• OUTLOOK ARENA
  • VIEWS ON NEWS
  • MAY 18, 2000

International cement giant makes Indian debut

Ciments Francais (France) has finally established a toehold in India, the world’s third largest cement market. The company is reported to have picked up a 50% stake in a 1.7 million tonne cement plant that has been hived off by Zuari Industries (50% stake).

The plant has been valued at US$ 80 per tonne (Rs 3,500 per tonne) and is in line with international rates.

The economic recovery that was witnessed during FY00 came as a boon to the cement sector, which had been languishing due to slow demand growth and low prices. With domestic activity picking up (especially in the housing sector) the demand for cement registered buoyant growth (up 15% in FY00). However prices continued to remain under pressure due to intense competition. This was mainly due to the fragmented nature of the industry. The consolidation in the sector brought hope of a better pricing environment.

Consolidation has progressed rapidly over the last one year. Infact there is speculation that several more deals are being planned in the sector. The move will benefit the sector by creating a structure that is suitable for a better pricing environment.

However, just when everything seems to be going right for the sector, unconfirmed reports that the monsoon may not be normal this year have created uncertainty. Drought in the parts of the country underscored these reports. Infact with construction activity banned in the drought hit areas, cement prices have once again turned weak as demand has slackened. The meteorological department is likely to be out with its reports only later this month.

Cement stocks have been under-performers in the stock market. The lingering doubt of a sub normal monsoon has been largely responsible for this. If, however, there were to be a normal monsoon after all, cement stocks could witness what has been denied to them for some time – better valuations.

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407