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| For instance, players like India Cements, Lafarge, Binani Cement, JK Cement and Jaypee Cement are trying to shed their regional player image. All are adding capacities in different regions.
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| If the trend in the building material's prices during the June quarter is any indication, the differences in realisation is clearly seen. For example, the northern region saw prices ranging from Rs 230-232 for a 50 kg bag of cement where as the western and southern regions saw prices at Rs 245-250 a bag. The eastern market, on the other hand, witnessed the lowest prices during the quarter at Rs 225-230 a bag.
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| Likewise, factors like the Gujjar agitations in Rajasthan, heavy rains in Gujarat and state intervention in pricing (recently Tamil Nadu and Andhra Pradesh governments) can also be taken care of once a company has presence in more than one market.
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| "It is not wise to put all eggs in the same basket. Sooner or later, one has to go for a pan-country presence so that one can hedge itself from the ups and downs of the industry. Realisation in some states is better at a times as compared with the others," said Vinod Juneja, managing director, Binani Cement.
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| Rajasthan-based Binani Cement is setting up two facilities in Gujarat and also plans to venture either into West Bengal or Orissa. These new units will let the company have access in the western and eastern regions of the country.
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| India Cements is probably the first south-based cement maker to step in the north and west with plans in Himachal Pradesh and Rajasthan. Similarly, Kanpur-based JK Cement is setting up a plant deep south in Karnataka. Jaypee is going ahead with huge expansion projects in Madhya Pradesh, Uttar Pradesh, Himachal Pradesh and Jharkhand where as French major Lafarge is eyeing Karnataka, Meghalaya and Rajasthan after Himachal Pradesh and Chhattisgarh.
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| "Diversification is the need of the hour for cement players. If one firm has gained a substantial market share in one of the markets, it tries out different markets, which will certainly help its balance sheet in the next two to three years," said an analyst who did not wish to be named. If one market goes down in terms of demand and realisation, the other markets will help maintain the profitability, she added.
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| At a time when the cement industry is anticipating a dip of as much as 20 per cent in net profit for the quarter ended June and the scenario set to worsen in the coming days, cement makers have no choice but to spread their wings to different places.
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| "Venturing into new markets within the country will help companies improve realisations as the industry's average realisation has dipped to $100-120 a tonne from $180-200 a tonne a few quarters back," said another city-based cement expert. |
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