Why Shree Cement’s H.M. Bangur is sitting out of India’s aggressive cement bidding wars

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: 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.Returns are also low because cement is highly capital-intensive. A ₹3,000 crore plant generates only about ₹1,000 crore in revenue, while Ebitda is ₹250 crore at a margin of 25%. So in reality, it is just a 7-8% return on capital, which is barely enough to service debt and interest.