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Star Cement expects price rise in Q3; sees 6-7% growth in annual demand

infrastructure | IST

Star Cement expects price rise in Q3; sees 6-7% growth in annual demand

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Sanjay Gupta, CEO of Start Cement is of the view that it will be very difficult to operate plants economically if the prices do not move on from here because we are really seeing a lot of cost pressures coming from the transport costs etc., so the prices need to go up in Q3.

Star Cement is in focus after the company received the approval of the Securities and Exchange Board of India (SEBI) for a share buyback offer. The buyback will be via the tender offer route at Rs 150 per share and the aggregate amount to be spent is about Rs 123 crores. In an interview with CNBC-TV18, Sanjay Gupta, CEO of the company, shared his outlook.
On buyback, he said, “Largely, this buyback is within the context of the company's policy of distributing 30 percent of the profits of the company and for the remaining cash, we have a few capex plans. We are setting up a 3 million tonne clinker plant.”
“We are also setting up a waste heat recovery (WHR) power plant of 30 megawatts, which would require Rs 50 crore of capex. So the total capex spend in the next two, three years is approximately Rs 1300 to 1400 crore, so we will be using the cash there,” he further added.
Talking about demand, he said, “In the entire eastern belt, demand had actually dropped in the last two, three months by around 10 percent. Q2 has been really affected by a lot of floods and rains in Eastern India. So, we also expect Q3 and Q4 to do much better than Q2.”
“However, expecting 10-20 percent of an annual demand would be a tall order. We expect demand to grow at around 6- 7 percent on an annualised basis,” Gupta mentioned.
On pricing, he said, “Overall, in the month of July, August, the prices dropped from 78 percent in totality. They have stabilised in this month (September) and we do hope that the upcoming festive season from October onwards and the onset of Q and Q4 as the rain subsides, we will definitely see an uptick in prices because prices have actually come to threshold levels.”
“It will be very difficult to operate plants economically if the prices do not move on from here because we are really seeing a lot of cost pressures coming from the transport costs etc., so the prices need to go up in Q3,” said Gupta.
On acquisitions, Gupta said that the company is not looking at it currently. He said, “We were interested in Emami quite a bit but we lost out. So, anything down south, we are not interested but our focus will remain largely on East.”
For the entire discussion, watch video
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