[04:37:23 PM] => Welcome to the Live Chat with Mr. Manish Saxena of Motilal Oswal Securities Ltd.
[04:37:53 PM] => Mr. Saxena is a senior Research Analyst of the Cement Industry
[04:38:17 PM] => He should be joining us shortly
[04:40:35 PM] => Disclaimer
[04:40:47 PM] => Mr. Manish Saxena is the Senior Research Analyst - "CEMENTS" of Motilal Oswal Securities Ltd. At the time of this conversation / chat, Mr. Saxena may or may not have positions in the stocks mentioned below , although holdings may change at any time.
[04:41:45 PM] => The views expressed by Mr. Manish Saxena is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr. Saxena, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed. None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:42:44 PM] => Lastly the views expressed by Mr. Saxena have no bearing whatsoever with that of IRIS Ltd. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website www.myiris.com.
[04:46:07 PM] => Kindly Note that since Mr. saxena is a Research Analyst on the Cement Industry he shall be answering questions pertaining to that Industry only
[04:46:47 PM] => Viewers are kindly requested to post questions which are relevant to this Industry
[04:49:23 PM] => Sanjayshenai :What will be the effect of the new accounting standard 22 which will require Indian companies to report earnings after adjusting cash taxes for deferred taxes.Dont u think there will be a negative effect on ACC because of timing differences occurring in respect to accelerated depreciation charge in respect to new capex.
[04:50:07 PM] => MS: definitely would have a negative impact as provisioning of taxes would have to be higher, though cash-out-go would be lower. But P/E multiples for higher tax paying is higher and hence the overall valuation would not be hit to the extent of depressed earnings due to higher provisions
[04:50:35 PM] => Yadav : What is cement per kg in mumbai
[04:50:57 PM] => MS: Rs 170/77 per kg
[04:51:22 PM] => Hiren : Where do you see the growth of Cement industry in next three months
[04:51:49 PM] => MS: Growth would be subdued in most parts of the country except for UP, which is due to elections after some time
[04:52:28 PM] => Kjeetesh : How the monsoon would have its impact in the stock prices of the cement companies.
[04:53:11 PM] => MS: A good monsoon would result in higher visibility of demand, growth and sustainability of prices
[04:54:16 PM] => Hahabuddha: What price do you expect ACC to be by 2nd July 2001
[04:55:03 PM] => MS: There would be weakness in the ACC stock as the stock goes into ND in the next week. Further the rolling would be out after the stock comes out of ND. However we expect institutional buying at lower levels and hence the downside is limited
[04:55:47 PM] => Rpanikar: Do you think that Cement companies would continue to perform better even during the monsoon season?
[04:56:30 PM] => MS: Dispatches would fall, but I do not believe that they should
[04:57:04 PM] => Mathew: Do you see the cement cartel continuing for the next few months?
[04:58:00 PM] => Mathew: Do you see the cement cartel continuing for the next few months?
[04:58:52 PM] => MS: There has been weakness in cement prices in south but this we believe is a temporary phenomenon related to new capacities, new government in TN and onset of monsoons in south
[04:59:15 PM] => MS:The understanding of the players should continue for a much more than a fewer months as the financial conditions of the players would not permit them to undercut each other. New capacities may act as a problem but we expect that adjustments related to new capacities should be over in a few months and hence over a longer period of time we see sustainability in prices
[04:59:37 PM] => Jajoo: What is the future of India Cements? Don't you think it is a prime takeover target?
[05:00:03 PM] => MS: India Cements would be having the largest market share in south. I do not think that it is a takeover target
[05:01:07 PM] => Mathew: Do you see further acquisitions by Lafarge in the coming months as it has now consolidated its position in the eastern sector?
[05:01:43 PM] => MS: Yes
[05:02:08 PM] => Kartik: Given the on going recession do you really believe that one should invest in Cement Stocks?
[05:02:44 PM] => MS: Cement are high beta stocks and hence the risk is comparatively higher. But Over a one-year period of time, even in the current recession we believe that the stocks should give us 25% plus returns from the current levels in the main line cement stocks
[05:03:37 PM] => Aasishk: What is the likely growth both in tonnage terms and in value terms in the cement Industry this year. Where do you see the growth coming from?
[05:04:13 PM] => MS: We expect incremental demand of 6 mT in the current year, resulting in a growth of 8% . In value terms the growth should be 15%
[05:05:09 PM] => Divya: Grasim Vs ACC, which stock would you recommend?
[05:05:31 PM] => MS: Grasim would be a safer bet, but potential returns from ACC would be higher.
[05:06:04 PM] => Sunita: Do you think that companies like Lafarge Cements have the muscle power to slash prices and sustain their operations. If yes then what happens to our Swadeshi companies
[05:06:42 PM] => MS: Smaller players would sell their units and the industry should have Five large domestic houses with a couple of MNCS in the next five years
[05:07:36 PM] => Manu: What would you value Tata Chemicals Cement Division at? Do you expect him to sell it to ACC or Ambuja?
[05:07:54 PM] => MS: Not in the near future
[05:08:51 PM] => Ramesh: Are cement stocks going to lead the charge in the Sensex for the year 2001-2002
[05:09:27 PM] => MS: Cement should outperform the sensex
[05:09:52 PM] => Mangesh: Do you see any threats from imports in the near future
[05:10:16 PM] => MS: No
[05:10:50 PM] => Janki: As cement producers are we cost effective when compared to other countries around the world. What is the differential if any?
[05:11:49 PM] => MS: Operating performance is the lowest in the world. But levies at 33% of the total prices is the highest and that is the difference
[05:13:10 PM] => Ksrini: With power fuel and freight accounting for over 50% of costs, what would you suggest to decrease the same?
