[ad_1]
Rise in input costs for cement manufacturers is expected to hit the sector’s overall operating margins by 200-230 basis points in FY22, ratings agency ICRA said on Thursday.
The major inputs required in the production of cement are coal, petcoke and diesel. Elevated freight cost also added to the production cost.
Notably, the projected decline in operational margins is despite a rise in production of the commodity and offtake by the infrastructure industry and rural housing sector.
“In terms of recent trends, the all-India cement production reported an increase by 22 per cent YoY in Q2FY22 and by 10 per cent as compared to Q2FY20, supported by the strong demand from the housing segment and pick-up in infrastructure activities,” it said.
Faced with rising input costs, several cement manufacturers went for a price hike in 2021.
According to Anupama Reddy, Assistant Vice President and Sector Head, Corporate Ratings, at ICRA: “While the capacity additions are expected to increase in FY22 when compared to previous year, the reliance on debt is likely to be lower owing to the healthy cash generation and strong liquidity of the cement companies. The debt coverage metrics are expected to remain strong in FY22.”
–IANS
ad/arm
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
[ad_2]
Source link
