Binani Cement eyes East African market

Binani Cement eyes East African market

Mumbai: Binani Cement, a mid-sized cement manufacturer, has recently picked a 49% stake in a clinker manufacturing plant in Shandong province in China to sell the cement in East Africa, which is emerging as the next hotspot for South Asian cement manufacturers as prices in this part of the world are higher.

“We are looking at exporting to East Africa as the realizations there are higher than those in West Asia by 10-12%. In the near future, these countries will see a lot of development. The East African market is half the size of the Indian market. There will be a lot of infrastructure coming up," says Vinod Juneja, joint managing director, Binani Cement Ltd. The size of the Indian cement market is estimated at around Rs60,000 crore.

“The prices in East African countries are better and the demand is growing. These countries are oil rich countries. There is a lot of infrastructure and construction activities happening there," says an official with Lucky Cement Ltd, Pakistan’s largest cement exporting firm.

Lucky Cement exports un-branded cement to these countries. “The buyers there have their own facilities to bag the loose cement," adds the official who did not wish to be identified. Lucky Cement exports to Madagascar, Tanzania and other African countries.

The landed cost of cement in East Africa from China is around $100 (Rs4,040) per tonne. “East Africa will remain an option for Indian cement manufacturers who have a presence in the coastal region like Ambuja Cement Ltd, Ultratech and Binani Cements. West Asia has been the most important foreign market for Indian manufacturers and those countries will have some surplus soon," says Rupesh Sankhe, a research analyst with brokerage ICICI Direct.

India has over 50 cement manufacturers with an aggregate capacity of 142mt. About 5% of this is exported, largely to West Asia, Nepal and Sri Lanka.