Demonetisation: For India Cements, it's business as usual so far

CHENNAI: The currency demonetisation move has not impacted India Cements so far, but the business-as-usual status depends solely on how the Indian government addresses the liquidity issues expected to worsen in the coming days, said N Srinivasan, managing director of the Chennai-based cement manufacturer.
Speaking to media on the second quarter results of the company, Srinivasan said core markets of Tamil Nadu and Kerala have a strong stockist/trader-led model of distribution, close to 85% of the business is done through this method and the rest by institutional buyers and governments, ensuring that the demand for cement has been met with enough sales.

"If the liquidity comes in quickly, I think the future should be okay too," he said, adding that traders and stockists are still managing to sell their stocks. A few of them have informed the company that may look for credit should the situation continue. The cement industry has been analysed to experience a 15-20% demand drop due to demonetisation, but Srinivasan, speaking for India Cements alone, said the company's core markets being the South is finding the going as usual so far.

The company said its improved cost reduction and better operating performance had made up for a drop in realisation in the quarter. Higher use of Pet Coke and better prices for its cement in Andhra Pradesh and Telangana since September has also contributed. Capacity utilisation at its factories has improved from 60% in the quarter last year to 68% this year.The company's total income from operations stood higher at Rs 1,314.4 crore against Rs 1229.1 crore during the September quarter of last fiscal. the company is hoping to do double its exports to about Rs 200 crore during this fiscal.