India Cement banks on demand surge from AP, Telengana

The company said it expects a demand surge from Telengana and Andhra Pradesh, even as demand across sothern states remains depressed

India Cements on Monday said the company has turned the corner after two tough years, and that better times lie ahead as demand for cement, particularly in southern India, is expected to pick up.

Addressing shareholders at the company's 69th Annual General Meeting on Monday, N Srinivasan, vice chairman and managing director of India Cements, said that to combat the difficult situation the company has retained its thrust on cutting costs, improving operational parameters, and maintaining high quality of products.

“This approach along with better price realisation has resulted in higher operating profit (EBIDTA) of Rs 431.26 crore during the six months period ending September 30, 2015 against Rs 349.70 crore in the same perios last year,” said Srinivasan.

He noted during the first half of the current fiscal, total sales volume including clinker and exports stood at 42.64 lakh tonnes compared with 49.09 lakh tonnes a year ago.

Srinivasan said that the company has reduced debt by Rs 200 crore during the current fiscal.

The company will continue to take measures to improve margins and will reduce debt further.

Srinivasan said next year onwards, the company hopes to see better capacity utilisation and that this year, too, would be better than the last.

He said Andhra Pradesh has launched a new housing project scheme for the weaker session of people that would increase demand for cement by 3.5 million tonnes overall. The state also announced concrete roads for villages in Andhra Pradesh.

He added that the expected revival in investment activity and industrial growth in Tamil Nadu, Telegana and Andhra Pradesh – where the government is expected to build a new capital city – will increase demand.

The company has two plants each in Andhra Pradesh and Telengana.

Overall, though, cement demand across the five southern states of Andhra Pradesh, Karnataka, Kerala, Telengana, and Tamil Nadu declined, with a 4% drop in production in the first half of FY-16.

Capacity utilisation is less than 60% in the region, as compared to 74-75% nationally.