Mumbai: Ambuja Cements, the country's third largest cement maker and part of Swiss major Holcim, will raise cement prices by Rs20 per 50 kg bag in two tranches effective October and early January. The hike will take the retail price of cement up to Rs265 per bag.
Gujarat-based Ambuja Cements is also planning to expand in the South Indian market by transporting cement by sea in a bid to lower transportation costs.
The cost of transportation through sea is one-third that of the road transport. The average freight cost by sea comes to around 50-70 paise per tonne km against Rs1.5 per tonne km for road transportation.
The company has recently taken one more terminal at Mangalore, in addition to Cochin, as it bids to corner a portion of the fastest growing cement market in the country.
Ambuja is also planning to add one more ship to its fleet, taking the total to 11. The company has placed orders for three more ships, which it will receive in two years.
Ambuja claims the hike is due to the spiralling input prices, which has started impacting the company's margins.
The government had temporarly banned exports and price hikes of cement and steel in a bid to tame spiralling inflation. Now that the ban has come to an end on 16 August, cement makers are free to hike prices.
Other cement companies, including ACC and Dalmia Cement are also expected to announce similar price hikes.
The price hikes are expected to impact southern markets more as the demand in the region is higher than in the other regions. This will be followed by hikes in the western and northern markets.
Ambuja is planning to invest Rs3,500 crore in capacity expansion over two years. This would take the company's cement capacity to 22 mtpa by 2009 from its current installed capacity of 18.5 mtpa.
Ambuja Cements is undertaking increase in grinding capacity at Dadri (UP), Nalagarh (HP), Sanad (Gujarat) and Barh (Bihar). These projects are expected to be be completed by 2010.