Came out of Covid unscathed; see huge growth potential: India Cements MD

India Cements is celebrating its 75th anniversary, and despite the ongoing pandemic, the company is in a strong position. Its vice-chairman and managing director, N Srinivasan, in an interview with Shine Jacob, talks about his company’s limestone reserves, the controversies involving Chennai Super Kings, and more. Edited excerpts:

How do you look back at the growth story of India Cements in the last 75 years?

It gives us immense pride that even after 75 years, we are still relevant. We started with a capacity of 1 lakh tonnes per year and have gone up to 16 million tonnes. When I entered the industry in 1968, it was under price and distribution control. It was partially decontrolled in 1982 and fully decontrolled in 1989. In all my formative years, a cost accounts officer used to be there and determine the rest of the things. 

Profit was an ugly word those days. The cement industry is a success story of decontrol. The capacity at that time (1989) was 30-40 MT, today we are at 400 MT.

Looking at the current pandemic situation, how do you assess the cement industry?

The cement industry in India is as modern as you can get anywhere in the world. China is the largest producer with 2.6 billion tonnes, after which comes India with 400 million tonnes (if we exclude grinding units) while the US with 60-70 MT is next. There is a huge gap between the west and us. If the government delivers according to expectations, there is huge scope for growth.

India Cements came through Covid unscathed. For the industry, lockdowns affected our production and demand. I believe demand will come back. Last year, our capacity utilisation during the first quarter was 37 per cent, while this year, the first quarter may be around 45 per cent. I believe this financial year will be better than the last.

Why did you stick to the core cement industry and not go for diversification?

 We make money and put it into the same industry and never try to diversify or go into unrelated sectors. This is why this industry has never troubled the banking system. It is tempting to get into telecom. I was tempted because I saw everyone becoming very big after getting into the telecom business. But now, I am glad that I did not venture into that sector.

Then why did you go for Chennai Super Kings (CSK)?

This company was always sports-oriented. Early in the 1960s, nine of ten Ranji trophy players used to be India Cements employees. Then we went into running teams in the Tamil Nadu league. So, it was a natural extension to go for CSK. If someone else would have bid low, Chennai would not have got a franchisee. It would have been a loss to Chennai and to the South India.

How do you look back at the controversies?

When we were banned for two years, I did not watch or follow the IPL at all. I was hurt. There was no fault of mine, or of anybody else. It was a kind of witch-hunt (including some sections of the media) and there was no proof either. 

Today, everybody in the cricketing world knows it. I was the only south Indian who went on to become BCCI president and created a voice in world cricket. During my time, I ens­ured that players are paid properly. BCCI exists because of the players, so how can you take the money and not give it? Not one cricketer said a word against me.

You have a large limestone reserve. How are you planning to utilise it?

We have about 2 billion tonnes of limestone. That is very tempting for generations of cement companies. I will not sell my limestone reserves. Now, in 2021, I still have 50 years of limestone left to successfully run my existing capacity. South India has 35 per cent of the limestone capacity in the country. Limestone is not there in north and east India, so capacity addition will come majorly in the south.

What are your dreams and future plans regarding India Cements?

We will touch 20 MT in the near future. India Cement should grow and should be as sustainable as today, having longevity. I would like my daughter (Rupa Gurunath) to carry on the cement tradition. As far as CSK is concerned, it will grow from strength to strength.

We were at Rs 3,500 crore of debt for 16 MT and last year I repaid Rs 550 crore. Now, I am left with only Rs 2,900 crore and of this Rs 700 crore is working capital and Rs 200 crore is interest-free sales tax loan. Six months later, I will repay another Rs 550 crore of debt. After that, we will line up more expansion plans.