K Padmakumar, Managing Director, Malabar Cements
Malabar Cements, a fully owned Government of Kerala undertaking with total installed cement production capacity of over 7.2 lakh tonne, has highest safety standards and harmonious labour relations. The company practices Japanese 5S concept of housekeeping to achieve excellence in maintaining clean and hygienic working conditions.
K Padmakumar, Managing Director, Malabar Cements shares his views with ICR. Excerpts from the interview...
What is the present market scenario and how is your company doing?
This year, profits have improved compared to 2013-14. The realisation has been better. We are commanding a good price for our product.
What has been the scene on price front this year?
Price of cement is a relative attribute of a product. We cannot lower or raise the price on our own. It is in relation with the other brands. In 2013-14, there was a huge ex-factory realisation drop to the tune of around Rs 20-22 per bag. The recent increase is only 6 per cent on an annualised manner compared to the prices on 2012. We have to track the prices on year on year basis, not in isolated way. However, we price our product normally Rs 10-15 lower per bag in retail market compared to the price charged by other private players.
What will be the price fluctuation after the onset of monsoon?
There will be slight decrease in the demand during monsoon with corresponding reflection in price. The construction activity will suffer and price will not go higher after the start of monsoon. The demand also will go down.
What is your product portfolio?
We make only blended cement and we sell only in Kerala and Coimbatore in Tamil Nadu. We source fly ash from Mettur Power Station, Udupi Power Corporation, Mangalore and from Hindustan News Prints. The absorption level as of now is 25 per cent. However, with imported clinker it is going up to 29 per cent since it has higher C3S content.
How do you differentiate with other players for the branding of the product?
Malabar Cements, a fully owned Government of Kerala undertaking, is synonymous with superior quality cements, vouched by customers spread across the state of Kerala. Cement can reach its customer in ´factory fresh´ condition without any deterioration in its original strength; either due to moisture or humidity, within 12 hr. We believe in ´Relationship Marketing´. Our presence in the market is very important; we have to make our product available to the customer at all the time. We have a network of channel partners. There is a strong demand for our product but we are unable to satisfy it cent percent due to limitations in production capacity. We are expanding our business by grinding imported clinker, overcoming inertia that is prevalent in public enterprises. Brand promotion by certain brands is through news paper advertisements, TV channels, hoardings etc. We need to be more aggressive on putting up hoardings. We believe in giving direct incentives to customers, channel partners, through schemes like lucky draw, distribution of gold etc. Our major sale is in retail segment but some supply goes to a few government projects also. We do not sell to private institutional buyers.
Is there any plan on manufacturing slag cement?
It is an option available as a backup plan. Right now we are selling only fly ash based cement. As a contingency plan if fly ash is not available to us then we can resort to slag cement. In the past, there was one such incidence when we had to resort to manufacture and sale of slag cement for a full year, 2012-13.
Please tell us about your CSR activities.
For our CSR activities, we tie up with local community. We utilise part of our profit back to institutions that work for noble cause adopting transparent procedures. Though it is mandatory to spend only 2 per cent of profit earned on CSR, we spend up to 5 per cent of our profit on CSR activities. We support schemes for social sectors, health sector, emergency assistance, orphanages etc. CSR is certainly not a brand building tool for us and is taken as a commitment by all our employees.
Could you brief us on your expansion plans?
As a part of expansion programme, we commissioned a 2 lakh tonne clinker-grinding unit at Cherthala in Alappuzha district, thus taking our total installed capacity to 7.2 lakh tonne. Right now we are doing a project of Rs 160 crore with Cochin Port Trust through which 1.4 million tonne of cement and allied materials will be sourced. Currently, we do not have plans to add to clinker grinding capacity as lime stone deposits are scarce in Kerala.