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Chennai, Dec 28: Cement demand is likely to exceed supply in south by the year 2000, said N Srinivasan, vice-chairman and managing director of India Cements Ltd. He was explaining the outlook for the industry, especially in south while launching the company's 1:1 rights issue at a premium of Rs 15 per share.
He said that in the last 20 years cement demand in south grew between seven to nine per cent mainly on housing demand without factoring in the infrastructure projects which are all set to take off. Once that happens then the demand will far outstrip supply and the prices will begin to rise.
The new capacities that have been added are in the process of being absorbed and there are no projects on the drawing board as of now. With the financial institutions hesitent to fund green field cement projects, no new projects are likely to come up in the next three years.
India Cements, he said, was well placed under the circumstances. With a seven million tonne capacity (can be increased to nine million bymaking small investments), all plants in good location and three best brands under it, India Cements can take full advantage of the situation.
He also said that the company had been cutting costs and de-bottlenecking operations. It came out with a VRS recently and employee strength was reduced by 100 employees. It has also reduced the power and fuel consumption. The company is focussing only on cement activities and is getting out of all other businesses, he added.
The rights issue was to fund the Raasi acquisition and is priced in such a manner that it is an excellent long term investments, Srinivasan said. He also said that the company was confident that financial institutions which hold close to 35 per cent of the capital would subscribe to their entitlements. The company's rights issue opened on Monday.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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