HM Bangur, Managing Director, Shree Cement, took complete charge of the textile business as well as Shree Digvijay Cement Co. Ltd., one of the flagship companies of the Bangur Group which also has business interests in Paper, Chemicals, Synthetic Fibre, Phophatic Fertilizer, Graphite Electrodes, Jute, Tea, Coffee and Rubber. During his tenure for the first time the Bangur Group Enterprises sponsored Indo-Soviet cultural co-operation event of Ballet on Ice in India. Bangur is currently the President of The Cement Manufacturers’ Association (CMA) & Managing Director of Shree Cement Ltd. (SCL). Bangur is actively associated with managing and overseeing the philanthropic activities of the Group, particularly in the field of education, charitable hospital and social welfare trust. He runs a trust which is actively involved in complete restoration, beautification and renovation of Lord Brahma Temple at Pushkar. An active Rotarian, Bangur also manages and contributes to a plethora of philanthropic activities.
Shree Cement Limited, the largest cement manufacturer of North India and among top five cement manufacturers in the country, is an energy conscious and environment friendly organization and is a part of many international forums propagating green initiatives. Its "Optimal Utilization of Clinker" project has already saved large amount of carbon emission and earned carbon credits for the same. Its latest initiative is setting up of 40 MW Green Power projects which will be largest capacity of in the entire world cement industry. The Green Power Plants would utilize waste heat generated from Company’s cement plants which is presently emitted into atmosphere and thus would conserve precious fossil fuel sources.
Replying to Anurag More of IIFL, HM Bangur says, "Cement demand from rural areas has exhibited good growth."
What is the demand- supply situation for cement in India. What are some of the trends being witnessed?
In the 2009-10 cement demand increased to 198MT against 178MT in previous year registering a double digit growth of 11%. The year witnessed capacity addition of around 44MT taking the total installed capacity to 263MT. In last four years the cement demand has grown by 10-12% and is expected to show similar trend in coming years.
Indian economy in recent years has seen some structural shifts, which have led to higher disposable income in the hands of the rural population as a result of inclusive growth. As a result, cement demand from rural areas has exhibited good growth. This shall continue to boost cement demand is coming years.
With many real estate and infrastructure projects coming up, what impact do you see on cement sector and your company?
Infrastructure development and housing are the main demand drivers for Cement in India. Governments continuous thrust on infrastructure development and housing will keep the cement demand robust. The government target of building 20 km of roads each day is a big push to infrastructure development and we expect that cemented roads will also form part of this plan.
The ambitious Industrial Freight Corridor, Delhi Mumbai industrial corridor project etc will further boost the demand for cement. On the housing demand front, there is large housing shortage in the country both in urban and rural areas. Many new townships are being developed. All these augur well for cement demand.
Thus the Cement industry is expected to register a demand growth of around 10% in the year 2010-11. As regards Shree Cement, we expect our growth to be about 12% i.e. 20% more than the industry average.
Comment on your raw materials. How are you managing your coal requirements?
In recent quarters; coal prices internationally have been going up. This has impacted our fuel costs as well. However for the full financial year 2010-11, we are hopeful that our average fuel prices shall be similar to the 2009-10 levels. Other raw Materials such as Limestone, Fly Ash and Gypsum etc, the costs have gone up. We are looking at developing alternative raw materials and sourcing options to control our Raw Material costs.
We source our coal from both domestic and international markets and shall continue to do so. We have even submitted our applications for coal linkage, but the same may take some time to materialize.
What are your capex plans?
Currently we are working on three key capex projects, Unit VIII having 1 mtpa clinker capacity at our Ras site, a 1 mtpa grinding unit at Jaipur & a 300 MW power project at our Beawar plant. We are constantly evaluating capex opportunities across the cement and power space and shall make decisions for further investments at the right time.
There are often comments of cartelization in the cement industry. What are your views?
Indian cement market is the best example of a demand-supply led free market. Different regions in the country exhibit different pricing pattern depending on the demand and supply dynamics. Thus the prices move in relation to demand and supply. There is no cartelization in the industry.
What makes you different from other players?
Shree Cement is an innovation led company and that is reflected in our Operating Profit margins which are one of the highest in the industry. Shree Cement pioneered using 100% petcoke as an alternative fuel across its cement and power operations. It has recently set up 46 MW power projects using waste heat from its cement plants which is the largest capacity in the World cement Industry excluding China. We have also adopted a multiple brand strategy which has helped us tap customers across the different segments.
When will your power plant at Rajasthan start production? Would you look at hiving off power into a separate company?
We have recently commissioned 96 MW of additional power generation capacity and another 50 MW shall come up in June 2010. This shall take our total generation capacity to 260 MW.
Work on setting up a 300 MW (2 x 150 MW) power plant with biggest Air Cooled Condenser in India at Beawar adjacent to out cement plants is in full swing. This power plant is expected to come up by Dec-11. At the moment we have no plans of hiving power into a separate company.
Would you look at selling power too?
Our capacity after commissioning of the 300 MW plant would be 560 MW. Of this; we shall be consuming about 100 MW for captive use and the balance 460 MW shall be sold as merchant power.
Brief us about your financials?
During the fourth quarter, Company has posted net sales of Rs9.44bn, up 17% from Rs8.05bn in corresponding previous quarter of last year. Cement and Clinker Sales Volume of the Company grew 12% against North Indian Demand Growth of 8%. Contribution of Power Business in Net Turnover was Rs540mn, up 22% from corresponding previous quarter. EBITDA for the quarter was Rs3.30bn against Rs3.37bn in corresponding quarter of previous year.
Fiscal 2009-10 was a good year for the Company. During the year, Company posted net sales of Rs36.32bn, up 34% from Rs27.11bn in 2008-09. Increase in turnover is both on account of better cement realizations and increased volumes as a result of capacity expansion undertaken by the company. Cement and Clinker sales volume grew at 22% against 11% demand growth recorded in North India. Contribution from power business in net turnover more than doubled from Rs806mn to Rs1.76bn.
Led by Increased operational efficiency, better capacity utilization and higher price realization, operating Profit for the year increased by 59% at Rs15.78bn. Net profit increased 17% to Rs6.76bn.
What is your latest shareholding pattern?
Our shareholding pattern as on March 31, 2010 for the Financial Institutions constitute 0.27%, Mutual Funds 8.53%, Foreign Institutional Investors are 4.87%, Promoters and Director/Relatives (non-promoters) are 65.56% and 0.02%respectively. The Public is 20.74%.