India Cements to tap non-Southern markets: N Srinivasan
Cement major The India Cements Ltd on Monday said it would tap non-Southern markets to improve capacity utilisation as part of its strategy of going forward. The company would also focus on restructuring and reducing debt and step up exports, company Vice-Chairman and Managing Director, N Srinivasan said.
Speaking at the company’s 71st Annual General Meeting he said, “During the year (2016-17),the company focused on further improving operational efficiency, restructuring and reducing debt, improving capacity utilisation by tapping non-Southern markets,stepping up exports. This strategy will continue going forward.”
As part of plans to improve capacity utilisation, the company was taking steps to diversify the product portfolio. “The company is already producing oil well cement. It plans to bid for the tender for supplying sleeper cement”, he said.
Noting that the cement industry primarily faced more capacity than demand in 2016-17, he said, “cement plants in North, West and Central regions clocked capacity utilisation of over 80 per cent. South had a lower capacity utilisation”. During 2016-17, all India capacity was 375 million tonnes as against the production of 270-280 million tonnes
“South had maximum surplus capacity. The real challenge faced by the industry was that the growth was not uniform. There was sporadic growth in north, east and west. Not all regions had seen growth at reasonable levels”, he said.
He said the Southern market witnessed a seven per cent growth in production during 2017-18 despite a flat growth registered in fourth quarter of the last fiscal. Demand was driven primarily by increase in consumption in Andhra Pradesh, Telangana and Karnataka. Tamil Nadu faced political turmoil and governance issues, besides shortage of river sand, he said.
Stating that the merger of Trinetra Cement Ltd and Trishul Concrete Products with the company has resulted in bringing cement assets under “one roof”, he said it would help the company become a “stronger and effective entity, carrying business activities more effectively”.
“We have told investors and fund managers that we want to remain largely and primarily a cement company. We will close down loss making subsidiaries”, he said.
Stating that the cement industry was also facing “cost pressure” from the current financial year, he said the steep increase in Pet coke price had resulted in production cost per tonne going up by Rs 150 in the first quarter of the current financial year. “Going forward, we expect cement prices to remain stable. With the possibility of pick up in demand,we can expect better capacity utilisation”, he said.