NCL Inds sees cement demand go up

K Ravi, Managing Director at NCL Industries comments on the company's future plans. He said that as a mini-cement plant, they have some concessions on excise duty, which still continue to enjoy that benefit now.

He adds that the demand is good and he feels that in the the next couple of months it's going to go up. According to him, if that happens then they might have to charge the extra duty also to the consumers.

Excerpts from CNBC-TV18's exclusive interview with K Ravi:

Q: How much are you selling each bag in Hyderabad for, at this point of time?

A: We are selling at around Rs 180-190 in Hyderabad.

Q: You walk right into the Finance Minister's good books and get the reduction on excise. Could you quantify that benefit for us?

A: As a mini-cement plant we have concession on excise duty for the first 99,000. As a mini cement plant, we still continue to enjoy that benefit now and it is only after we cross that 99,000 mark of production that we may probably have to revise prices.

Q: Do you see an upward pressure coming in on prices considering the demand that is prevalent?

A: The demand is good and particularly in the next couple of months it's going to go up.

Q: Would prices also go up in line and if so by how much?

A: Probably immediately we may have to pass on this Rs 12 a bag and cross the Rs 200 barrier in which case, we will have to charge the extra duty also to the consumers.

Q: Just a word on your capex plans – you are planning to double your capacity close to about six million tonne. You are setting up a grinding unit and as far as we know you are setting up a cement-bonded wood particle board plant as well. How are you planning this entire capex?

A: We are almost at the fag end of the capex plan. The board plant trials are going on at Ponta Sahib and probably this month we will be starting regular production. Similarly the grinding unit at Kodapalli near Vijaywada, the trial runs are going on, which too will be commissioned in this month and the third is increasing the clinkering capacity that probably we will be able to complete in the month of April.

The State Bank of India is financing the grinding unit; similarly UTI will fund the board plant at Ponta Sahib as well as the energy efficiency project in Mattapalli - the clinkering capacity, which will be financed by IRDA.

In addition to this, now we plan to implement another eight to lakh tonne clinkering unit at the existing plant - the debt portion of which will be taken up the SBI and the State Bank of Hyderabad.

Q: What will be the total cost of setting up all these three plants? Does it work out to be in excess of Rs 100 crore?

A: All the three projects put together is around Rs 80 crore.

Q: What is the interest burden that is associated with the loans that SBI and UTI have given you?

A: It is going to be around 11% whereas the IRDA has given a concessional price because it is a World Bank like credit.