No Slowdown In Cement, Headed For ‘Golden Period’: N Srinivasan

The Indian cement industry is headed for a ‘golden period’ reminiscent of the firm prices-high capacity utilisation milieu seen over a decade ago, reviving on the back of stable demand from infrastructure projects and government housing schemes.

Indian cement factories have built capacity of over 400 million tonnes a year but been plagued by over capacity, which is nearing an end, said Srinivasan. The new Andhra chief minister has cancelled infrastructure projects such as roads and buildings at the new capital region in Amaravati and some irrigation projects totalling several tens of thousands of crores on corruption allegations, sparking concerns among construction companies, cement manufacturers and banks. Srinivasan said his company, with 10 plants in operation across five states in the country, will not be affected as much as those solely dependent on Andhra Pradesh.

Srinivasan’s ebullience rests on strong earnings before deductions in the recent quarter not seen in several quarters before. India Cements’ standalone net profit zoomed nearly 244% to Rs 72.4 crore. Its capacity utilisation was at 77%. Srinivasan predicts his plants to get closer to top capacity in the next year.

India Cements’ total capacity is expected to touch 20 million tonnes on the back of a new factory in Madhya Pradesh, for which land acquisition has begun. The estimate is that the new plant will be commissioned to leverage the improved scenario as predicted in the next three years. Cement prices have improved in the north and holding firm in the west, although the effects of the overhang are still felt in the south.

Having raised total cement capacity from around 175 million tonnes to nearly 365 million tonnes over a decade ago, the Indian cement industry had anticipated double-digit growth numbers that never arrived, said Srinivasan, leading to a capacity overhang that has just begun to recede, with the latent effects still felt in the south.