India Cements chalks plans to become pan-nation player

January 15th, 2012 - 2:16 pm ICT by IANS  

New Delhi, Jan 15 (IANS) India Cements, a leader in southern India with a 28 percent market share, has charted an expansion plan to become a pan-nation player next year with new mining leases and improved performance in the coming months.

“Instead of dominating in one market, we should also become a pan-India player. This is what we are currently working on,” said V. Mohan, joint president for corporate finance, India Cements.

“We have set up a facility in Maharashtra, with a one-million-tonne grinding unit. We have also moved into Rajasthan. We have set up a 1.5 million-tonne composite cement plant there,” Mohan told IANS in an interview over phone from Chennai.

“Wherever we have got mining leases, we are trying to acquire land so that whenever the demand starts going up we can start looking at expansion. We would like to be a pan-India player to get the benefit of growth and development across regions.”

India Cements, which owns the franchise for Chennai Super Kings that had won the latest Indian Premier League Twenty20 cricket tournament, hopes to produce some 10.9 million tonnes of cement this fiscal, against 9.9 million tonnes last year.

According to Mohan, incomplete infrastructure projects and a slump in the real estate sector had resulted in consumption growing by mere three percent across the country in the first half of this fiscal.

“It was worse in South India where we had a negative growth of four percent for the first six months. But things have been changing since November and December. Clearly, there is a much better growth in demand,” he said.

“Normally for our industry, January-June is the peak period because of no monsoon — people take up new work. We will have to see how this quarter goes which will clearly show whether we continue to have this demand problem on hand.”

Already there are signs of a reversal in the performance of 2010-11. For the quarter ended Sep 30, the company’s sales rose nearly 30 percent to Rs.1,091.57 crore from Rs.842.84 crore in the previous corresponding period.

The company also reported profits against a loss during the like period of last year as also a huge jump in operating margins.

In fact the latest index for eight core industries released by the commerce and industry ministry showed that cement production in India had registered a growth of 16.6 percent in November, against a decline of 4.3 percent in the corresponding month of 2010.

A report by broking firm BRICS Securities also suggested a growth in cement volumes in the quarter ended December and in the current quarter ending April due to lower bases in the corresponding quarters of the previous year.

This apart, the Angel Broking stock advisory group also projected a 4.2 percent growth in cement dispatches from southern cement companies.

“Traditionally if you take a three- or five-year moving average, the demand usually grows by 7-8 percent easily. If we believe that will be the case then we will have much better growth next year,” Mohan added.

(James Jose can be reached at james.jose@ians.in)

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