Systematic
Factors
Ø Increase in
prices of key raw material i.e. Limestone and gypsum.
Ø Increase in
domestic coal prices and non-availability of low cost linkage coal has
increased the power & fuel cost for cement manufacturers.
Ø The freight
costs have also increased due to increase in surcharge and cess by Indian
Railways in Oct 2011 and increase in freight rates for some commodities in Mar
2012.
Ø Hike in the
prices of diesel.
Ø Slowdown of
production of cement by 3.8% in July-August because of the arrival of monsoon.
Ø Rise in
inflation rate from 8.87 % in 2011 to 9.30 % in 2012 leads to increase in
prices of raw materials for cement industry.
Ø Less demand
in cement because of following factors.
Lack of stable leadership in PSU and corruption
related investigations resulting in slowdown of govt. spending on projects.
Issues pertaining to land acquisitions, delays in
securing the requisite approvals in Infrastructure projects.
Source (Annual reports of Ambuja, J K Lakshmi and
Chettinad Cements and http://icra.in/Files/ticker/Indian%20Cement%20Sector_Sept%202012.pdf )
Unsystematic
Factors
Ø A decline
in cement prices, against Ambuja’s Cement price estimates of a CAGR of 2.8%
over 2012–2014 could impact their net profit.
Ø Ambhuja
Cement is unable to deliver the estimated volume CAGR of 10% during 2012–14
Ø Chettinad
Cement board approved de-listing the company's shares from stock exchanges.
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