Industry

India Cements plans to mobilise Rs.500 crore

A view of India Cements building in Chennai. Board of India Cements has approved a proposal to raise Rs. 500 crore through qualified institutional placements or foreign currency convertible bonds to meet capital expenditure needs, a top official said on Friday. File photo

A view of India Cements building in Chennai. Board of India Cements has approved a proposal to raise Rs. 500 crore through qualified institutional placements or foreign currency convertible bonds to meet capital expenditure needs, a top official said on Friday. File photo  

India Cements is planning to mobilise funds to the tune of Rs.500 crore. This would be raised through qualified institutional placement or foreign currency convertible bonds or global depository receipts or other instruments. The board has approved the proposal and a resolution to this effect was passed at the annual general meeting held here on Friday.

Addressing shareholders at the meeting N. Srinivasan, Vice-Chairman and Managing Director, said the company had returned to black in the third quarter after witnessing losses for four quarters. There was a slight improvement in demand this year, he said.

Mr. Srinivasan was cautiously optimistic on the performance in 2015 with the expectation of a pick-up in cement demand. The company also expected the market to pick up in Andhra Pradesh and Telangana. He said there was excess capacity of 100 million tonnes at all-India level. South also had a substantial excess capacity.

In the case of India Cements, against a total capacity of 16 million tonnes, it produced only 9 to 10 million tonnes a year. When the capacity utilisation was lower, the company had to incur higher fixed costs. The duties and levies alone came to Rs.100 per bag. With the expectation of a pick-up in demand and price, capacity utilisation would improve, resulting in an increase in margin, he said.

During 2013-14, due to lower price realisation, the company lost Rs.200 per tonne in margin, he said. The company was taking steps to cut cost and improve logistics. It had created 160 to 170 MW of captive power capacity. This included 100 MW capacity from the  power plants at Sankarnagar in Tamil Nadu and Vishnupuram in Telangana.The company was taking all necessary measures at the operational level to improve the working in the remaining part of the current fiscal. With a stable Government at the Centre and the thrust on infrastructure development and housing and the bifurcation of Andhra Pradesh into two States, Mr. Srinivasan was hopeful that the investment activity would pick up resulting in an improved demand for cement in the coming months.

Considering the tough economic situation, sluggish demand, cost pressure and lower realisation price, the performance of India Cements during the year 2013-14 should be considered satisfactory, Mr. Srinivasan said. Talking about the industry Mr. Srinivasan said the current year was the centenary year for the Indian cement industry which had crossed so many hurdles and had grown from strength to strength over a period of time. It was one of the success stories of de-control and de-regulation with installed capacity having shot up by 15 times in the last 30 years to 360-365 million tonnes. Southern Region accounted for a lion’s share of 40 per cent.

With the economy registering sub 5 per cent, the cement industry took a hit with practically nil growth last year.

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Printable version | Aug 16, 2020 2:40:39 AM | https://www.thehindu.com/business/Industry/board-gives-nod-to-india-cements-fund-raising-plan/article6728025.ece

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