Cement prices may rise 2-3% in a yr: Jaiprakash Associates

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Cement prices may rise 2-3% in a yr: Jaiprakash Associates

Jaiprakash Associates has commissioned 21 MT extra capacity and expects to clock in a growth of 42% in FY10. Executive chairman of Jaiprakash Associates Manoj Gaur said he expects to see a growth of 37% in FY11. Gaur said in all liklihood, cement prices will go up by 2-3% in a year's time

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Q: I am trying to add the numbers because if cement is going from 5,000 to 10,000 crore next year, FY11. If you are going to see growth in real estate, which seems very likely, how much E&C revenues do you see next year? Could your overall revenues then go from Rs 10,000 to Rs 17,000-18,000 crore?

A: I think this is a doable target.

Q: A lot of this capex is quite capital intensive as well. Is it on the agenda for the company to monetise some of your treasury shares as early as the next quarter?

A: I will be frank in saying that such rumour keeps on coming. I think we have done reasonably enough on this front and the thing which is going to hit the market would be Infratech and that is the only plan we have made as far as monetising our investment is concerned or raising the fresh capital. Jaiprakash Associates Limited (JAL) has done capex planning for all its projects and we are comfortable with that.

Q: How soon are you keen on seeing this issue hitting the market and you will hold the previous size that you have indicated to us or do you think JP Infra could be a larger issue?

A: We have filed the Draft Red Herring Prospectus (DRHP), JAL is going to offer 6 crore shares while JP Infratech would raise fresh shares. So size of issue is depending on price in range of around Rs 2,500-2,700 crore and we are expecting the clearance shortly and it looks like April would be the target.

Q: Cement, you are confident that despite the new supply, which is coming in, demand will be that robust, I am not talking about the monsoon, but post monsoons you do not see any kind of slackening in cement prices?

A: If gross domestic product (GDP) is more than 7.5% then cement consumption would be at least 11%, this is a trend we have observed all through. Cement price is a combination of the price of coal, price of power, price of logistics, so as I mentioned price, generally speaking, is at the same level as it was in March '09. But prices of coal and all went up like anything. So I have a feeling that consumption would grow by at least 11% and not 13% as we are seeing now in this financial year, but price would remain stable and this is my firm belief.

Q: Will the JP Infra issue happen first or your quarter results happen first in April?

A: I think the issue will be before the results.