Thought leadership: Rajnish Kapur, COO of JK Cement sheds light on rising costs
5paisa Research Team
Last Updated: 28th March 2022 - 06:31 pm
The company aims to for gradual increase in its prices.
One of the sectors that has been badly hit by the rising commodity or input prices is cement sector. In last couple of months, the stock prices have come down significantly as the commodity prices continue to put pressure on the cement manufacturers. Rajnish Kapur, COO of JK Cement has expressed his views on the concern.
He feels that the cost increase are happening in an unprecedented manner. Rising coal prices have affected the operations. But, March being one of the best months of the year for the cement sector, they have witnessed a demand uptick post state elections. As the company has a strong hold in North India, it has witnessed strong sales there.
However, the rising costs cannot be ignored. They had been already high till Q3 and the geopolitical conditions have added on it. The company plans to tackle this situation by making price hikes gradually over the time in the next couple of months. That way, it plans to at least maintain the EBITDA margins which had fallen to 18% in Q3.
Talking about the EBITDA per ton of cement production, it was around Rs 1,100 per ton which had fallen from the average levels of Rs 1400-1500 per ton. The COO feels that the going into Q4, the number would be more or less similar to Q3. However, he estimates that the Q1 FY23 would be subdued and when compared the Q1 FY23 performance with Q1 FY22, where the company had witnessed strong margins and sales, the Q1 FY23 might see a significant drop.
He also talked about the company’s venture into the paints segment where the company is set to invest Rs 600 crore over five years. He feels that it’s a strategic action by the management and that the company is foraying in a phased and disciplined manner.
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