Will not be able to pass on cost hikes to consumers: ACC

Cement manufacturer ACC reported a 6% dip in profit after tax (PAT) at Rs 328 crore for the quarter-ended June 2011. The EBITDA margins came in at 21.6% compared to 25.5% year-on-year.

Speaking exclusively to CNBC-TV18, CFO Sunil Nayak said, the dip in EBITDA was due to higher raw material prices and power supply issues. "We are working at 83% capacity utilisation at present," he informed.
Nayak expects high raw material costs to remain as an overhang on the cement industry. "We will not be able to pass on cost hikes to consumers," he clarified.
ACC has delivered the best production and dispatch figures for the first half of this calendar year (up 10%). However, it remains to be seen how the company weathers the monsoon as the prices will correct further.
Nayak said there are no plans of any merger between ACC and Ambuja at the moment. Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: What caused the pressure on margins this quarter?
A: The coal cost has gone up by about 30% because Coal India has increased prices. Our dependence on domestic coal is about 90%. We have imports of only 10%. The import cost has also gone up. Coal has an impact of about 30% in our costs. The costs of raw materials like slag, gypsum and fly ash has also moved up quite substantially.
We have also had issues with one of our grid power units in Gagal, where we do not have Captive Power Plant (CPP). The cost there has also gone up. Our EBITDA has dipped to about 24% as compared to 29% in Q2