On Solid Ground

Shree Cement Is Looking to Replicate the Success It Had in the North in Newer Markets of South and East India. Will the Magic Formula Work?

- Krishna Gopalan

There is no more than a hint of a grin on Prashant Bangur’s face when you question him about his strategy. Almost instantly, the conversation goes back to 2003, when as a freshly minted 22-year-old MBA graduate, he was sent to Shree Cement’s plant in Rajasthan’s Beawar. At that point in time, Shree Cement was a company with a two million tonne capacity and revenues of ₹484 crore, with a net profit of just ₹6.70 crore. More worryingly, there was a debt of ₹360 crore on the balance sheet. “We decided to go in for an expansion in 1998 and the market collapsed. Till 2003, we were in the middle of a debt trap and our strategy was only to survive,” he says slowly.

Since then, the company, where he is now the joint managing director, has come a long way. From that troubled phase at the turn of the century, the Kolkata-headquartered Shree Cement has now grown into a ₹5,731 crore entity with a net profit of ₹455 crore and a debt of ₹520 crore, making it among the most well run companies in the sector. Its operating margin at 25% is significantly higher than its competitors such as, UltraTech (20%) and Ambuja Cements (18%) (see: Cutting edge).