It will be business as usual June onwards: N Srinivasan, VC & MD, India Cements

The first rate worth and that too with no credit score, and the expertise we gained over the past yr will maintain our enterprise, even when our capability utilisation is little decrease.

Cement main India Cements doesn’t see the second wave of Covid -19 creating a giant downside for the corporate, believing that markets will reopen in June and there can be pent-up demand. N Srinivasan, vice-chairman & MD of India Cements, who was reappointed for 5 years on Monday, says the corporate, marking its seventy fifth anniversary this yr, did fairly effectively in FY21. It generated sufficient money flows to retire money owed by Rs 500 crore within the simply concluded monetary yr. Excerpts.

What’s your evaluation of the doable affect of the Covid-19 second wave on the corporate and trade?

Within the west and north of India, lockdown restrictions [are being relaxed] and we count on gradual leisure in June within the south additionally. Subsequently, this yr, general, we could also be higher positioned as now we have had the expertise of coping with the primary wave. Within the final fiscal, we had decreased our receivables and had good money administration. This yr, we count on to generate extra money, costs are holding and the quantity general must be higher than final yr. We had managed the price of manufacturing and contained the mounted value. As I mentioned, by June, most markets can be [free of] restrictions and there can be a pent-up demand. For our firm, will probably be enterprise as normal then onwards.

How has This autumn been by way of volumes and efficiency?

The fourth quarter has been superb for us. Out of 29 lakh tonne of cement and clinker we did for the complete yr, round 6 lakh tonne had been within the final quarter. Our inventory drawals have been additionally robust within the final quarter. The corporate’s cement manufacturing improved each quarter through the yr, with capability utilisation bettering from 37% within the first quarter to round 77% within the fourth quarter, together with clinker gross sales. Capability utilisation in March 2021 was round 82%.

Although we’re entitled to function our vegetation, we’re working items primarily based on the stock which we need to preserve, as shops have remained closed on account of native lockdowns. At current, we don’t need to construct up the next stock. The second the shops open, we can function at increased capability utilisation ranges.

How has the corporate’s debt place been? Are there pressures on inputs value?

Originally of FY21, the corporate’s complete debt place was at Rs 3,500 crore. It has come all the way down to Rs 2,900 crore on the finish of the fiscal. Over the past yr, we repaid Rs 500 crore of debt regardless of the truth that we didn’t function at full capability, and we had managed our stock effectively. We’re additionally on the right track to repay one other Rs 600 crore debt in FY22, primarily based on our evaluation that by mid-June all markets, together with the south, can be out of lockdown. There is no such thing as a must tweak any of our enterprise plans within the wake of the second wave of Covid-19 … On this present yr, enter value might go up, however I imagine that it may be handed on to the market. The costs of cement have gone up in Might by Rs 10 per bag and can improve in June by round Rs 10 to Rs 15 per bag.

What has been the affect of the money and carry follow of the corporate?

The corporate will proceed the follow of money and carry (gross sales on money), which it launched final yr throughout all geographies, even strongly. As an organization, we’re very explicit about money. We imagine that worth is essential and that we promote at an honest worth. … The first rate worth and that too with no credit score, and the expertise we gained over the past yr will maintain our enterprise, even when our capability utilisation is little decrease.

That are the sectors that may drive demand?

Covid-19 brought on a synthetic discount in demand due to the restrictions. The fundamental demand was there. For those who have a look at the pre-Covid interval, the demand was going up throughout the nation. The demand will go up due to the infrastructure focus of the federal government. The expansionary Price range for 2021-22, which had its thrust on elevated capex, is anticipated to spur development. If the promised capex on infrastructure, roads, metro rails happen, there may be scope for increased demand for cement.