Nuvoco Vistas IPO: Information analysis

The Indian cement sector is witnessing an IPO after a gap of nearly a decade and a half. Nuvoco Vistas is the fifth largest producer in the country and is the largest player in the fast-growing geography of eastern India. It is promoted by the Nirma group (run by Dr Karsanbhai K Patel). The group is a diversified conglomerate with business interests in chemicals, detergents, healthcare and real estate. Starting its journey with a plant having the capacity of 2 million tonnes per annum (MTPA) in Rajasthan in 2014, the company has been on an expansion spree through acquisitions. Two of its notable acquisitions include LafargeHolcim in 2016 (11 MTPA) and Emami Cement in 2020 (8.3 MTPA). At present, its total capacity is pegged at 22.3 MTPA, spreading across 11 cement plants, along with 105 megawatts of captive power plants. The company broadly operates in three segments: cement, modern building materials and ready-mix concrete (RMX). While brands such as Concreto, Duraguard and Artiste are part of its cement and RMX portfolios, modern building materials (which include products such as construction chemicals, tile adhesives, wall putty, etc.) are sold under the 'Zero M' and 'Instamix' brands. Strengths Favourable geography: With eight out of 11 plants located in East India, the company has a strong presence in this region. This part of the country witnessed a demand growth of 9-10 per cent during 2015-20 as compared to the growth of 3-5 per cent in the rest of the country. This region is also expected to continue to have above-average growth rates for the next five years. Strong distribution facility: The company has a large sales and marketing network, comprising more than 16,0000 dealers and 244 clearing and forwarding agents. It has developed strong relationships with its channel partners and plans to leverage its loyal base of customers to increase the sales of its portfolio comprising over 50 products. Research & development: The company has a dedicated R&D centre in Mumbai through which it develops innovative products, such as quick-setting cement, ready-to-use wet micro concrete and fast-bonding adhesives for tile fixing. It has a patent for one product and has filed applications for three more products. Risks Regulatory risk: The company is mired in a huge number of legal proceedings ranging from issues such as envir