MK Singhi, executive director of Shree Cements, says that the monsoon has not particularly affected sales the June quarter. Sales have gone up 63 per cent and they have been able to capture more than 50 per cent of the total demand increase in North India, he said. He further added that Shree Cement’s current capacity is 4.5Mt and in the quarter of June the company achieved capacity utilisation of 113 per cent. EBITDA has also gone up by 25-30 per cent compared to the last June quarter.
Excerpts from CNBC - TV18’s exclusive interview with MK Singhi:
Q: Give us a perspective on prices at this point in time? What range are they hovering around in your area, your markets particularly and more importantly, are you contemplating any variations in light of the onset of monsoon?
A: Primarily monsoon does not really affect the quarter of June, but at the same time, prices are quite firm in northern India. In Jaipur, the retail prices are around Rs 185. In Delhi this would be around Rs 210. In Gurgaon and Ghaziabad it would be around Rs 200-Rs 205. These are the retail prices. Demand is also quite firm and in the northern zone, so far the first quarter has shown a growth of around 10% plus.
Q: What were your average realizations per bag for FY06, you did about Rs 101?
A: Last time the retail prices were around Rs 140-150, which are now showing at around Rs 200.
Q: Like you said, there is not too much of an impact, atleast currently, of the monsoon, going forward with the way it is panning out, do you see yourself being able to further increase prices?
A: Infact the prices increase or decrease only by the market forces. Market demand is good and supply is also normal, therefore prices may remain stable. But if demand grows further, the prices may go up. If I talk of Shree Cement’s market performance in this quarter, our sales have gone up 63% and we have been able to capture more than 50% of the total demand increase in North India.
Q: Traditionally has this season seen a slump in volumes at all, you mentioned that it does not impact you too much, but have you seen a cut down in the off take particularly in this season, and if so by how much?
A: It has not gone down. To some extent there was a slow down of demand in the first half of June but it was never an impact of the monsoon. We expect about 8-10% growth in the month of July and August also, so that is quite positive. Rajasthan also shows a good demand increase. Shree Cement has been able to hold market leadership in Rajasthan, Delhi and Haryana, and our growth has been 100% in the Rajasthan market.
Q: Tell us about the 54 mega watt captive power plants that you had plans of setting up. Is it on track and by when does it get fully operational?
A: These are on time and the first power plant will be ready in the last quarter of 2006-07 that is by March 07. They are well in time and maybe before schedule.
Q: Out of the current capacity could you give us a check on your utilization levels?
A: Our current capacity is 4.5Mt and in the quarter of June we had capacity utilization of 113%. EBITDA has also gone up by 25-30% compared to the last June quarter.