Ramco Cement is planning to boost its capacity to 20 million tonne by the end of next year, although the company doesn’t expect to grow much in the current fiscal. The announcement comes even as the cement industry expects demand to go up by eight percent, in this fiscal, as per an ICRA report.

"I don’t see much growth for us in FY 20,” said PR Venketrama Raja, chairman, Ramco Cement, in an interview with CNBC-TV18, “Our capacity will max out if we have another 10 percent (in growth).” Raja added, “Any improvement in capacity and growth will come only once our new projects come on board.”

The new projects that Raja refers to are part of a roadmap that Ramco Cements has drawn up for itself, to bring its total capacity up to 20 million tonne by the end of 2020.

The company’s current capacity is at 12 million tonne. This includes two clinker units, which will be commissioned by the end of this period. “We will register a little more than 12 million tons in terms of sales for FY20, but for FY21 we will be a little below 17 million tons since our new capacity will come online,” said Raja.

In FY 19, Ramco Cements registered 11.2 million tonne in cement sales, which was a 19 percent growth when compared to the previous fiscal. During this period, the company reported good volumes, managing to sell almost all the cement it has produced. “We have been able to do this because of all the markets we’ve sold to, in the East,” said Raja.

While Ramco Cements has consolidated a fairly strong market for itself in South India, it has managed to sell excess production to geographies in the East, at competitive prices. The company, however, has conceded that it has sacrificed margins while adopting this strategy.

Since the re-election of Prime Minister Narendra Modi, there has been a talk surrounding a renewed infra push by the government. Raja agrees this could spell good news for cement manufacturers.

“The government is doing things right by laying emphasis on infrastructure as in roads, ports and airports,” he said, “But the NBFC and banking sector has seen a liquidity logjam, including issues in terms of availability of loans. If the government could focus on freeing up the economy and cleaning up this problem, ground-level cement consumption will start improving."

For the moment, however, Ramco says it will continue playing to its strengths in South and East India, rather than focus on becoming a pan-India player. While the company says it is evaluating expansion options, it “won’t expand for the sake of expanding.”

Raja added that Ramco’s balance sheet has also forced the company to be cautious on the acquisitions front. “There is a highly competitive market for acquisitions at the moment, which is slightly beyond our means,” he signed off.

First Published:May 31, 2019 6:23 PM IST