Binani Cement, the flagship enterprise of the Rs 1,700-crore Binani group, is presently evaluating the possibility of establishing long-term bulk cement supply contracts with various real estate developers, notably including Raheja and Hiranandani. If this initiative comes to fruition, it will mark a pioneering move within the industry, possibly prompting other cement companies to adopt similar strategies.
Vinod Juneja, managing director of Binani Cement, confirmed that discussions are ongoing between the company and select real estate firms concerning these contracts. He stated, "It is at a very initial stage. Yes, we had talks with some real estate developers on cement contracts." This acknowledgment highlights the company's proactive engagement in exploring new business avenues.
Industry experts suggest that such a contractual arrangement could prove advantageous for both parties involved. A long-term contract would empower real estate developers by granting them better control over the unpredictability associated with commodity price fluctuations. Conversely, Binani Cement stands to benefit from acquiring guaranteed buyers for its products.
Moreover, according to industry insiders, the real estate sector may opt to invite cement companies to participate in a bidding process prior to finalizing any such contracts. When queried about this potential step, Mr. Juneja expressed that his company would willingly engage in bidding if the situation demands it. Analysts have pointed out that the prevailing slowdown in the real estate sector can be largely attributed to stringent monetary conditions. Additionally, a rise in cement prices—particularly during the rainy season when prices typically decrease—exacerbates challenges for developers.
In a related note, it's worth mentioning that Binani is set to venture into the real estate market within this fiscal year. The company holds approximately 56 acres of land in Wada, located around 30 kilometers from Thane in Mumbai. Plans are underway to collaboratively develop this land into an IT Park with a partner. Furthermore, Binani Cement is planning to expand its operations in the northern and western regions of India over the next quarter, as part of the firm’s ambitious strategy to grow into a $1 billion enterprise by 2012. The company currently operates from its fully integrated cement plant situated at Binanigram in Rajasthan.