From a regional player that faced the ire of debtors in 2003 to a company that is aiming to be one of the leading cement players in India in the coming times, India Cements is planning a paradigm transformation. Can it go the distance? by Virat Bahri
When Birla group company Grasim Industries acquired Ultratech and when Holcim took control of Gujarat Ambuja and ACC, they were not just acquiring enhanced cement capacities. Their aim was also to leverage the brand equities of the targets in their bid to broaden their target audience. Even in a perceptually commoditised market like cement, it is very difficult to enhance your reach without the requisite brand power.
India Cements isn’t a company in the league of either Grasim or Holcim, with its presence largely restricted to the south Indian market and a capacity of around 14 mtpa. By volume, it is the market leader in the South Indian market, and has established presence in Andhra Pradesh, Tamil Nadu, Karnataka, Kerala and Maharashtra. Moreover, it hasn’t been long (2003) since the company was compelled to go through the Corporate Debt Restructuring Mechanism (CDRM) under RBI due to its failure to repay its interest and repayment obligations. Since that time, Vice Chairman and MD N. Srinivasan has been instrumental in taking the company back en route to recovery. In the process, he has bought out his brother’s stake in the company to emerge as the sole promoter.
Just like Holcim and Grasim, India Cements now aspires to challenge the boundaries that it had set for itself over the last six decades of existence. And its headline-grabbing route to national fame is not the acquisition of a national level brand, but widening of its own brand appeal and reach; buoyed by the acquisition of the Chennai Super Kings (CSK) franchise in the Indian Premier League for around $91 million in 2008. The company instinctively realised that it had a winner in the franchise from the very beginning. In an exclusive interview with B&E after the culmination of IPL Season 1, India Cements MD N. Srinivasan had exuberantly exclaimed, “In 45 days, we have created a brand. We are able to register our presence in public domain. Making this happen in such a very short span of time is what we have achieved.”
Coincidentally, 2010, the year in which India Cements planned a major QIP to raise around $65 million (in March 2010), is also the year in which CSK won the IPL tournament. The associated recognition seems to be far more important to India Cements as compared to profits or valuations (incidentally, CSK earned around Rs.800 million for the company in 2010). Company officials excitedly discuss on how the CSK branding has made it easier for them to gain dealerships in new markets. In fact, the company’s cement bags are being sold based on the punchline - from the house of CSK. But obviously, this recognition can only be the tip of the iceberg in what would be a long, arduous journey to become a national player. B&E takes a look at how the hard business metrics play out for India Cements beyond the action on the cricket field.
When Birla group company Grasim Industries acquired Ultratech and when Holcim took control of Gujarat Ambuja and ACC, they were not just acquiring enhanced cement capacities. Their aim was also to leverage the brand equities of the targets in their bid to broaden their target audience. Even in a perceptually commoditised market like cement, it is very difficult to enhance your reach without the requisite brand power.
India Cements isn’t a company in the league of either Grasim or Holcim, with its presence largely restricted to the south Indian market and a capacity of around 14 mtpa. By volume, it is the market leader in the South Indian market, and has established presence in Andhra Pradesh, Tamil Nadu, Karnataka, Kerala and Maharashtra. Moreover, it hasn’t been long (2003) since the company was compelled to go through the Corporate Debt Restructuring Mechanism (CDRM) under RBI due to its failure to repay its interest and repayment obligations. Since that time, Vice Chairman and MD N. Srinivasan has been instrumental in taking the company back en route to recovery. In the process, he has bought out his brother’s stake in the company to emerge as the sole promoter.
Just like Holcim and Grasim, India Cements now aspires to challenge the boundaries that it had set for itself over the last six decades of existence. And its headline-grabbing route to national fame is not the acquisition of a national level brand, but widening of its own brand appeal and reach; buoyed by the acquisition of the Chennai Super Kings (CSK) franchise in the Indian Premier League for around $91 million in 2008. The company instinctively realised that it had a winner in the franchise from the very beginning. In an exclusive interview with B&E after the culmination of IPL Season 1, India Cements MD N. Srinivasan had exuberantly exclaimed, “In 45 days, we have created a brand. We are able to register our presence in public domain. Making this happen in such a very short span of time is what we have achieved.”
Coincidentally, 2010, the year in which India Cements planned a major QIP to raise around $65 million (in March 2010), is also the year in which CSK won the IPL tournament. The associated recognition seems to be far more important to India Cements as compared to profits or valuations (incidentally, CSK earned around Rs.800 million for the company in 2010). Company officials excitedly discuss on how the CSK branding has made it easier for them to gain dealerships in new markets. In fact, the company’s cement bags are being sold based on the punchline - from the house of CSK. But obviously, this recognition can only be the tip of the iceberg in what would be a long, arduous journey to become a national player. B&E takes a look at how the hard business metrics play out for India Cements beyond the action on the cricket field.
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Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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