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The cement sector is back in headlines as cement manufacturers are raising prices per bag of cement when inflation levels are all time low. Further, it being the basic construction material the cost of housing and development gets impacted. The real estate sector has lost its sheen and rising cement prices are putting pressure on its margins, especially in case of affordable housing development.
In one of our previous articles on the cement industry we had discussed the performance of the industry in the last decade and the prospects of the sector going forward.
Prism Cement, promoted by the Rajan Raheja Group (RRG) was initially incorporated under the name of Karan Cement Limited in March 1992 as a joint venture between Raheja group of Mumbai, F.L.Smidth & Co. A/s Denmark and Industrialization Fund for Developing Countries (IFU), Denmark.
In our previous articles, we looked at how did the company fare in terms of topline, bottomline and the cost control initiatives taken by the company. In this article, we will take a look at ratios.
In the previous articles, we made an attempt to portray JK Cement's journey and analysed it on the basis of five-force model of Michael Porter.
In the previous article, we gave an insight into the company's business and how it has evolved since inception. In this article, we shall profile the cement sector and JK Cement's standing within the industry by applying the Michael Porter's analysis.
Cement is a product of high volumes and therefore, transporting it over large distances can prove to be uneconomical. This makes it imperative for the plants to be located near markets. In some cases, the plants also tend to be located near the limestone reserves (a major raw material for cement) from where the cement is transported to nearby states.
Shree Cement, promoted by the Bangur group is North India's largest cement producer with installed capacity of almost 4 MT. The company, apart from being an efficient cement manufacturer, is the market leader in the north, with a market share of 16% within the region.
Shree Cement Limited has posted a profit of Rs 31.8 m during the quarter ended 31st March 2000. The company has benefited from an improvement in operating margins, which was largely a result of better cement price realisations and lower costs.
According to newspaper reports, a number of cement producers from the north are planning to consolidate themselves into a 5 m tonne company. The move is aimed at taking on the increasing competition it the sector.
Shree Cement Limited has posted a 89% jump in net profits during the quarter ended 31st December 1999. The company has benefited from improved operating margins and lower depreciation expenditure.
The race for dominating the Indian cement industry is hotting up. After Lafarge (France) and Holderbank (Switzerland), it is now the turn of Cemex SA DE CV Mexico, the third largest cement producer in the world, to bid for a presence in the Indian cement industry. The cement unit in question has a capacity of 1.7 million tonnes and belongs to Zuari Industries.
Lafarge, global cement major, seems bent on making a back door entry into India despite having faced setbacks recently. The company is reported to have initiated talks with Shree Cement to acquire a strategic stake in the 2.2 million tonnes per annum cement company. Larsen and Toubro, on the other hand, is looking at acquiring capacities in the west and south.