Shree Cement Ltd, a mid-sized Indian cement maker, expects strong demand and rising construction activity to boost revenue by 15 per cent in the current fiscal year, a senior company executive said Thursday to Dow Jones reporters. "Currently, demand for cement is far more than supply. This is keeping the prices firm. I am confident our revenue this year would grow by 15%," Managing Director H.M. Bangur told Dow Jones Newswires. Shree Cement posted INR4.73 billion in revenue in the previous fiscal year ended March 2004.
"Demand in north India is very strong due to ongoing construction activities. It is currently growing at 8 per cent (a year) and will grow at that rate for the whole year," said Bangur.
Shree Cement is one of the largest cement players in north India and has a capacity of 2.8Mta at its plant in Rajasthan state. Government infrastructure efforts have helped fuel the ongoing construction boom, and have spurred cement consumption in India and kept prices firm. Bangur said although prices are steady they have yet to reach their peak. "But the situation is changing and we hope to reach a new peak by February."
Cement prices differ from region to region in India and currently average about INR150 per 50-kilogram bag in north India. Bangur also said Shree Cement is setting up a new plant to meet the growing demand for cement in India. The company is building an estimated INR3 billion plant with an annual capacity of 1.2Mta of cement at Beavar in Rajasthan state. "We aim to complete the project by October next year," said Bangur. The new plant would enable Shree Cement to cut costs further, Bangur said. The company is already one of the lowest-cost cement producers in the country, helped by its 36-megawatt captive power plant.
Bangur said although consumption is growing steadily, Shree Cement plans to meet incremental demand by raising capacity through expansion or by building new plants. "We have no plans to acquire any company. We are also not in talks to offer equity to other companies," he said.