Covid-19 Pandemic

And The Indian Cement Industry Outlook Series

Capacity utilization at cement companies has improved significantly in May after a sharp drop in April with some cement companies reporting upto 80% drop in capacity utilization.

 While cement production halted in March-April owing to the nation-wide lockdown and the steps taken by the government to control the Covid-19 pandemic, production commenced in May in some of the cement plants after getting approvals from the respective state governments.

Easing of logistical hurdles and improved workers’ availability have helped cement companies move production levels upward in May and is expected to go up further in June in the expectation of more relaxations to the  lockdown.

According to the Indian cement industry, the IHB segment ( individual house builders ) which drives 55 per cent of the annual national demand, has been looking up after construction activities were permitted by various state governments.

Government infrastructure projects expected to be the catalyst to kickstart the economy post Covid-19, will create a huge demand for Cement, which in turn is expected to ramp up Cement capacity utilization to pre-covid19 levels. 

Cement Company Results

Sagar Cements

Standalone Results March 2020 

Net Sales was at Rs. 215.24 crore, 

down 19.76% compared to last year.

Reported Standalone quarterly figures for Sagar Cements are given as under:

Net Sales at Rs. 215.24 crore in March 2020 down 19.76% from Rs. 268.26 crore in March 2019.

Quarterly Net Profit at Rs. 8.59 crore in March 2020 down 49.17% from Rs. 16.90 crore in March 2019.

EBITDA stands at Rs. 35.65 crore in March 2020 down 20.85% from Rs. 45.04 crore in March 2019.

Sagar Cements EPS has decreased to Rs. 3.91 in March 2020 from Rs. 8.28 in March 2019.

Covid-19 Pandemic

And The Indian Cement Industry Outlook Series

Against the Covid-19 pandemic, most businesses will be looking to maintain their cash position. This is true of the Indian Cement Industry too. Due to the lockdown, cement sales have been adversely affected and this in turn has affected their ground level liquidity. Focus will be on maintaining or improving liquidity. Another aspect would be reducing expenditure. To this effect, a major casualty will be capital expenditure.

Cement major UltraTech has already begun moving in this direction. The Aditya Birla Group Company has stated in a regulatory filing:
That the capital and financial resources of the company are well protected.
That the company had been servicing its debt obligations as per schedule and on the due dates.
The the company did not require to avail the moratorium extended by banks as per RBI guidelines.
That the company plans to restrict its capital expenditure (CAPEX) to Rs. 1,000 crores.