SME Cement Players Taking Risks for Higher Gains

At a time when most giants in the Indian cement industry are adopting a 'wait and watch' approach before deciding their future courses, SMEs in the sector have already begun makingattempts to garner better sales and earn healthy revenues for the current financial year.

From cutting down cement prices to making capacity expansion plans and exploring new regions for exporting cement, small players are adopting strategies that will help them strengthen their foothold in the market. SMEs are also initiating a slew of initiatives to get more long-term contracts and business orders from industry players engaged in real estate and infrastructural projects.

Deploying smart strategies

While most biggies in the cement sector like UltraTech, Ambuja, ACC and Grasim are defying price-cuts, many small and mid-sized companies have already slashed prices by Rs 3'6 a bag. Price-cuts are expected to boost the demand for cement manufactured by SMEs, thereby enabling them to see greater offtake and better margins this year.

'The volatile market conditions, recessionary pressures and price fluctuations have prompted SMEs in the Indian cement industry to take corrective measures. Price corrections by small players are also likely to prompt bigger players to follow suit very soon,' said G Agarwal, proprietor of Agarwal Cement and Steel, a small-sized cement supplier in Nagpur.

Although big players are offering cement in the price range of Rs 252'255 a bag, smaller firms are making cement available at comparatively reasonable prices, at around Rs 246-248 a bag.

Besides price-cuts, smaller players have been adding capacity over the last two years and making huge investments in upgrading their grinding machinery and cement production plants. Given the capacity expansion investments made by SMEs so far, the Cement Manufacturers' Association projects that an additional 110 million tonne of capacity at an investment of about Rs 50,000 crore will be added in the next three years.

'Capacity expansion will help us to create surplus production to meet the demand, which is projected to increase in the near-term. It will also help us grab a greater market share,' said D Binani, spokesperson, Eastern Cement Mills, a small-sized cement dealer in Kolkata.

Given that the cement consumption will surge significantly in the coming months, smaller players can yield greater returns and make huge gains by taking up these sustained efforts.

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