NEW DELHI: A slowdown seems to be catching up with the construction sector, if the 35% decline in advance tax payments of cement companies in September 2008 is any indication. Many leading cement manufacturers such as ACC, Ambuja, Grasim and Ultratech have paid lower advance tax as compared to the previous September.

Aditya Birla group’s Grasim and Ultratech have paid 66% lower advance tax paid for September 2008 quarter compared to the year-ago period. Grasim paid Rs 79 crore, while Ultratech paid Rs 42 crore. The advance tax paid by ACC and Ambuja Cement, part of Swiss cement major Holcim, was lower by 38% and 12%, respectively. Ambuja paid Rs 176 crore in the September quarter.

“High energy prices brought margins under pressure at cement companies. While higher inflation in the country saw prices of everything going up, cement prices remained where they were,” says ACC chief finance officer Onne Van der Weijde.
Cement companies like ACC have often cited high energy prices as a major area of concern. But with oil prices losing steam and coal prices beginning to soften, cement companies may heave a sigh of relief.

Another pressing concern for cement firms is the slowdown in real estate, leading to a lower demand for cement. Onne says market are subdued in the north, but east and south are doing fine.

This is partly reflected in the advance tax numbers. South India’s largest cement maker India Cement paid an advance tax of Rs 36 crore, up 9% from last year. Other companies, which reported growth include Zuari cement (76%) and Lafarge India (58%). Both companies paid a tax of Rs 38 crore each.

Many others, which reported lower advance tax for September quarter are Madras Cement (15% at Rs 21 crore), Prism Cement (36% at Rs 15 crore), Chettinad Cement (23% at Rs 10 crore) and JK Cement (75% at Rs 3 crore).