Indian cement companies are now venturing out of the country to diversify their markets and the Middle East has emerged as a preferred destination for the companies.
JK Cement and Binani Cement are in advanced talks to set up their units in the region. Unconfirmed market reports suggest that Jaiprakash Associates, a leading north-based cement firm, had also chalked out plans to enter the Middle East market.Tax incentives, export potential, mines and good infrastructure in the region are attracting the cement makers.
Vinod Juneja, joint managing director, Binani Cement, said, "United Arab Emirates (UAE) could be one of the good markets for us. The country does not have sales tax, income tax and central tax. It can also be used as an exporting hub for African countries." In the domestic market, cement is one of the heavily taxed commodities with taxes constituting over 65 per cent of the cement prices. Binani Cement is looking to acquire a cement unit in Dubai. "We can send clinker to the plant, which we are looking forward to acquire, our unit at Gujarat coast," added Juneja.
Official sources in JK Cement said that mining lease and easy land acquisitions in Middle East countries along with booming construction activities in the region resulting in high demand for cement offer a good business opportunities. They added that exports at low costs from the region could also fetch cement firms good business.
JK Cement is planning to set up a cement unit with an investment of $350-400m in Fujairah, one of the United Arab Emirates (UAE) countries, in association with the Fujairah local government.
H M Bangur, chairman and managing director of Shree Cement and president of Cement Manufacturers’ Association, said, "There are many hurdles in our country. Due to ease of doing business outside, there could be several more cement firms moving out." He pointed out that land acquisition in India was tough and getting overall clearances before actual construction started took no less than three years. Sector analysts at a Mumbai-based foreign brokerage house, said, "The cement industry is now looking to diversify its markets to keep a check on the risks involved. West Asia, at present offers good opportunities for cement but in the next two years, the region will be a surplus zone in terms of cement." However, they added that the move to foray outside would prove a profitable venture in short-term.