At a time when the local market is growing at a slow pace and there is overcapacity, The India Cements Ltd is looking at the possibilities of exports to Sri Lanka and South African countries. However, the company says the quantum of exports would be marginal and would not offset the Indian market slowdown.
“We are looking at exports to countries like Sri Lanka and South Africa. Of course, there are challenges, but exports are feasible now,” said N Srinivasan, vice chairman and managing director. He was speaking to reporters on the company's performance in the first quarter ended June 30, 2012.
The company is expected to start exports probably to Sri Lanka first this fiscal. He refused to divulge more details.
There are issues like higher cost of logistics and internal transport of consignments from the existing factories to the ports, which need to be addressed. Further, the company also has to meet the entry barriers in these countries, especially in the African countries, before starting exports.
However, the potential for exports at present is not much. “The amount of exports will be marginal. We are not considering it as enough to offset the slowdown in demand in India and the overcapacity of the facilities,” said Srinivasan.
In countries like Sri Lanka, the company would look at quality of the product as a competitive edge, compared with the existing cements imported into these countries.
The local price of cement per packet is around Rs 850 in Sri Lankan currency, which is equivalent to Rs 356 (Indian currency), while in Chennai, the price of Indian Cements' brand is Rs 340 a packet. The company would have to factor in the logistics price also for exports.
The capacity utilisation for the company is currently around 67 per cent. Though there is little growth in demand, overall it is slow. The company is hoping an increase in volume at a later stage, he added.
The company, which owns the Indian Premier League (IPL) team Chennai Super Kings, received revenues of around Rs 122 crore from the IPL for the quarter. Last fiscal, the total revenue from IPL was around Rs 137 crore.