Shree Cement Ltd is operating at 84-90% capacity while the industry is working at 70-75%, Executive Director Mahendra Singhi told NewsWire18 today."Overall the cement sector is not working on full capacity," he said, adding "We are better than the sector."
Shree Cement currently has a total installed capacity of 13.5Mt. Singhi spoke to NewsWire18 on the sidelines of the World Economic Forum- organised India Economic Summit 2011.
Singhi said demand has remained low as industries are cautious on expanding in the wake of current global economic uncertainties.
"Cement demand is based on spending on infrastructure, industrial projects, and household," Singhi said. "So it looks like in the last 10-12 months infrastructure and real estate are not growing."
Also, the government’s indecisiveness on the policy making front is delaying infrastructure projects, he said. The sector may see a lower year-on-year growth in the current financial year to March, Singhi said. According to independent studies, Indian cement sector had grown a tepid 4% in 2010-11 (Apr-Mar).
"This year it looks like there may be very low growth," he said. "It is not growing in that proportion to even the GDP (gross domestic product) growth. Otherwise if you look till 2009-10 cement demand has been growing almost 1.2 times than the GDP growth but it has reversed now." He said the sector may ride on rural demand to ensure some growth this year.
Singhi is positive that the cement sector will be able to cope with the current high cost-low demand scenario and return to a strong growth trajectory going forward. "In such a core sector, such cyclical phase comes in and goes out, so we are not worried about that," he said. "We are poised for a 10-15% growth every year in capacity expansion."
Singhi said Shree Cement is working to improve efficiencies to protect its margins from spiralling input, power, and fuel costs. "On price front we have little control," he said. "But at the same time when we talk on the efficiency front, then we have been tackling to bring down energy consumption in terms of kilocalories per tn and fortunately we have been able to manage so far."