M Ravinder Reddy, Head Marketing, India, Vicat Group and Director Marketing Bharathi Cement
Announcing their first line of commercial despatch from Gulbarga plant, under the name Bharathi cement, M Ravinder Reddy, Head Marketing India, Vicat Group and Director Marketing Bharathi Cement talks to ICR about, logistics, latest technologies and his forecast for the year 2013.
What are your views on the current scenario of the Indian cement industry?We have reached 370 mt installed capacity as far as demand is concerned probably 2012 our final total estimate was 250 mt. We are expecting an average of 8 per cent and if government decides to spend more money on the coming election it may even go more and that is the forecast we have. Coming to our company, Vicat group has a couple of joint ventures now in India. First one started in 2010 April with Bharathi Cement and had a capacity of 2.5 million tonne. Adding 2.5 million tonne, our total capacity now is 5 million tonne, in Andhra Pradesh. The plant in AP caters to southern states and also some parts of Maharashtra. Second joint venture which is green field plant originally it is done with Sagar cement and it is a minority shareholder and majority is Vicat Group. Here the Gulbarga in North Karnataka we have shared another 2.5 mt plant and this Vicat group capacity has gone up to 7.75 mt. These two are in strategic locations; one is at the border of AP, Maharashtra and North Karnataka. Other plant in Kadappa is the border of South Karnataka and Tamil Nadu and AP. How do you keep in pace with the latest technologies in cement industry?We have introduced polypepelene laminated bags for cement in 2009 which is our USP and we were the first to start in India, which is not followed by everyone in India. Also we have installed a robotic control system in our laboratory and each material comes to this robotic lab and every hour the robot analyses everything i.e. raw materials to finished products. There are times when the quality of limestone differs, thus right mixture is necessary from the first step itself. This brings consistency in quality and the customer in Tamil Nadu and Hyderabad will get the same quality. Our objective is Uniformity in quality is what we aim to the customers from all the are promise i.e.both quantity and quality. Quantity is improved packing and quality we are ensuring through our plants. These are two major successes for us. We also take precautionary measures. We have gone to vertical roller mills which are imported from Germany and are energy efficient and we have the largest first cement mill in the world. It can grind 360 tonne per hour. Hence our advertising campaign assures three times better cement quality, German technology, robotic quality control and tamper proof packing. Normally, the cement bags are stitched which can be opened and restitch but the heat fill technology that we use, the pack cannot be opened once sealed. All this is our USP and that is how we were able to get good improvement in our sales and market share and market zone. We are operating in AP, Tamil Nadu, Karnataka, Kerala and part of Maharashtra. And also some small quantity exported to Sri Lanka.The prices of cement in Andhra Pradesh by the end of 2012 dropped by Rs 40-50 per bag. How did this affect the financials and your production?We are not depending on one state. My distribution is there in five largest states and I give about 20 per cent everywhere. It has affected in AP definitely. But not in Tamil Nadu, Kerala, Karnataka. Another problem in AP is power holidays. So now power holidays government would like to increase it to 16 days from next month. Today it is 12 days power holiday. They want to extend it to 16. What happens is cement normally January to June is the best demand period and if the power holidays are more than availability will come down and production too will come down. Your predictions for the year 2013?I am a little bullish because of the election in 2014. I am expecting 8 per cent growth. Except AP which is not doing very well, AP shows some positive improvement then it will cross 8 per cent otherwise 6-7 per cent in south also.
The last year had been pretty sluggish, how did this affect the financials of your company?Yes particularly in southern Indian the demand was sluggish. The overall industry growth was 5-6 per cent and my growth was 23 per cent. Earlier year 2011 we have sold 2.06 mt and last year we sold 2.53 mt. We are on a positive growth and brand makes the difference.Kindly highlight the sustainability initiatives towards the environment?Vicat being an international group does not compromise on environment. The plant is fully complied of international and Indian environmental standards. If you come and see our cement plant you cannot see dust and you cannot see that the factory is running or not. Yes and everywhere. Also, Gulbarga plant the agencies IFC is there. They do not compromise. it has to be of international standard. All precautions have been taken. We ourselves do not have deviation in our concept. We are doing 100 per cent environment friendly processes.How important is the location while setting up a cement plant?Cement plants is using limestone. One thing is if limestone is available and close to the market area you are lucky. If limestone is not available in closed area then you have to travel. Our plant in Khadappa and Gulbarga is next to the limestone mine. Both plants are connected that way. It is most essential for transportation for the market. Also we have seen a cluster. The Khadappa plant is in southern part of AP and this is in Northern part of Karnataka. It is in proximity of north AP, north Karnataka and Maharashtra. We have an advantage as well. Suppose if I am in one corner I cannot cater to all markets because of the logistics. Is the company planning to expand its market in northern India?As of now we do not have any immediate plans to expand in the nothern markets. Right now the strategy is to establish in the Southern market. We are having in second line project in a couple of years’ time. Then again is a provision of third line in Gulbarga which will take another two to three years. We will take another four to five years to establish a leadership in the Southern market.What are the greatest challenges that the cement industry face today?Paucity of coal is one big challenge. Earlier a lot of used to supply too many cement plants now they are not able to supply coal so now we are dependent on imports. Either we have to get Indonesia, or Africa. But we are getting coal from other countries apart from the domestic coal. Domestic we do not get 100 per cent. Sometimes 20 or 40 per cent depending on availability. Balance we get through imports. Cost is another important factor which is going high in India. Logistic cost is going high because of diesel. Alot of cement companies off late have been blamed for malpractices in the industry, what is your take on that?If malpractice is done by some company it is their scenario we do not take such things in our company. We do not believe in it. We believe in straight and legal things. It will have a long life for the brand.How do you combat the logistic cost?For combating the logistic cost we have two plants now and thus we are allocating quantities from nearest plant. Earlier one cement plant fed all the states. For example earlier we used to supply from our cement plant in Kadappa, the supplies went to the regions of Mumbai and Pune. Now Gulbarg will be close to Pune and Mumbai, thus the needs of Mumbai will be catered by the new plant saving Rs.300. When it comes to railways we generally face a scarcity of railway wagons perticulaarly the regions of Arawa, Purvass, shortage is there. However we do not face a paucity of wagons in Kadappa. The route taken by the railway in South starts is via Kundawal. Though we might face logistical issues in Gulbarga plant in future. Thus being proactive we are not depending entirely on railways. We depend 60 per cent on rail and 40 per cent by road. All close by markets we want by road and far away markets by rail.
What is your take on consolidation being the key for the cement industry?In India whatever consolidation happens still lot of entrepreneurs are coming up every year. I cannot say that 100 per cent consolidation will happen in India. We are seeing a lot of large groups are having 50 per cent capacity and another 50 producers are available.Kindly highlight the companies dealers network?We have 2100 dealers and also have attached another 5000 sub dealers. Within a short period of three years we have reached almost 50 per cent in the retail segment side which is an achievement for us and we are improving year by year.