Binani Cement, the flagship company of Binani group, is considering long-term bulk cement supply contract with real estate developers including Raheja and Hiranandani. The initiative, if it fructifies, will be the first in the industry and other cement companies may follow suit.
Binani Cement’s managing director Vinod Juneja confirmed the discussions between the company and a few real estate firms on this regard. "It is at a very initial stage. Yes, we had talks with some real estate developers on cement contracts," he told ET.
This will be a win-win contract for both, said an industry expert. The long-term contract will empower the real estate developers - most of them are going through a tough time - to control over vagaries of price fluctuations of the commodity. On the other hand, Binani Cement will get assured buyers of its produce.
Industry sources said the realty sector may invite cement companies to participate in bidding before signing any such contracts. Asked on this, Mr Juneja said his company would not hesitate in bidding, if required. Analysts attributed the main reason for the slow down in the real estate sector to tight monetary condition. Increase in cement prices, that too during the rainy season which normally sees a price drop, makes the situation further unfavourable for the developers, they added.
Incidentally, Binani is also getting into the real estate sector this fiscal. The company has around 56 acres of land in Wada, about 30 km from Thane in Mumbai. It plans to develop the land jointly with a partner into an IT Park. Binani Cement is expanding in the northern and western parts of India in the next quarter. This expansion is a part of the company’s plan to become $1bn firm by 2012. It operates from its fully-integrated cement plant at Binanigram in Rajasthan.