NIFTY 50

HeidelbergCement India says cement demand is buoyant; expects price hike post Diwali

Updated : October 30, 2018 08:43:35 IST

Jamshed Naval Cooper, managing director and chief executive officer, HeidelbergCement India, has worked in cement industry for three decades. Credited for revamping the sales and marketing setup of HeidelbergCement India, Cooper successfully created and launched the "mycem" brand.

Served with ACC Ltd for 22 years, he said cement demand is buoyant and expects a bigger price increase post Diwali. Cooper, who pioneered the 25 kg cement packing and launched bulk cement for the first time in India, sees signs of better cement demand from retail and housing space as well.

Edited excerpts:

Q: Can you start by telling us when was the last cement price increase taken and by how much?

A: Last cement prices, if I recollect was somewhere around October 25 or so.

Q: What was the quantum of the price increase and what do you expect in the months to come?

A: The quantum’s are small and it's not very huge. It can be anywhere ranging between Rs 2-5 a bag. Going forward, I think the market is buoyant and the market prices will keep moving up. Now, the season has started. Once the Diwali is over, I think the prices will start looking up.

Q: How was the quarter gone by, very good numbers, sales up 14 percent and volume is up about 6 percent, give us more colour?

A: Volumes are about 6 percent up on year-on-year basis. The basic benefit that came is the prices.
The prices have been stronger in this central zone, where we sell about close to 90-95 percent of our volumes.

The market growth has been mostly because of infrastructure projects, which are coming up. Retail segment is also equally good and doing well. So, that adds up to that.

On the cost side, we had seen some pressures. But, still I would say the market returns that we got was little more than the costs. So, that is how the numbers are looking good now.

Q: You said the demand is buoyant. The consumption story which all the festive guys gave us was around the bleak, whether it was two-wheeler sales or cars or even consumer goods. Where are you noticing this buoyancy in demand?

The demand is coming mostly from housing projects in central India.

There are road and irrigation projects and demand is from this segment. Considering the demand was low base last year, there is a little bit of improvement in the retail segment also. So, housing sector and the retail, which we call IHB (individual house builders), is looking little stronger now.

This trend was there as earlier bases we had a little problem with sand availability. Now that sand availability is gone, so this brings the industry to a point where the pent-up demand, which was remaining there has now started hitting the market. That is why I thinking it will continue for some time.

Q: When we spoke with you in the month of September, you had indicated that the cement industry will grow by about 7 percent in this fiscal and Heidelberg will keep pace. Given that demand has improved quite a bit, would you like to scale up the expectation? Do you think you would manage to do about double digit growth this year?

A: The demand for coming year is not going to be less than anywhere. I am projecting about 7.5 percent demand growth between 7-8. I don’t think demand across the country is going to relent anyway. This is going to continue.

Q: Can you give us more little more colour on how you see input cost from hereon, petroleum coke prices, and your mix? Should we expect improvement in margins because of your raw material management?

The raw material is a big concern today, especially the fuel. Earlier the pet coke was cheaper than coal and now it's the reverse.

So, we are just amending or altering our fuel mix very frequently. Earlier last year, our fuel mix coal was about 35 percent, it's now closed to 42-45 percent and it has changed. Landed cost of pet coke is closed to about Rs 12,000 per tonne, whereas coal is about Rs 5,600 odd. So, that makes a lot of difference.

In terms of gigajoule into thermal value, coal is now cheaper as compared to pet coke. Now all cement companies will have to alter their fuel mix, which we are able to do very well as our team here is now understand how the fuel mixes have to be altered as fast as within two days’ time. So, that is the ability and agility what we have building in our system.
cnbc two logos
To keep watching CNBC-TV18, India's No. 1 English Business News Channel, call your Cable or DTH Operator and subscribe now for just Rs. 4 per month. You can also subscribe to CNBC-TV18 Prime HD for Re 1/- per month.Find out more
Live TV

recommended for you