Cement demand is expected to reach 550-600 MTPA by 2025.

RAVINDER REDDY

Director - Marketing, Bharathi Cement

Government has taken various initiatives by focusing on increasing construction activities and taking up infrastructure developmental projects. It has also announced massive schemes and even made budgetary allocations for the same. How do you assess India's growth story in this backdrop and the vision to become a USD 5 trillion economy?

The Government of India is rapidly intensifying its concentration and on infrastructure development to boost economic growth by developing 100 smart cities. The government understands the importance of logistical cost and plans to develop the capacity of railways and the facilities for handling and storage to reduce transportation costs. Also, in 2021, the pandemic made remote working an accepted norm, leading to affordable housing with ticket sizes below Rs. 40-50 lakh in Tier 2 and 3 cities will surely increase the cement demand.

The Union Budget allocated Rs. 13,750 crore, and Rs. 12,294 crore for Urban Rejuvenation Mission: AMRUT and Smart Cities Mission and Swachh Bharat Mission, respectively and Rs. 27,500 crore has been allotted under Pradhan Mantri Awas Yojana. In addition, the government approved an outlay of Rs. 1,18,101 crore for the Ministry of Road Transport and Highways, We expect these initiatives by the government will increase the cement demand, and we are confident we will be a part of some of these projects, especially in the South and Central India.

Can you give us an overview of the cement industry in the backdrop of these developments in the construction industry? Also, how had the cement manufacturers geared themselves (capex plans, expanding manufacturing capacities) to meet the expected rise in domestic demand?

Post the pandemic, the demand for cement will see remarkable growth in the infrastructure and real estate sector. Moreover, with the stalled construction projects resuming after the lockdown, Q3 saw healthy growth and sales, increasing the cement demand. The demand of cement industry is expected to reach 550-600 MT per annum (MTPA) by 2025 because of the expanding demand of different sectors, i.e., housing, commercial construction, and industrial construction. Cement production is projected to reach 381 MT by FY22. However, the consumption stood at 327 MT in FY20 and will reach 379 MT by FY22. The cement production capacity is estimated to touch 550 MT by 2020. As India has a high quantity and quality of limestone deposits through-out the country, the cement industry promises huge potential for growth.

Several government schemes such as MGNREGA, PM Garib Kalyan Rozgar Abhiyan and state-level schemes such as Matir Srisht (West Bengal) and public work schemes (Jharkhand) have aided demand.

What are the challenges plaguing the sector from both domestic and international front in terms of liquidity, delay in approvals, fuel price, etc.? What, according to you, needs to be done to ensure the bottlenecks are removed?

India is the second-largest producer of cement globally, producing 7% of the global installed capacity. The cement sector will see a great demand in the infrastructure and construction sector. With the governments' ease of doing business, Vicat Cement has invested along with other foreign players. A significant factor that aids the growth of this sector is the ready availability of raw materials for making cement, such as limestone and coal. India's overall cement production reached 262 million tonnes (MT) in FY21, with an increment of 7.8% compared to February 2020. India's overall cement production accounted for 262 million tonnes (MT) in FY21  (Till February 2021). The cement production is expected to increase by 10% to 12%, and the utilization is expected around 65% in FY22. The demand of the cement industry is expected to reach 550-600 MT per annum (MTPA) by 2025 because of the expanding market of different sectors, i.e., housing, commercial construction, and industrial construction.

Some private firms have consolidated their businesses while some have slashed their capex plans. When do you expect large investments to flow back into the sector? Or will it be a wait and watch approach for some more time? What is your take on global investments in the cement sector, if at all?

It's only a matter of time that before the Capex plans will fall in place and so will the investments fall in place. To be more precise, I feel it would be a wait and watch approach most are taking. But as estimated by government, India requires an investment worth Rs 50 lakh crore only in infrastructure over the next few years for a sustainable economic development in the country. A few of Indian major players have lined up a good over Rs 13000 crore seeing the potential in the governments' infrastructure plans.

Tell us about the impact of Covid pandemic on the sector and how is the industry dealing with it? Also tell us about the initiatives taken by your company to deal with these challenges.

The pandemic hit everyone. And cement industry was not spared either. The production dropped by 22% this fiscal to 148 million tonne against 189 mt in comparison to last year. The pandemic restricted both private and public players with every construction projects because the lock down had to be implemented to save the precious human lives.

Can you give an outlook on the cement sector by 2025 in terms of capacity addition, investments, technology adoption, etc? Also, please share your vision for the company in terms capacity addition, investments, technology adoption, revenue growth, etc, by 2025.

Despite the odds, our sales team left no stone unturned. We did manage to sail through the rough waters. We partnered with some of the prestigious projects like the Kaleshwaram Irrigation Project, Kochi Metro Project, the expansion of Bengaluru airport terminal and the runway, the Chennai Outer Ring Road, to name a few.

As part of a growth plan and being an environment-friendly organization, we are going ahead with a massive expansion of our brownfield capacity in Karnataka. We are also setting up a substantial grinding unit in Vizag.

We have also set up a 10 MW solar power plant at its Kadappa manufacturing facility and is the first of its kind in the cement industry set up for captive use in India and within the entire Vicat Group. Vicat India has a long-term plan of using renewable energy in place of conventional sources.

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