India Cements to shut loss-making subsidiaries

At the 71st Annual General Meeting of India Cements here on Monday, N Srinivasan, VC-MD said, “Going forward, there is possibility of demand improvement with the Government implementing various projects and an expansionary budget expected next fiscal ahead of general elections in 2019. I see better future for the cement industry than in the last few years.” 

He said, “after the merger of subsidiaries, Trinetra Cement and Trishul concrete products, all the cement activities have come under one roof- India Cements. We have told investors and fund managers, we want to remain largely and primarily a cement company. We will close down loss-making subsidiaries”. 

The Company is taking steps to diversify product portfolio to improve capacity utilisation. It is already producing oil well cement. It plans to bid for the tender for supplying sleeper cement. It will also continue the export of cement to Sri Lanka under the Company’s brand. He told members that primarily, the problem faced by the cement industry is that it has more capacity than demand. 

During 2016-17, all India capacity was 375 million tonnes against which the production was 270 to 280 million tonnes. South had maximum surplus capacity. The real challenge faced by the industry was that the growth was not uniform. There was sporadic growth in north, east, west. Not all regions had seen growth at reasonable level. The cement industry is also facing cost pressure from this year. 

Due to the steep increase in Pet coke price, cost of production per tonne went up by Rs 150 in the first quarter of this year. However, Srinivasan said, “Cement price has been stable although fluctuating in a narrow band. Going forward, we expect cement prices to remain stable. With the possibility of pick up in demand, we can expect better capacity utilisation.”

He said the Cement Manufacturers’ Association (CMA) had represented to the Centre that in the last five years cement demand had recorded a CAGR growth of just 1 % while it continued to face cost pressure due to the increasing cost of inputs.