Capacity A Drag On Market Share, Says Srinivasan

Having become the second largest cement producer in the country, post-Raasi Cement acquisition, India Cements is now preparing to take on the role of the market leader.

The company intends to establish its pre-eminent position by being aggressive on the price front, its capacities in the region allowing it to do so. With seven plants in the region, it hopes to steadily build on the market share it already enjoys.

Market share is constrained by capacities, India Cements vice-chairman and managing director, N Srinivasan, said. The 35 per cent market share the company enjoys is because of its 7.5-million tonne capacity, he added.

 

Terming cement a regional business Srinivasan said, he would rather be a big player with significant capacity in a region than be spread thin over many regions.

The next two years will be back to the business and will involve translating the synergies of these acquisitions to the bottomline, he added.

Cement is a long-term business which has to be looked into with a three to five year perspective. And, in that time frame, I am terribly bullish on cement. The overall demand and supply situation is reasonably balanced and only regional imbalances exist now, he said.

Srinivasan says he was able to convince B V Raju that the takeover was in the best interest of the company and the shareholders. It also helped that Rajus parleys with other major cement companies like L&T, the Birla group and Gujarat Ambuja fizzled out. Even his appeal to Andhra-based companies for coming together to keep out the Chennai white knight turned black knight did not translate into actual cash flows.

India Cements, it is learnt, while continuing to persuade Raju to sell, even conceded the post of chairman in Raasi to B V Raju but the Raasi patriarch is reported to have declined the offer. Similarly, suggestion for board-level representations were also turned down.

After the open offer closes, a change in the Raasi board is almost a foregone conclusion, industry observers say.

ICL also does not see a problem in bringing under its fold a public sector unit (Yerraguntala), a private plant (Raasi) and a greenfield unit (Visaka). The ICL managing director is confident of bringing all the three companies within its umbrella without any major cultural clash and/or downsizing of workforce.