Meghalaya's Star Cement is the largest player in Northeast. Can it shine pan India?
With six manufacturing units, 2,100 dealers and 12,000 retailers in its network, Star Cement is the largest player by sales and production in the region with 80 percent sales coming from the region. Now it wants to spread across India
New Delhi, December 1996. It was a body blow for Rajendra Chamaria. In December, the Supreme Court imposed a blanket ban on cutting of trees in Northeast India. Chamaria, whose forefathers migrated from Rajasthan to Assam over one-and-a-half century ago, had built a sizeable timber empire in the Northeast. After a partition in the family business, Chamaria’s father relocated to a remote corner of Arunachal Pradesh in 1971, and started rebuilding the timber business. “There was no electricity, no school, and zero infrastructure,” recalls Chamaria, who completed his graduation from Assam in 1979 and joined his father. “He started from zero,” he underlines.
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The hope was misplaced, though. “The plants in Himachal and Rajasthan were successful failures,” contends Chamaria. Though commercially they were yet to become viable, in terms of knowledge, he got a deep insight about the cement business. The gritty entrepreneur dishes out a philosophical explanation for the initial failure in the cement venture. “What are the good qualities of a cement?” he asks, listing out some half-a dozen traits. It should have strength, must harden early, possess good plasticity, be an excellent building material, should be easily workable and must be good at resisting moisture. “At times, what you intend to do for a living tests you to see if you have what it takes to be in the business,” he reckons. In 1997, the government’s industrial policy doled out incentives for setting up plants in the Northeast. Four years later, Chamaria was back to his roots. In 2000, he set up a cement plant in southern Assam.
A year later, in 2001, a ‘star’ was born. Chamaria set up the Cement Manufacturing Company (CMCL) in Arunachal Pradesh, and over the next few years, started rolling out cement under the brand name ‘Star’. The name—his advertising agency suggested—must be like Fanta. It must be short, sweet and self-explanatory. “There was no looking back since then,” says Chamaria, who roped in Sajjan Bhajanka and Sanjay Agarwal of CenturyPly as co-promoters, rebranded CMCL as Star Cement in 2016 and got the company listed in 2017. “The company has lived up to its name,” smiles Chamaria.
Chamaria, though, points out the shiniest part of the report card. “We are a zero-debt company,” smiles the vice chairman and managing director of Star Cement. “Our dealer and retailer network stands at 2,100 and 12,000, respectively,” he claims, underlining the massive headroom for growth of the company. Cement consumption in the Eastern region stands at 131 kilo, which is lower than the national average of 195 kilo. There is an estimated 21.6 million units of housing shortage in Eastern India, he lets on. Roping in Bollywood actor Akshay Kumar as the face of the brand, he underlines, has led to a sharp uptick in brand awareness and popularity. “Now we are well-placed to expand to other parts of the country,” he adds.
The growth forecast over the next few years, too, looks rosy. The Northeast region is expected to grow at a healthy rate owing to the government’s focus on large infra projects and the demand in the region continues to be robust, Axis Securities pointed out in its quarterly result update in August. Star Cement, the report maintains, expects the East market to grow at a decent pace during FY23. The company aims to sell 35 percent of its production in the East and the balance in Northeast India. With better cement demand, higher pricing and stabilisation of the Siliguri grinding unit, and cost optimisation measures, Star Cement is likely to report an encouraging performance moving forward, it underlined.
The cement star from East India is now gearing up to take on the big boys of cement in other parts of the country. But why have biggies such as ACC and Ultratech failed to make a dent in the East? Chamaria thanks his lucky stars. “The terrain, topography and the market are not easy for everybody,” he reckons. The biggest challenge lies in labour management. The people from the region, Chamaria points out, are industrious, gifted and emotional. “You need to have a different lens and mindset to handle them,” he says. But now can he take on the big boys on their turf? Chamaria sounds confident. “We have enough ammunition,” he says.
Star Cement, though, might need to keep an eye on its rising marketing and advertising spend. “When it works, it becomes all the more difficult to resist,” says Rajan Gahlot, assistant professor at Delhi School of Economics. From just ₹29 crore in FY19, it has touched ₹51.82 crore in FY22. Gahlot is also baffled by the company’s ambitions to have a wider play. The markets in Northeast, Bihar and West Bengal are still under-penetrated. The company must first try to consolidate and make its fortress impregnable, he points out. “The sun is also a star, but all stars are not the sun,” he says. The company, he lets on, needs to be cautious about not letting rivals spoil its home turf in its quest to shine abroad.
Chamaria reckons an entrepreneur must keep taking risks. “Destiny is bigger than our desires. But one has to keep the hope intact and keep fighting,” he says. “The star has the potential to become a superstar.”
Last Updated :
September 29, 22 10:35:46 AM IST