'IT'S NEVER ABOUT SIZE, IT'S ABOUT EFFICIENCY'

H.M. Bangur of Shree Cement on his 'no-hurry' play and why he's skipping aggressive bidding wars

- Dipali Banka, Nehal Chaliawala & Satish John

H.M. Bangur, 72, the chairman of Shree Cement, is unfazed by the acquisition spree of his peers, Aditya Birla Group's UltraTech and Gautam Adani's Ambuja Cements. He is in no hurry, avoiding the bidding wars and opting instead for organic growth. “It is never a question of size. It is a matter of efficiency,” he believes.

Bangur sat down with Mint for a rare interview at his house near Mumbai's Peddar Road—other residents in the area, also called the 'billionaires row', are Mukesh Ambani and Sajjan Jindal.

Unlike the skyscrapers that dot the neighbourhood, Bangur's home is a two-storeyed haveli called Mohini Mahal. Dressed in a fading lavender polo shirt and black, loose-fitting trousers, one would be forgiven for mistaking the septuagenarian businessman for a retired professor sharing his time-tested thesis with the three scribes. But under that mild demeanour hides one of the corporate sector's shrewdest strategists.

In a 90-minute conversation, Bangur spoke at length about his business philosophy and why Shree Cement—the third-largest cement maker by capacity in India—hasn't joined the top two players in their inorganic expansion spree. Edited excerpts:

How would you describe the present phase in the cement sector?

For the past four years, the cement industry has been expecting a demand revival, but growth has remained weak. Traditionally, cement demand grows 1.3-1.4 times India's GDP (gross domestic product). With GDP growing at 6-7%, cement demand should have grown close to 10%. But, instead, volume growth has been only 4-5%. This suggests demand may not just be delayed; there may also be structural weaknesses we have yet to fully understand.

Even though margins look healthy at 25-30%, long-term cement prices have risen slower than inflation. As a result, profitability remains under pressure.