All the world is coming to India’s fast-growing market, but the cement maker is heading out of India
Driving down the wide roads of Ballard Estate — Mumbai’s earliest business district famous for its buildings with European Renaissance facade and canopy trees — it is easy to miss the corporate office of Binani Cement along one of the inner lanes. Visitors are more likely to notice the nearby Reliance Centre that now belongs to Anil Ambani’s ADAG Group or the headquarters of engineering giant Larsen & Toubro. Ironically, both have been linked to the cement industry: ADAG has announced a multi-
billion dollar plan to set up cement plants in India, while L&T made an exit from the business five years ago even after creating a brand that was on top of its game.
One key risk is that Binani Cement isn’t a huge player in its home market. Most companies like Cemex or Lafarge expanded internationally after they had become large players in their home market. This is important because if something goes wrong with the international game-plan, there is a domestic business cash-flow to fall back on. The second major risk is that the international supply chain that the company has developed, looks merely opportunistic. There is no telling how it will fare once the demand for ships goes up in a better global economy. All the cost advantage could very well get eroded.
(This story appears in the 20 November, 2009 issue of Forbes India. To visit our Archives, click here.)