Business
ACC Ltd plans to step up exports to cash in on the record depreciation in the rupee and tide over damp demand in the local market.
Updated : Mar 18, 2018, 04:39 AM IST
ACC Ltd, Holcim-controlled market leader in the Indian cement sector, plans to step up exports to cash in on the record depreciation in the rupee and tide over damp demand in the local market.
The company is looking to sell in the South Asian market till the domestic situation improves.
“The current rupee depreciation surely opens up a lot of export markets. The countries that we are mainly targeting are Maldives, Mauritius and Bangladesh,” said Ramit Budhraja, chief executive-south-west region, ACC.
The Indian rupee has depreciated by close to 20% against the US dollar since July.
“This would not be a very significant percentage of our total volumes,” he said.
Since the Indian port capacities are constrained, there is a limited option of sending huge export quantities as big ships cannot berth at Indian ports, he said.
One of the major issues being faced in the export markets is competition from other countries like Pakistan and China. Budhraja said the rupee depreciation, which gives a price edge, will help outwit competition from other cement producers.
Among the other Indian companies targeting the export markets is French Vicat group-controlled Bharathi Cement, which has a facility in India. The company has started exporting to markets such as Sri Lanka, where it has exported close to 1,300 tonne in the last two months and plans to take it to close to 10,000 tonne a month shortly.
“The end of the war in Sri Lanka is opening up a lot of funds towards building infrastructure. Cement from India has a quality advantage over that from the Chinese players,” said Ravinder Reddy, director-marketing, Bharathi Cement.
He, however, does not expect this to turn into a significant percentage of the company’s total production volumes. Ultratech and Holcim group, which holds a controlling stake in ACC and Ambuja Cements, also supply to this market.
In spite of the efforts to offset the lull in the domestic market, a senior industry official said the Indian cement sector cannot be a noteworthy export story.
“For exports, one needs to have a plant close to the port, which is not the case with most cement companies. Secondly, while markets such as Sri Lanka, Nepal and Bangladesh were always there, other markets are not viable. Farther markets such as Middle East involve huge freight costs and are struggling with their own domestic over-capacities,” he said.
The official said demand from markets like Mauritius is as small as those generated in the Mumbai market alone and these markets also witness supplies from European countries. The industry does not expect other cement companies to increase focus or consider export markets in spite of the currency prop.