

Adani Group-owned Ambuja Cement Ltd (ACL) on August 3 announced an investment of around ₹1,600 crore in Bihar to set up a cement grinding unit at Warisaliganj in Nawada district.

The 6 MTPA Warisaliganj cement grinding unit is the company’s first venture in Bihar, which is aggressively expanding its capacity in the country, according to a statement from the Adani Cement entity. “The Warisaliganj Cement Grinding Unit, a standalone facility with an overall capacity of 6 MTPA (million tonnes per annum), will be established at an investment of nearly ₹1,600 crore,” it said.

With this announcement, the billionaire Gautam Adani-led firm has become “the largest investment in the State by a cement industry player”.

“The project will meet the growing infrastructure needs of Bihar, aligning with priorities outlined in the recent Union Budget,” it said.

In the latest Union Budget 2024-25, the Narendra Modi-led government unveiled big-ticket projects for Bihar, proposing a total outlay of over ₹60,000 crore for various projects, including funding for three expressways, a power plant, heritage corridors and new airports and sports infrastructure.

Finance Minister Nirmala Sitharaman announced Centre’s support for the development of three Expressway projects — Patna-Purnea, Buxar-Bhagalpur, and Bodhgaya, Rajgir, Vaishali and Darbhanga, and an additional two-lane bridge over river Ganga at Buxar. These four projects will have a total cost of ₹26,000 crore.

The Adani group firm said it will execute its cement grinding unit project in phases, with the first phase being commissioned by December next year. “The project will be implemented in three phases with first phase of 2.4 MTPA at an investment of Rs 1,100 crore is targeted to be commissioned by December 2025. Adequate provisioning of land for future expansion is in place, which will be commissioned in due course at much lower capex,” ACL said.

The project will be located in Mosama village, Tehsil Warisaliganj, District Nawada, Bihar and the site is well-connected by road and rail network. Moreover, this project will contribute “approximately ₹250 crore per year to the State’s fiscal revenue” and create 250 direct jobs and 1,000 indirect jobs.

Bihar Industrial Area Development Authority (BIADA), the State agency, has already allotted 67.90 acres of land for this cement unit for which environmental clearance has been obtained for work on the site.

Pranav Adani, Managing Director (Agro, Oil & Gas) and Director, Adani Enterprises Limited, said: “We look forward to collaborating with the state government, authorities, and local communities on this and future projects. State government’s support in fast-tracking and provisioning of all permits has made this landmark investment possible in short time.”

Adani Group recently announced the acquisition of Hyderabad-based Penna Cement at an enterprise value of ₹10,422 crore, which will add 14 MTPA, taking its capacity to 93 MTPA. The Group aims to achieve a 140 MTPA capacity by FY28 and is aggressively expanding organically through capacity expansion at the existing units and also going for acquisitions. Through Ambuja, it also controls ACC Ltd and acquired MyHome Industries and Sanghi Industries in 2023.

Representational image only.
| Photo Credit: Reuters

Adani Cement, through Endeavour Trade and Investment Limited, has announced the completion of its refinancing programme for acquisition of debt taken for Ambuja and ACC, through a $3.5 billion financing package, raised from a clutch of international banks. 

“This facility will result in an overall cost saving of $300 million for the Adani Cement vertical,“ Adani Group said in a statement. Adani Family had acquired Ambuja Cement & ACC in a $6.6 billion deal last year.

 “The $3.5 billion facility marks the continued execution of the capital management plan outlined in September 2022 that will see step wise planned deleveraging of Adani Cement. With cement vertical Net Debt to EBITDA now under 2x,” the statement said.

The transaction was financed by facilities aggregating to have $3.5 billion from 10 international banks. DBS Bank, First Abu Dhabi Bank, Mizuho Bank and MUFG Bank acted as Mandated Lead Arranger and Bookrunners and Underwriter to the transaction. 

In addition, Barclays Bank PLC, BNP Paribas, Deutsche Bank AG, ING Bank, Sumitomo Mitsui Banking Corporation and Standard Chartered Bank acted as Mandated Lead Arrangers and Bookrunners for the transaction.