India Cements Ltd is looking at possibilities of exporting cement to improve capacity utilisation and foreign exchange earnings, which would also have an advantage in the backdrop of the current rupee depreciation.
Speaking to the shareholders in the annual general meeting of the company, N Srinivasan, vice chairman and managing director of India Cements Ltd, said that the company used to export cement earlier and then the opportunity for export came down because the Indian firms could not compete with other countries who were offering cement at a much lower prices.
He added, “With the Rupee depreciation, there is a possibility of exports and we are looking at some exports to improve our capacity utilisation and hopefully exports will start again.”
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It may be noted that Srinivasan, during August, 2012, has said that the company is looking at exports to o Sri Lanka and South African countries though the quantum was expected to be marginal.
For the domestic market, the industry is expected to see more demand as the economic situation improves and the construction activitiy is also expected to pick up with Govt spending on infrastructure ahead of general elections in 2014.
As such, capacity addition has slowed down in the South India and there are signs of demand picking up, which would increase the capacity utilisation in cement manufacturing facilities in the region. The current capacity utilisation for India Cements is around 70%.
The power situation in Andhra Pradesh which had declared a whopping 12 days a month of power holiday in addition to practically switching off power during the peak hours on daily basis has affected the performance of the company, he added.
It has invested Rs 500 to Rs 600 crore in setting up captive power of plants of 50 MW each in Tamil Nadu and Andhra Pradesh. It has created capacity to generate 160 to 170 MW of power, which will meet 80% of its requirements.
He added that the company has more presence in Andhra Pradesh, where the cement prices are low, while it is able to sell 50% of the cement produced by Tamil Nadu plants in Tamil Nadu and Kerala where the cement prices are relatively higher. However, other companies in TN are selling 73 to 75% of their production in these two states which makes difference in margins realised by the companies.