Coronavirus impact on us relatively limited: Sameer Nagpal CEO Dalmia-OCL

As India Inc battles the impact of COVID-19, Dalmia-OCL is relatively protected owing to the industrialised nature of its products. However, the company faces challenges in exports to Europe, stemming from supply chain disruptions. Sameer Nagpal, chief executive officer of Dalmia-OCL, tells Jayajit Dash about the  demand scenario in the wake of the outbreak, outlook on cement and steel industries, its major customers and their plans for acquisitions, plant ramp-ups and capex infusion. Edited excerpts:

How has the coronavirus scare impacted your business?

In refractories, the raw material supply chain is very much dependent on China. There have been some minor disruptions but not any major impact on the supply chain side.

If the crisis perpetuates, do you foresee any demand slump or consumption slowdown?

Our customers are mainly in the industrial segment — steel and cement makers. If they ramp down their production due to workers not turning up or restrictions imposed by the government, then there could be some impact. At this point, we don’t see any impact.

How will your product prices be affected?

We believe steel production will continue and so will cement. But, the cycle of ramping up and down of these industries is difficult to predict. If there is a slowdown at all, we expect it to be temporary — a few weeks or, at best, a couple of months. We hope it is not going to have any major impact.

The anticipated impact on your export?

We export around 10 per cent of our production. And, we have a plant in Germany. If there is a government-imposed lockdown on intracity people movement, our production might get impacted. Our export to Europe is seeing a challenge primarily because of supply chain disruption. In Europe, there is a little challenge. However, in other parts of the world, we are not witnessing any challenge. We are somewhat protected by the industrialised nature of our products.

On your core operations, do you see scope for ramp-up and capita expenditure?

If we don’t factor-in the coronavirus, our production in India will continue to be ramped up. All our plants are going through some stage of upgradation. Our strategies are centred on both organic and inorganic growth. We are planning for capex and improvement at our existing facilities. At this stage, we are not planning any new projects; we are looking at acquisitions in Europe. Last year, we acquired a plant in Germany.

Your outlook on cement demand and prices for 2020-21?

The cement sector is our customer. We track it only from the point of view of how production is shaping. We see production at more or less similar levels. Many more projects might be announced. We expect cement companies to go for brownfield expansion.

Your outlook on the refractory business?

Dalmia-OCL is the second largest in India. We have introduced models in our production processes and services. We have brought in capabilities from Europe. We expect to grow 17-18 per cent, more than the industry average of six per cent.