[05:15:39 PM] => MS : Freight would get decreased in a couple of years as consolidation of players take place and markets gets more structured. Reduction in freight in the next one year could be as high as Rs 100/ton, which is significant to EBITDA contribution
[05:16:23 PM] => Kindly hold on Mr. Saxena is busy on the telephone
[05:19:24 PM] => Ganshyam: Likely takeover targets in the near future. What do you expect their valuations to be?
[05:20:26 PM] => MS : All the players who have minority interest in cement.
[05:22:44 PM] => V_kandaswamy71: When do you think that the demand supply situation of Indian Cement will even out? My Second question is that the prices and demand were superior in South (excluding Andhra Pradesh). Still financials were not better compared to north based cement companies. Why?
[05:23:18 PM] => MS: My Answer to your first question is -Not in the next five years
[05:24:20 PM] => MS : the answer to your second question is that Operating cost in South is comparatively higher including that for Madras Cement.
[05:24:59 PM] => Pratikpshah: how are the dispatches of Q1 2001-02 as compared to q4 2000-01(progressing)?
[05:25:30 PM] => MS : Better
[05:26:10 PM] => V_kandaswamy71: Which cement companies are likely to command enterprise value of over $100 per ton capacity? V_kandaswamy71: Do you feel that the consolidation in the Cement industry is overshadowed by the L & T cement division's strategic sale?
[05:27:24 PM] => MS: EV is determined more by EBITDA/ton. In the current context apart from Ambuja no one has an EBITDA in excess of $ 20/ton and hence only Ambuja gets a EV of $ 100/ton. About consolidation,to a certain extent yes. But in current improved price scenario consolidation seems to have slowed down
[05:30:01 PM] => Myiris : We thank the viewers for their response but due to time constraints Mr. Saxena would be taking in a few more question only. An Emergency meeting has cropped up
[05:30:54 PM] => V_kandaswamy71: Do you think that India cement's debt burden is on a higher side? How about Gujarat Ambuja? Do you expect that Gujarat Ambuja will come out with an open offer for ACC?
[05:32:18 PM] => MS : Yes India Cement is leveraged on the higher side. They need one good year of prices to improve their leverage. Ambuja is Leveraged at less than one is still within the prudential borrowing norm. However the capital structure for Ambuja seems to be bloated
[05:33:21 PM] => MS : Secondly Ambuja through its group companies may make an open offer for ACC. But the offer price need not be premium to the market price
[05:34:04 PM] => Kindly hold on Mr. Saxena is on another phone
[05:35:26 PM] => looks like he really has to run for that emergency meeting after all
[05:36:12 PM] => kituanand: which is he best picks in cement sector and prices please looking for 50% return in a year
[05:36:47 PM] => MS: We don't see 50% return on stocks. If you get 50% return you should book profits
[05:37:13 PM] => Rajani : Do you think that the import duty on cement should be further reduced?
[05:37:29 PM] => MS: It does not matter
[05:39:22 PM] => v_kandaswamy71: What is the increase in demand likely on account of restarting construction of narmada dam? Which region will see improvement in cement prices? Why?
[05:40:17 PM] => MS: About half a million ton every year . The answer to your second question is the Northern reason the maximum
[05:41:00 PM] => kamalrangan: please let me know the three cement companies whose cost per ton is lowest
[05:41:25 PM] => MS: Larsen, Ambuja and Grasim, Shree
[05:41:54 PM] => kthacker: Don't you think L&T will lose synergy benefits with the hive-off of its cement division ?
[05:42:07 PM] => MS: No
[05:42:36 PM] => katariaashish: How strong an affect of the slow down/ reduced production in the cement industry do you see on companies manufacturing sacs for packaging (both the Paper Kraft Sacs and the Jute/HDPE sacs) ?
[05:43:04 PM] => MS: Not at all
[05:43:47 PM] => v_kandaswamy71: Southern region was badly hit on cement consumption last year. What is your expectation of demand growth in this region?
[05:44:12 PM] => MS: About 5% growth
[05:44:53 PM] => Murildhar: What is the likely increase in demand for rebuilding Gujarat?
[05:45:35 PM] => MS: About 1.5 to 2 MT in FY-01
[05:46:54 PM] => dharam: Next to L & T, which is the best company or group whose cement capacity will be available for takeover / strategic sale?
[05:47:36 PM] => MS: Most likely the Birla's Group
[05:48:46 PM] => chandreshs: Which scrips in the Cement industry, do you feel are value buy as of now?
[05:49:09 PM] => MS: ACC- change of management and cost. Grasim as a safe bet. Larsen for the restructuring and growth in engineering
[05:50:14 PM] => kichuanand: what is the year end target price of ACC
[05:50:23 PM] => MS: Rs 200 for Acc. Ambuaj may not buy ACC shares at a premium to the market price
[05:52:14 PM] => MS : I'm Sorry viewers I really have to leave. My apologies to those participants whose questions I may not have answered.
[05:53:08 PM] => MS: I shall try and answer them in a day or two and shall give it to myiris.com so that they can include it in the transcript
[05:53:44 PM] => MS : I once again thank all the participants in the chat. Thank you
[05:54:24 PM] => Myiris.com : Thank you Mr. Saxena for having spent some of your valuable time with us
[05:56:11 PM] => Myiris : Thank You participants and do join us again on Monday, June 11,2001 at 4.30pm for a chat with Mr. SN Rajan CIO KOTAK MAHINDRA ASSET MANAGEMENT COMPANY
[05:56:33 PM] => Thank You All