Whalesbook
Nuvoco Vistas Corporation Ltd is passing on rising input costs to customers, implementing a ₹100 per tonne price increase for cement. This adjustment is driven by supply chain disruptions linked to the Iran conflict, which have sharply increased expenses for key materials.
Key Cost Drivers
Managing Director Jayakumar Krishnaswamy highlighted the sharp spike in polymer granule prices, essential for cement packaging bags. These granules jumped from ₹99 per kilogram in February to ₹155 per kilogram, directly increasing packaging expenses. Additionally, rising petcoke prices, a primary fuel for cement kilns, and higher import costs for gypsum, used to control setting time, are significantly squeezing margins. Gypsum import costs alone have risen by approximately ₹20 per tonne due to disrupted supply lines from regions like Oman.
Mitigation Strategies and Future Outlook
With limited capacity to absorb escalating input costs, especially for packaging, Nuvoco Vistas sees price adjustments as its main option. The company is actively exploring alternatives for imported gypsum, such as FGD gypsum from power plants. It is also reducing reliance on petcoke by shifting towards domestic coal and other fuels like lignite. These efforts have led to lower petcoke consumption across its plants, particularly in eastern and northern regions.
Despite these optimization strategies, fuel costs are projected to continue climbing, impacting overall energy expenses. Nuvoco Vistas has already implemented price increases across both trade (retail dealer sales) and non-trade (institutional and bulk buyers) channels in March and April. Eastern markets saw a ₹10 per bag increase in trade and ₹20 in non-trade, while northern and western markets also experienced hikes ranging from ₹10 to ₹15 per bag depending on the channel. The company anticipates that cost pressures may persist or even intensify through May and June, potentially requiring further price adjustments.