We will have to improve our regulatory policies to help boost demand for cement
RP Tak, Chairman, CCI, interacted with ICR to share his vision for the company. Excerpts from the interview.
Please brief us about CCI
Cement Corporation of India (CCI) was established in 1965 in the era of government control of cement production and pricing, which lasted till 1984. Post privatisation, the company was given a free reign to grow and take on competition with the private players. The company struggled hard to push its way as it evolved out of the protected and secure government working style into a competitive environment. Today, CCI owns 10 plants of which 3 are operational. The combined capacity of these plants is about 1.5 mtpa, which is around 0.5 per cent of country´s installed capacity. The company is [now] in the process of modernising these three plants using funds obtained by offloading its non-productive assets.
How is the demand-supply scenario in the country?
The demand for cement is very less in India. If we look at the per capita consumption of cement in our country, we will realise that there is a huge potential for growth. However, to boost the demand, we will have to improve our regulatory policies. Today the industry is in dire need of tax reforms. More than 30-40 per cent of cement cost is attributed to different types of taxes that manufacturers have to pay. The sector should be given a priority sector status and tax holidays or cuts must be introduced.
At the same time, efforts must be done to improve domestic consumption of cement. If the government and banks lower the interest rates on loan then it will give a direct boost to the housing sector and will ultimately help cement demand grow. Infrastructure development is needed too. With right policies in place, we have a huge scope to grow. Today, our industry growth rate is about 4-5 per cent, whereas it should be around 11-12 per cent. If we can get our act together, we can easily reach the targeted 400 mtpa capacity by 2015.
How important is branding to you?
Today the sector is driven mainly by retail players. So advertising and brand building plays an important role in market development. Our brand is popular in different states. Having a limited budget, we try to use our resources effectively and market the product efficaciously. Recently, we have made changes in our packaging to entice more buyers. We have also initiated interactions with villagers in the rural market through ´Choupals´ and ´Panchayats.´ Dealers and masons meet is yet another aspect that we have explored to develop our network.
Tell us about your future plans.
Our efforts are to boost our sales and expand our production capacity. In today´s scenario, it is not economically viable to have a plant with its production capacity less than 2 mtpa. We are focusing on expansion of our plants.