Slowdown In Andhra Pradesh And Telangana Hit Us In Q2: India Cements’ N Srinivasan
Government policies brought infrastructure activity to a halt in major South Indian hubs, India Cements’ MD N Srinivasan says.
India Cements Ltd. posted weak results for the quarter ended September as government policies brought infrastructure activity to a halt in major South Indian hubs, the cement maker’s Vice Chairman and Managing Director N Srinivasan said.
“As far as the south (of India) is concerned, there’s a capacity overhang,” Srinivasan told BloombergQuint in an interview, adding that shortage of sand—an important raw material—and the decision to examine projects again, too, contributed to the situation.
“Sales volumes of the company fell 13.3 percent year-on-year as lower demand in Andhra Pradesh and Telangana resulted in a 50 percent volume decline for the company,” Emkay Research wrote in a note. “Realisation increased 3.4 percent year-on-year (down 3.8 percent quarter-on-quarter), which drove 10.3 percent Ebitda/tonne growth.”
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Yet, Srinivasan said “this period has to pass and demand will grow again”. “The difference is led primarily by an Andhra and Telangana slowdown, of which (the slowdown in) Andhra is larger,” he said. “The demand in Andhra and Telangana put together was about 31 lakh tonnes per month. That dropped to 14-15 lakh tonnes (this quarter).”
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The huge infrastructure demand because of dam projects, housing for weaker sections and a whole host of things which the government had initially planned never materialised, he said. “I hope the government sorts out the political issues, in which case demand will pick up from the next quarter.”
WATCH | India Cements’ N Srinivasan on cement demand in south India
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