INSUBCONTINENT EXCLUSIVE:
ET Intelligence Group: Intense competition and demand that has often not reflected the pace of broader economic expansion have prevented
cement manufacturers from raising prices
In this battle of attrition, the undisputed leader UltraTech has focused on gaining market share rather than experiment with pricing
It has been unwaveringly following this strategy for the past two years
The story in the December quarter is not structurally distinct.
In the December quarter, Ultra-Tech's sales volume grew by 14 per cent to 18
MT in comparison with the same quarter last year
Its cement realisations did not show any noticeable improvement on quarter, a clear indication that the company has been unable to gain any
pricing power.
A large part of the stable demand for cement, although not great in value terms, still comes from non-trade or institutional
This segment comprises infrastructure and low cost housing (both from government and private)
It is estimated that the low-cost housing programme of the government –Pradhan Mantri Awas Yojana - Gramin (PMAY) has generated 28-30MT
demand of cement.
Besides this, more road projects across states is fuelling demand
This means that demand is coming at a price point that is not high enough to boost earnings and margins
In terms of sales, UltraTech derives 64 per cent from the trade segment and 36 per cent from non-trade.
