Grasim, ACC post lower profit, see pressure on prices

* Grasim profit falls 22 pct, ACC net down 7 pct

* Cement demand seen slipping on economic slowdown

MUMBAI Oct 23 (Reuters) - India's top cement producer, ACC Ltd (ACC.BO), and diversified Grasim Industries Ltd (GRAS.BO) posted lower quarterly profits on Thursday and said an economic slowdown was beginning to bite their margins.

Grasim, which makes cement, chemicals and synthetic fibre, said consolidated net profit fell to 4.86 billion rupees ($98 million) for its fiscal second quarter ended September. Revenue rose 13 percent to 44.89 billion rupees.

"There has been all-round rise in input costs. We were not able to escalate prices as much because of the economic downturn," Chief Financial Officer D.D. Rathi said at a news conference. Overall operating margins fell 19 percent, he said.

In its key cement business, which contributes 80 percent of revenues, Grasim said a jump in coal and raw material prices, and higher freight costs resulted in a 9 percent hit on margins.

ACC, which is 46.22 percent owned by Switzerland's Holcim (HOLN.VX), reported a 7 percent fall in net profit to 2.6 billion rupees in its third quarter ended September.

Both Grasim and ACC, however, beat street forecasts of 4.34 billion and 2.28 billion respectively.

Still ACC, which is India's single-largest cement producer, warned about a gloomy outlook.

"We see challenging times ahead of us in respect of markets, investments and input costs," it said in a statement. "Growth of cement consumption in coming months may decline."

Last week, UltraTech Cement (ULTC.BO) reported a 13.4 percent fall in quarterly net profit to 1.64 billion rupees.

Grasim, which owns 50.3 percent of UltraTech, together have an annual cement capacity of 35 million tonnes, said it expected slowing demand from housing and infrastructure putting pressure on prices.

"By 2009 there will be overcapacity. Demand growth is also likely to be lower than expected, about 7-8 percent," Rathi said.

Grasim said interest costs rose 30 percent from a year ago on higher borrowings for capacity expansions.

Shares in Grasim hit a three-year low of 1,080 rupees on Thursday, before rebounding to close 4.7 percent higher at 1,215 rupees, in a Mumbai market that fell 3.9 percent.

ACC shares closed 2.1 percent lower at 442.85 rupees. ($1=49.8 rupees) (Reporting by Prashant Mehra; Editing by Ranjit Gangadharan)