Dalmia Bharat Ltd. expects demand for cement to increase from October, aided by pick-up in infrastructure activity, even as the rise in Covid-19 infections and fatalities delays economic recovery.
The industry has toned down expectations following the pandemic and a decline in consumption across businesses from July, according to Mahendra Singhi, managing director and chief executive officer of the cement maker. Cement firms, he said, are working probably at capacity utilisation levels of around 50% or lower.
“The end of monsoon, pick-up in the roads sector, and with support to the real estate sector, things could pick up for cement sector,” he told BloombergQuint on Talking Point.
Singhi also said higher raw material costs—especially those of coal, pet coke and diesel—may affect the industry's operational metrics, adding it would be mitigated by a drop in fixed and other costs.
He expects a potential demand uptick in the eastern region—which has large capacity—to drive utilisation. The company will operate at a capacity of 33 million tonnes by March 2021, and its large size, he said, is a matter of strength due to economies of scale.
Dalmia Cement isn't looking to deleverage, as it's comfortable with the current debt-to-equity ratio that stands at 1-1.5 times, he said.
Singhi denied that the company is looking at selling its stake in Indian Energy Exchange Ltd. “We're comfortable holding the stake as we believe IEX is doing well for itself.”
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