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    Shree Cement to take gradual price hikes as higher costs pinch

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    Shree Cement to take gradual price hikes as higher costs pinch

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    CNBC-TV18 caught up with Shree Cement's HM Bangur to discuss the impact of higher energy prices on the cement maker's business. The company is gradually looking at increasing cement rates to pass on higher input costs, says Bangur.

    Shree Cement expects its margin to be under pressure due to higher costs, Managing Director HM Bangur said in an interaction with CNBC-TV18. He said coal prices have risen due to the Russia-Ukraine war and energy costs have gone up by 70-80 percent owing to higher raw material costs.
    He said, “Even without war (Russia-Ukraine), the coal prices were rising at a steady rate and with the war it has risen sharply. So war has impacted and cost has gone up to Rs 40-50 a bag.”
    He also said the company is gradually looking at increasing cement rates to pass on higher input costs.
    Shree expects the government's push for development to aid offtake, he said.
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    “Compared to the last monsoon, the prices should be much higher or if the war suddenly stops and the prices of coal comes down then everything will be a temporary blip,” said Bangur.
    The cement manufacturer will start commercial production at its clinker unit in Raipur, Chhattisgarh, which has been completed six months before schedule, in 10 days, he said.
    He said, “EBITDA will depend on cost as well as the sales price. We do not talk of EBITDA, but for the new unit, it should be anywhere between Rs 1,500-Rs 2,000.”
    Shree Cement's volume in the current financial year will be at par with FY21, and the company expects it to rise 15 percent on a year-on-year basis in FY23, Bangur said.
    He expects growth to pick up and surpass levels seen in the past five years.
    “We have Nawalgarh unit in Rajasthan. It’s in the pipeline and should take about one-and-a-half years. Purulia unit is there and now we have permissions in Andhra. However, in the last five years, the growth was a bit low. We will again grow at a much faster rate compared to the last five years,” said Bangur.
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