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A strong diversified base to build

Since decontrol 25 years ago, the Indian cement industry has been recording spectacular growth. Today the industry has a capacity of 360 million tonnes. The industry operates at around 72 per cent of capacity.

India Cements was founded in 1946 by S N Sankaralinga Iyer and T S Narayanaswami. The latter’s son N Srinivasan (NS), took charge in 1989. The timing appears propitious: decontrol of the industry soon after helped realise the latent potential, which was drawn to the most. Srinivasan embarked on upgrading technology. Improved profitability, thanks to higher prices, combined with the thrust for growth, an acquisition spree. The acquisitions included companies with handsome capacities like the Malkapur Cement Plant (2.40 mn tonnes) in Andhra Pradesh (now Telangana), Dalavoi plant (present capacity 1.85 MTPA) in Tamil Nadu and, more recently, Bansawara plant (1.50 MTPA) in Rajasthan. These have helped the company build capacity to 15.55 MTPA; when NS took over, the installed capacity was just 1.3 MTPA. The company’s plants operate in Andhra Pradesh, Rajasthan, Maharashtra, Telangana and Tamil Nadu.

Srinivasan consolidated these acquisitions along with building capacities for ready mix concrete, power, coal, shipping, infrastructure, finance, IT... This helped the group enhance total operating income to Rs. 5083 crore for the year ending 31 March 2015. Of this, India Cements Ltd accounted for Rs. 4454 crore.

IE discussed GIM prospects with NS. Excerpts:

IE: What an investor can expect from GIM for the manufacturing sector?

NS: I belong to a capital-intensive industry directly employing several lakhs apart from providing secondary and tertiary employment. Hence cordial industrial relations assume importance. In our experience, for manufacturing, Tamil Nadu is the best in terms of availability and maturity of skill sets and cordial industrial relations. These factors should make special appeal to prospective investors.

IE: How do you rank Tamil Nadu in terms of ease of doing business?

NS: Traditionally Tamil Nadu has been administered by experienced and responsive bureaucracy. It is a highly industrialised state with substantial manufacturing capacities in a wide range of industries. We have presence in all major sectors. The administration is thus fully aware of and sensitive to the challenges faced by industries and their needs. This ensures ease of doing business.

IE: Should the state focus on a few specific industries?

NS: No, with the broad industrial base, the state has the capability to nurture a vast range of industries. Sometimes skilled labour is not available, but there is a large influx of labour from outside that helps cater to the need. We should also focus on skill development and training.

IE: Your suggestions for attracting investments…

NS: There are enough reasons for investing in the state. I feel the state should not lose revenue by offering many incentives. The state has built a brand and there is no need for discount sales.

IE: On the state of the cement industry...

NS: There are only 7 – 8 states with limestone deposits and Tamil Nadu is one of these. The resources have been utilised effectively for development. The sector creates capacity ahead of demand and continuously ploughs back the resources generated. There are enough deposits for at least the next 50 years; there is no cause for worry.

IE: Your plans for diversification...

NS: I believe in sticking to knitting. The investor is demanding. Beyond a size, growth depends on investments from domestic and international investors.  We want to focus on increasing capacity utilisation we have created.

IE: Your wish list for the 2020s…

NS: I feel a sector not sufficiently exploited by Tamil Nadu is tourism. We have a variety of attractions to offer- pilgrimage tourism, beach tourism, heritage tourism to mention a few. There is a huge potential to attract, hordes of domestic and foreign tourists.  We should exploit it.

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