Cement manufacturer, NCL’s Managing Director, K Ravi says that demand for cement is steadily growing in the southern India.
In an interview with CNBC-TV18, he says with growth in retail demand, especially in Karnataka and Tamil Nadu regions, realisations are visible now. However, government demand is yet to turn positive, he adds.
In the June quarter, the company’s total income grew 65 percent to Rs 157.8 crore and it had a turnaround in loss to profit of Rs 39.54 crore.
Ravi expects the second half of the year to be better with nearly 75 percent of capacity utilisation. The company had repair works that impacted capacity utilisation in the quarter gone by.
The company was given a Corporate Debt Restructuring (CDR) package with certain capital expenditure (capex) restrictions, says Ravi. The decision to continue with CDR is yet to be taken, he adds.
Below is the transcript of K Ravi’s interview with Latha Venkatesh and Nigel D’Souza on CNBC-TV18.
Nigel: Tell us what is the latest in terms of prices in South India? In the last one month we believe there have been some attempts of increasing prices yet again?
A: The demand has picked up in South, so the realisations are also good and that is why my last two quarters performance is good. My feeling is that this is going to continue because the central government, they are yet to ground all those projects especially the infrastructure projects.
Both the Andhra Pradesh government and also the Telangana government are also talking of housing, etc.
Latha: Is there actual demand? You said that realisations are improving and demand is good, who is asking for cement?
A: Mainly the retail markets. We sell mostly through the retail network. We have a big dealer network of about 1,500 small dealers and our position has improved considerably. We are able to see that demand. The only thing is the government side is yet to pick up.
Latha: You could push up prices in the last month or two?
A: The prices are more or less stable there.
Latha: You were telling me that you expect cement demand to grow, how much volume of cement you will be able to sell?
A: My case more or less I am utilising the capacity but in between we have stopped for a while for repairs and all that. Last two years was a bad period and because of our financial problems we have not taken up the repairs. So, in this quarter, we have stopped. Otherwise, whatever we produce we are able to sell.
Nigel: What is your current capacity utilisation, I think you have a 2 million tonne plant and so on a quarterly basis what is the run rate you are looking at, in the last quarter what was that particular number. Could you give us some of these figures?
A: Capacity utilisation of last quarter is about 62 percent.
Latha: For the full year what do you expect you will use?
A: I may touch 75 percent or something like that. I have lost out because I had taken long stoppages.
Latha: You were in the corporate debt restructuring (CDR) list, weren’t you? What difference did it make, what are the conditions of the CDR?
A: CDR mainly though they have given some concessions but at the same time there are a lot of restrictions and capex, etc. So, we are working out, if there is a way to come out of this.