Ambuja plans West Asia packing unit

Gujarat Ambuja Cements Ltd is studying the possibility of setting up packaging operations in west Asia to take advantage of the ongoing construction boom there.

"We are likely to take a final decision on the matter within six months to a year," Anil Singhvi, executive director, Gujarat Ambuja Cements Ltd, today told Business Standard.

Since it will be a packaging operation only, it is unlikely to entail a heavy investment in plant and machinery.

According to Singhvi, Gujarat Ambuja's port in Gujarat is the nearest cement port to Dubai and it takes only four days for a shipment to reach Dubai.

As a result, Gujarat Ambuja would have a distinct freight advantage in exporting to West Asia vis-a-vis cement producers in other Asian countries such as Malaysia and Indonesia.

Gujarat Ambuja is the lowest cost producer of cement in the world. It is also the largest cement exporter out of India, accounting for almost 50 per cent of the 3.5 million tonne exported from India last year. A significant portion of the exports are to West Asia. Singhvi said the company is targeting exports of almost $70 million next year.

About the West Asian market, Singhvi said construction in the region has reached a new pitch thanks to the rising oil prices.

"After 9/11, not much investment from the region is going into American assets. Gulf money is now being invested in local countries," he said adding that investments were being made in residential properties as well as commercial real estate.

Though there is a sizeable cement industry in West Asia, the supply falls short of the demand. As a result, the region imports 10-12 million tonne of cement every year.

In view of the opportunities offered by the region, Gujarat Ambuja is considering setting up a base on its own rather than go through a trader.

Singhvi also said the company would package and sell cement in the region under its own brand.

"There is a lot of awareness about our brand in the area. In some measure, this is also because of the presence of the large population of expatriate Indians there," he said.

On positioning of the company's Ambuja brand, Singhvi said it would be a premium slot as the product compares with the best in West Asia.