Demand still weak; JP Associates deal soon: Shree Cement

The Jaiprakash Associates deal is likely be completed within the next 15-20 days once CCI gives their clearance to JP Associates. Shree Cements already has got a clearance from CCI, said HM Bangur, MD, Shree Cement in an interview to CNBC-TV18.According to Bangur, cement prices have been impacted adversely due to low demand.The prices have come down by Rs 10-15 per bag in the North India where they operate.

The demand in October was low and even though the festive season is over, the demand in November too has remained low, says Bangur.The impact on margins due to lower diesel prices haven’t yet benefited them because the margins so far have been pocketed by the truckers. However, if the prices continue to remain low, then they are likely to see the impact on margins going forward, says Bangur.

Below is the transcript of HM Bangur’s interview with Latha Venkatesh & Anuj Singhal on CNBC-TV18.Anuj: I want to ask about this Competition Commission of India (CCI) that you have got for the Jaiprakash (JP) Associates deal. When will that deal be finished now, now that the approval is there? A: There are two parts for the approval one is from our side the CCI approval that is clear the other part is from the JP side they have to get the clearances from many banks that have hypothecated the assets. So, that process is on and as soon as that is over the deal should be over. I expect it to take about 15-20 days.Latha: What is the demand price situation at this point in time? What is the kind of capacity utilisation you are doing the industry is doing and what is the price trend for say the next quarter?A: Right now the demand situation is bad, we expected good demand pick up after average month of October, November we thought will be a good month as all the festival season is over. To all our surprise November demand is very low and this type of low demand was not thought of and as a consequence prices are falling down.Anuj: How much have prices come down from peak and what is the outlook on pricing from hereon?A: The prices have come down differently in different areas. We are watching only in the North zone so in the north zone between October and now the prices have come down by Rs 10-15.Latha: What gains do you get by the diesel price cut in terms of margins?A: In terms of margins diesel price cut primarily affects the freight rate and in the freight rate diesel price is only one component. As the demand has come down the freight has softened by Rs 1-2. To negotiate every time with the truckers for a small is difficult. Most of the margins will be pocketed by the truckers – transport industry. Looking forward from here if the diesel prices should remain soft for a much longer time, then gradually the effect will come to us.