Cement industry in the State is passing through a rough patch as the demand has come down last fiscal. While infrastructure sector occupied only 40 per cent, the lion’s share was taken by real estate, says KV Vishnu Raju, chairmanmanaging director.
Anjani Portland Cement Limited (APCL) will be doubling its turnover this fiscal (Rs254 crore in FY11), as it expanded its Nalgonda plant in March 2010. What’s adding to the numbers this year is the increase in profitability, according to KV Vishnu Raju, chairman and managing director, APCL.
Cement consumption in the State has fallen in 2011-12. While 60 per cent of production is consumed by real estate sector, 40 per cent goes to infrastructure. Both industries took a beating this year. Real estate projects did not take off as expected due to political agitations, he told Postnoon in an interaction.
There is an increase in the input and fuel costs. Power cuts took their toll on cement industry, which is heavily power intensive. There is almost 40 per cent power cut. The supply to the company almost halved from 15 MW to 8MW. The companies are ready to buy expensive power at least to keep the units running instead of shutting down.
Coal prices are also spiralling due to short supply. Singareni Collieries hiked the coal prices through electronic auctions. First preference is given to power plants in coal supply, forcing the cement industry to import. There is no respite in the rise of cement prices owing to dwindling rupee.
A cement bag is priced at Rs 250, which means a kilogram costs a meagre Rs 6, which is less than that for a kilogram of salt. Unless each cement bag is priced at Rs300, the industry wouldn’t grow, he observes.
Many companies have increased production capacities. The consumption doesn’t meet the supply. He feels this trend is likely to continue in the next financial year as it is a transition period. Raju foresees 2013-14 as a better year for the cement industry.
Cement consumption in India is less than 300kg per capita against the world average of 500kg. The consumption would increase in coming years with increase in incomes, aspirations and literacy levels. The limestone deposits are decreasing in different parts of South India. Andhra Pradesh will have an edge over other States in this sphere with its substantial limestone reserves.
The cement companies from Andhra Pradesh are going to be leading suppliers in the entire South India and also to eastern and western of the country, he envisioned.
Talking about the growth plans of APCL, he says the production at the Rs50-crore ceramic tile factory will commence operations from June. As of now, there is no wall tiles plant in South India and every one imports from Gujarat. The product can be offered at a cheaper price to the consumers here.
“We will continue to spend at least Rs1crore every year on CSR initiatives that include welfare of the local villagers and will continue to offer free education for the under-privileged people in the villages around the plant,” he concluded.
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