"Higher realisation is not a key profit driver" - Views on News from Equitymaster

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"Higher realisation is not a key profit driver"

Feb 25, 2000

Narotam Sekhsaria, Promoter and Managing Director, Gujarat Ambuja Cements Limited, is a revered man. He is largely credited for having created a company that boasts of being one of the most cost efficient cement manufacturers in Asia.

In an interview to equitymaster.com (EQM), Mr. Sekhsaria, Promoter and MD, Gujarat Ambuja spoke to equitymaster.com about his views on the future of the cement industry in India.

EQM: What will be the role of the foreign majors in India?

Mr. Sekhsaria: It is very difficult to predict as to what role of the foreigner majors in India will be.

EQM: Post consolidation what will be the key drivers for increase in industry profits? Will it come from higher price realisations or from better-cost controls?

Mr. Sekhsaria: I think that the key drivers in India for increase in profit will be - better cost control, better productivity and better quality and not higher price realisation.

EQM: How do you see the development of the retail and institutional demand for cement?

Mr. Sekhsaria: I do feel that retail demand of cement will grow at a faster pace in the short run and may be 2/3 years down the road, we will have demand for infrastructure and also institutional demand picking up.

EQM: Where do you see Gujarat Ambuja to be five years from now?

Mr. Sekhsaria: Five years from now, we are looking to be having a capacity of 15 million tonnes and will remain the most profitable cement company in India.

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