India Cements AGM: Srinivasan 'cautiously optimistic' on the back of 3rd Covid-19 wave

Chennai-headquartered India Cements expects cement consumption to increase on the back of the central government increasing investment in infrastructure projects. Addressing shareholders at the company's 75th annual general meeting, its Vice-Chairman and Managing Director N Srinivasan highlighted the fact that the Union budget for 2021-22 had "a fixation on growth and many infrastructure projects have been announced, including large ones in the south."

At a capacity of 16 million tonnes, India Cements is among the largest players in the south, a region characterised by low utilisation rates. The company is looking to increase that by four million tonnes, which will come from the south, capacity expansion in Rajasthan and a new integrated plant in Madhya Pradesh.

Referring to the budget, Srinivasan said it envisaged a 34 per cent increase in capital expenditure. "If the promised outlay on infrastructure in roads, metro rail projects in the south take place, there is scope for higher cement demand," he said.

Much as the outlook looks good, he also sounded a word of caution on the third wave of the pandemic. "One has to be cautiously optimistic about the immediate future." At the AGM, shareholders approved Srinivasan's reappointment for another five years.

He gave credit to the Tamil Nadu government for pushing housing and infrastructure development. "The governments in Andhra Pradesh and Telangana are also implementing irrigation, road building and other infrastructure projects apart from housing schemes," explained Srinivasan, who expects greater demand to aid higher capacity utilisation.

Despite the second wave, the first quarter of the current fiscal, he said, saw the company doing well. Kerala and Tamil Nadu, India Cements' key markets, were severely affected by Covid. "We still operated at 50% (capacity) against 35% in the same quarter of FY21. It is slightly better in the current quarter and expected to improve."

The firmness in pricing was a huge plus during the phase. The big challenge last year for all players was the sharp increase in coal prices. Srinivasan spoke of that now coming down and resultantly reducing costs.

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