‘Our first RMC plant will come up in Mumbai by February’

Suresh P Iyengar Mumbai | Updated on November 26, 2020 Published on November 26, 2020

Parth Jindal, MD, JSW Cement   -  PAUL NORONHA

Govts have no other option but to spend on infrastructure projects to boost the economy, says Parth Jindal, scion of the JSW Group

JSW Group scion Parth Jindal has charted out an ambitious plan to achieve a cement production capacity of 25 million tonnes per annum (mtpa) by 2022 and towards that has started preparing an investment plan despite the lingering fear of Covid-19’s impact on the economy. Though cement demand has started improving on government infrastructure spending, private investments are hard to come by. Jindal spoke to BusinessLine on the way forward. Excerpts:

Has the demand for cement stepped clear of the impact of Covid-19?

Cement demand in the first half of this fiscal fell by 29 per cent, compared to the same period last year. In the second half, it is expected to grow by 10 per cent. Overall, the average cement demand this fiscal will be down 7 per cent, which is still much better than previous predictions made during the peak of the Covid-19 pandemic. We are seeing governments spending a lot of money on infrastructure projects.

Can government sustain infrastructure spending given its state of finance?

It is a billion dollar question. But I believe they have no other option than spending on infrastructure projects to boost the economy. We are supplying to many state government projects, including metro rail, airports project, elevated metro corridors and link roads. Government contractors are being paid on time. The government has to keep spending even if their current account deficit and fiscal deficit widens. The deficits can be taken care of once economic revival gathers pace.

Is the second wave of Covid-19 a concern?

Definitely, but the government is taking all measures to keep it under control and does not want to end up in complete economic lockdown like before. Moreover, the second wave is only striking metro cities such as Ahmedabad, Jaipur and Delhi. Cement demand is currently coming from rural areas, which is away from the second wave of Covid-19. With India tying up for 100 million Covid-19 vaccine doses, things should be under control.

Any plans for the more vibrant central and northern cement markets?

Since the promoters of JSW Group are from the northern region, we would like to have a big play in these markets. The two regions cover major markets in Rajasthan, Haryana, Uttar Pradesh, Madhya Pradesh and Chhattisgarh. We will tap into these markets in the second phase of growth from 25 mtpa to 50 mtpa. In fact, the new limestone mine acquired in Rajasthan, Chhattisgarh and Gujarat are in line with this plan.

Is importing clinker and tapping the Indian market a better option than making it in India?

Imported clinker will be cheaper only if the grinding units are closer to the port. In fact, we import clinker only for our grinding unit at Dolvi in Maharashtra and that too from our own unit at Fujairah in the UAE. Our grinding units in the eastern region get clinker from our Nandyal Cement Works in Andhra Pradesh. The railways is also giving us a discount. So, using domestic clinker would be much cheaper.

Any plans to enter the ready mix concrete (RMC) business?

We are setting up a ground granulated blast furnace slag facility in Salem to tap the RMC sector exclusively. This product can be used to partially replace OPC (Ordinary Portland Cement) in RMC production. Our first RMC unit will come up in Mumbai by next February, followed by Bangalore, Hyderabad and Chennai.

Builders have complained that cement companies are hiking prices despite weak demand. Your thoughts...

Since 2007, cement prices have increased by a CAGR of just 1 per cent, much lower than the inflation growth rate. Real estate players cannot show a single country where cement prices are so low. Real estate players should impress on the government to reduce the GST on cement from the current level of 28 per cent, rather than complain of high cement prices. When steel attracts a GST of 18 per cent, there is no reason for cement to be taxed at 28 per cent.

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Published on November 26, 2020
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