Nicely researched report.
one more thought is, building a capital requires huge quantities of cement and generally it would be better to acquire cement from 2-3 vendors who are large enough to provide in such huge quantities. Does Deccan cement currently have that capability? How does its capacity weigh when compared to giants in this industry.
OUT OF TOPIC: Also, investment thesis depending on capital construction may not be a safe idea, as we never know what Chandrababu Naidu would do while giving tenders to cement companies? Given that the opportunity is so huge, he may build a cement plant or buyout an existing one and up the capacity so it becomes captive plant for capital needs? Or Crony Capitalism may play a part here and all cement procurement tenders would go to some of his buddies’ business outfits. Again, as indicated, this is just to be careful thought as dealing with govt. orders will have its share of red-tapism, I do not imply that this will happen.
How does Sagar Cements look like in comparison to Deccan cements?
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