RG Bagla, group executive president at JK Cement, has spoken about the latest activity at his company and the road ahead for the producer in an interview with CNBC-TV18. Below is a verbatim transcript of the interview.
Q: How exactly has demand picked up post the monsoon in terms of dispatches in volumes?
A: Every year monsoon is a depressed period and this time the monsoon came in late-August and September with great furry in northern, western and southern India. This depressed the market very much. Now monsoon is practically over in northern and western India and southern India also now it is free. So, whatever jobs that were devastated in the heavy floods in Punjab, Haryana and all that reason now the work will be started. I do hope this should be a good period second half should give good growth.
Q: What is your capacity utilisation in your plants then, if you could give throw some light on that as well?
A: On a year-on-year basis, in comparison to 2009-2010, our production is 21% higher and dispatches are 22% higher in April-September period.
Q: When you said that second half should be little better for your company, could you quantify that may be in terms of how your margins might perform for the entire year and where you see the realizations?
A: I do hope that margins should be also better as it is a normal feature year-after-year that the second half of October to 31 March period is normally better for not only our plant but every manufacturer of cement.
Q: When we spoke to you last time you had indicated that you had plans to setup two cement plants is there any development on that?
A: On the domestic side, we are trying our best to get our mining lease and environment clearance but somehow it is being delayed for different reasons. Instead of the new work we are now trying to do the expansion in one of our Rajasthan plant. That will be also quite a good capacity and that decision will be taken within a month or so.
Q: Can you just give us an outlook on the cement prices in the north and the south as well and any sort of price hikes, which we could possibly expect from the sector?
A: Market forces are the greatest decider in terms of prices and if the construction work goes on, the government budget from January to March, they also wanted to be adjusted. This is the period for festivals everybody wants to book a flat and etc, so this is normally a good period. I do hope prices should go up. There is no reason for the prices to go down. But by how much? I cannot say because ultimately it is the demand supply situation. Wherever the supply is more the prices will be little subdued or whatever. And if supply is just matching then normally because the demand is growing by 6% and I hope that it will 8% in the next half, so it should be better.