‘India’s per capita cement consumption will definitely improve in coming years’

The Begamo, Italy-based Italcementi Group is the fifth largest cement manufacturer in the world. The 150-year-old company went on a global acquisition drive by purchasing Ciments Francais, the French cement maker, in 1992., followed by a series of acquisitions in emerging countries, including India’s Zuari Cement.

Carlo Pesenti, Group CEO of Italcementi, is a fifth-generation member of the Pesenti family, that has a substantial stake in the company.

In an interview at Kochi, where he attended the ground-breaking ceremony of a port-based one-million-tonne Zuari Cement terminal, the seventh of the group, Pesenti told Business Line that India is a key market for the group and that the group’s global footprint would continue to increase.

How is the Italcementi Group positioned globally?

We are one of the top manufacturers of cement, ready-mix concrete and construction aggregates. We are the market leader in Italy and Egypt and we have manufacturing and trading facilities in 22 countries. In the 1990s, the company made a strategic decision to go global and this phenomenally improved the company’s profile and turned it into the $5-billion multinational it is today.

How has the global economic recession affected cement companies?

It has hit all cement companies, slowed down production and reduced turnovers. The construction sector is the last in the chain to be hit by an economic recession and also the last to be benefited by an economic boom. There is a time lag of 12-18 months for the economic ripples to reach the sector. This is because of project commitments. As a result, cement companies reflect the general economic conditions with a time lag of 12-18 months.

How did your group manage to tackle the recessionary impact?

We were able to react promptly and take crucial strategic decisions. First, we downsized in terms of number of employees, production facilities and operations. Second, we focused on cost reduction and quality improvement which helped us compete better. We are now a low-cost manufacturer. Third came market diversification. We spread out to newer global markets, mainly the emerging markets, like Thailand, Kazakhstan, India. In Egypt, we are number one.

What are Italcementi’s prospects in India?

India is a huge market. As of now, the per capita consumption of cement is one of the lowest in India. But India’s economy is growing fast. Over the past 15 years, the per capita consumption of cement has almost doubled in the country. Though the growth in demand for cement in the last financial year was just 3.5 per cent, it will definitely improve in the coming years. We are more active in the South, where we have a market share of 5 per cent, and we are fast expanding our manufacturing facilities.

We are going to expand our operations in the country. The cement terminal we are now building at Kochi will enhance Zuari Cement’s storage and distribution capabilities and increase our market access in more States. A new grinding facility is coming up in Solapur, Maharashtra.

And, well, Italcementi has big plans for India.

What is your current global strategy?

We will continue to expand our global market steadily in accordance with the changing economic realities but, we will focus more on emerging countries. We might acquire new companies, infuse latest technologies into them and scale up their operations.

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