N Srinivasan, vice chairman and managing director, India Cements, said that the company has envisaged a capex of Rs 200 crore this year, mainly for maintenance works. Between this year and next financial year, capex is expected to be around Rs 400 crore.
The company also lined up specialised cements for oil wells and for Indian Railways. He added the company has plans to manufacture a range of specialised cements like oil well cement ( used for cementing works in the offshore drilling of oils by ONGC) and sleeper cement ( used by Indian Railways).
ICL has reported a 62 per cent growth in net profit of Rs 62.41 crore in the second quarter ending September 30, 2016 as compared to Rs 38.5 crore, a year ago. Company's net sales improved to Rs 1,307 crore from Rs 1,225 crore.
Srinivasan said, ICL has further improved its performance in the current year by increasing sales of cement and export of cement and clinker and by reducing variable cost and financial cost. In the first half of this year, it has repaid 80 crore debt and for the full year, it is looking at reducing debt by Rs 250 crore.
Cement market in the south has seen some marginal growth this year with improved offtake in AP and Telangana. The overall volume including export was 23.99 lakh tonnes in second quarter against 21.65 lakh tonnes. Capacity utilisation improved to 68 per cent from 60 per cent in the same quarter last year, the increase was mainly due to export. In 2015-16 export earning was around Rs 100 crore and company hopes to double it before end of this year.
On the effect demonetisation and withdrawal of Rs 500 and Rs 1,000 notes on cement, Srinivasan said: "So far, in the last 15 days, we have not seen fall in sales. It is business as usual for our company."
"If you ask me if the situation will continue, I have no answer. I don't want to guess or comment on the future demand for cement. It all depends on the effect on other building materials. In any case, Cement consumption will not be abandoned. If at all, it will get slightly postponed by few months. Once the liquidity is restored in the system and more new currency notes come into circulation, it will ease the situation in the market and help the trade to do business without any hardship," he said.
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For India Cements, Tamil Nadu and Kerala are the major markets where maximum sales take place. In the two markets, 85 to 90% of the sales take place through trade ( stockists and dealers). and the balance 10% of cement sales go to builders, government, projects, institutions.
He said, ICL has network of dealers and stockists across the country, so far, it has not felt the effect of demonitisation. Most of the cement is consumed into building houses in the rural and urban areas