Cement Demand in South Bright

India Cements AGM Updates

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Chairman of India Cements Mr. N Srinivasan, speaking at the company’s 72nd AGM said that cement demand in the Southern region of the country is increasing with growth in infrastructure and housing. The company expects that demand in the second quarter will also improve despite the floods in Kerala and the transporters’ strike.

After a long time cement demand is slowly picking up in the south, which has the problem of cement over capacity. Demand for cement is slowly picking up following an increase in infrastructure and housing sector projects. The southern region is slowly catching up with the rest of the country when it comes to the demand for cement with higher capacity utilisation by the plants in the current year. Southern region registered a growth of over 20 per cent in cement output during the April-June 2018 quarter primarily driven by the infrastructure push given by the governments of Andhra Pradesh and Telangana.

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He said the plants in north, west, central and eastern regions are already operating almost at full capacity. Capacity utilisation of plants owned by India Cements Ltd was at 71 per cent better than the industry peers in South. India Cements substantially improved the operating performance in the first quarter of the financial year April-June 2018 with capacity utilisation of 80 per cent as compared to 67 per cent in the same quarter the previous year. On the capacity expansion plans in Sankari and Dalavoi plants in Tamil Nadu, Mr. Srinivasan said the company would explore avenues for augmenting capacity after attaining the expected full capacity utilisation.

It had substantially improved its operating performance in the first quarter of this year (Apr-Jun) with a capacity utilisation of 80%, against 67% in the same quarter of the previous year. It also expects the second quarter to be better despite the floods in Kerala and transporters’ strike. “This year, we’re seeing good volume and going forward, we’ll be operating almost at full capacity in the fourth quarter (Jan-Mar) of this year resulting in better performance,” Mr. Srinivasan told shareholders.

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Mr N Srinivasan, Vice Chairman & Managing Director of India Cements Ltd. envisages signs of cement demand picking up steadily, spurred by infrastructure projects. The Chennai based cement major, is now confident of reaching full capacity utilisation and achieving better profitability by the fourth quarter of this fiscal.

India Cements is at 80 per cent capacity utilisation as against 67 per cent capacity utilization for the corresponding quarter the previous year. And is expected to reach full capacity utilization shortly.
The company has reported a drop in its net profit at Rs.21 crore for the quarter ended June 30, 2018 as compared to Rs.26 crores the previous year.

The company's cement sales stood at about 31 lakh tonnes of cement in Q1 of this fiscal as against 27 lakh tonnes a year ago. But lower cement prices per bag have resulted in a drop in revenue, which stood at Rs.1,361 crore as against Rs.1,462 crore in Q1 of previous fiscal.

Net plant realisation stood at Rs.3,279 per tonne, 9 per cent lower than the previous year. Operating profit stood at Rs.162 crore as against Rs.191 crore in Q1 of previous fiscal.

From a two plant company having a capacity of just 1.3 million tonnes in 1989, India Cements has grown in the last two decades to a total capacity of 15.5 MTPA. After the approval of a Scheme of Amalgamation and arrangement between Trinetra Cement Ltd and Trishul Concrete Products Ltd with The India Cements Ltd, all the cement assets have come under one roof - India Cements.
India Cements has now 8 integrated cement plants in Tamil Nadu, Telangana, Andhra Pradesh and Rajasthan and two grinding units, one each in Tamil Nadu and Maharashtra.

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India Cements' Market Expansion Plans

India Cements To Concentrate On Speciality Cements 

While other cement companies are waiting for the Government to step in with infrastructure investment as a stimulus to to revive growth, Chennai-based cement major India Cements is planning at achieving better capacity utilisation by tapping the northern, eastern and western markets during the current financial year.

At the company’s 71st AGM, Mr. N.Srinivasan, vice-chairman & managing director stated that India Cements was taking steps to diversify product portfolio to improve capacity utilisation. The company is already producing oil well cement and has plans to bid for tenders for supplying sleeper cement. It would also continue the export of cement to Sri Lanka under the company’s brand name which is well established there. He also stated the the company would focus on reducing debt, introduce speciality cements and boost exports, in line with the company’s plans to turn the focus back on core businesses and exit non-core businesses.

He further stated that the cement industry was facing a situation of excess capacity, with south India in particular facing maximum surplus capacity. While there was sporadic growth in non-southern states, he added, not all regions have seen growth at a reasonable level. However, now that prices had stabilised, there was a distinct possibility of improvement in cement demand all over India. This, along with various schemes and projects taken up for implementation by the Centre and states, and an long expected expansionary Union Budget, could improve capacity utilisation.

Mr. N.Srinivasan also pointed out that due to the increasing cost of inputs, cement companies were facing. Mergers and Acquisitions by bigger players were also likely to gain pace, though on a smaller than expected scale and with focus on gaining strategic and operational competitive advantages. He added that Financially stressed companies were selling assets. And in some cases, regulations imposed by the Competition Commission of India had forced cement companies to sell their assets.