CAN SRINIVASAN TURN INDIA CEMENTS AROUND?

While Srinivasan is trying to pull the haemorrhaging company back from the brink, improving efficiency will be harder

- N Madhavan

When India Cements Ltd (ICL) announced on 21 September that it had sold 73.75 acres of land in Andhra Pradesh's  Vizianagaram district to rival UltraTech Cement Ltd for 170 crore, it surprised long-term cement industry watchers. After all, N. Srinivasan, vice-chairman and managing director of Chennai-based ICL, had in the past been at the forefront in thwarting any attempts by national cement players such as Gujarat Ambuja or UltraTech from entering or expanding into south India.

Srinivasan's determination to keep invaders away was best captured by Narotam Sekhsaria, founder and former chairman of Gujarat Ambuja Cement Ltd, in his book The Ambuja Story. "I was relieved that I did not buy Coromandel Cement," he wrote. "Mr Srinivasan guarded his Southern territory zealously and he would not have let me settle down." In 1990, Ambuja Cement had lost the bid for Coromandel Cement, located in Chilamkur in Andhra Pradesh, to ICL, and with it, an opportunity to enter south India.

That Srinivasan is today selling assets to a rival reflects his compulsions. Hit by high costs, especially on coal, and low cement realization, ICL has been in the red for the last five quarters. In 2022-23, it incurred a loss of ₹587 crore before exceptional items. During the first quarter of this fiscal year, the loss stood at ₹75.30 crore. Having burned cash worth ₹231 crore in the last five quarters, it is facing an acute working capital shortage that has curtailed production as its market share suffers an erosion. This, despite good demand-cement consumption grew 11% in south India in Ql of 2023-24. The company urgently needs to increase output to become profitable, generate enough cash to repay debt and fund badly needed modernization efforts. Its volume, at 9.7 million tonnes (mt), is at the same level as it was two years ago.