‘IPL will help us build brand image at no cost’

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After lying low for a few years, Chennai-based India Cements Ltd has not only become a major player in the cement industry in the country but has also attained the third slot (after Holcim and Grasim) under the leadership of N Srinivasan, its vice-chairman and managing director. Through its sheer cost control measures, strong brands and wider distribution network, the company has outpaced its peers, reporting better EBITDA margins quarter-after-quarter for the last two years.

Having set a target to become a pan-India player, the company has embarked upon capitalising on the increasing demand and gap supply by almost doubling its capacity to 18 Million Tonne (MT) in the next three years with a marked presence in the northern parts of the country. To further position itself as a major contender in the Indian cement industry, the company is understandably cashing in on the advantage arising out of becoming a franchisee of the Indian Premier League (IPL) of BCCI. In the recently held auction of teams and players, India Cements shelled out $91 million for the Chennai team and another $1.5 million for India’s T20 and one day captain MS Dhoni. The company expects its brand equity to grow manifold across India. Srinivasan spells out his gameplan for his company and the cricket team in an exclusive interview with FE’s R Ravichandran. Excerpts:

Experts believe that the current demand and supply gap in the cement industry will narrow down in the coming years. What do you think about it?

The industry has been growing at 9-10% for the last two years and operating at 95% capacity utilisation. It is unprecedented and we had not seen such a trend in the past. Taking into account the recent government estimates, the average requirement of cement by 2011 is estimated at 250 mt. The requirement can go up to 291 mt. If the industry's capacity utilisation comes down from the current 95%, the requirement will further shoot up to 325 mt by year 2011.

There are two factors, which will determine the demand-supply gap scenario. Firstly, the industry can no longer run at a peak capacity utilisation (it’s 95% today) given the age and equipment of the plants in India. Secondly, there is this impact of the delay in project execution due to the requirement of large investment.