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Nostalgia: Indian Cement Review



Today, looking back, I remember the Cement Manufacturers’ Association (CMA) annual general meeting held 25 years ago at Taj Mahal Hotel, Bombay, where the then president of CMA, industrialist M H Dalmia, while releasing the first issue of ‘Indian Cement Review’ (ICR) remarked that "At last! Roshan Wadhera, a somebody from media world has realised the importance of a monthly magazine for the Indian cement industry and has ventured to fulfill this long felt need of the Industry".Roshan Wadhera is the founder editor of India Cement Review. He is currently the editor of Soaps, Detergents and Toiletries Review.That was our birth and today at 25 we hope, we have come of age of maturity. We are still trying to contribute our might towards value addition to the Indian cement industry. CMA not only welcomed the ICR but also extended its full support by lending us the able guidance of its secretary general S M Chakraborty, as honorary, Technical Editor.We were publishing articles & news about the happenings in the industry by highlighting the minutes of the association meetings. At that time the unpopular government controlled cement industry by buying 60 per cent of the production at the fixed price and 40 per cent of sale in the open market. And at last the control was lifted by the cement controller of India and the entire production of cement was flooded in the market. The demand was far less than the production. The cement prices fell to alarming proportions and panic struck the industry.The decontrolled eraThe ways and means were being discussed to undertake the measures to increase consumption of cement. Efforts towards exports were explored by the association. Concept of ready mix concrete was being introduced in constructing the roads. World experts like Milton Sharpe was invited to guide the industry to use the newly developed product for the maximum benefit towards the consumption of cement in road construction in particular and house building in general. The industry confronted different experiences of the decontrol. Most of the companies were coming out from the captured market to open market. There was never any marketing department in most of the cement manufacturing companies and now, was the need for sales & marketing set up in their organisation. The new measures worked and the cement consumption increased considerably. However, on the export measures front envisaged by the association, things did not work as per expectations. There was uncertainty in the industry but boom in cement concrete roads and building activities played a major role in consolidating the situation.Exhibitions and seminarsIndian Cement Review also witnessed these different phases of the development in the Indian cement industry but continued serving the interest of the industry in its own humble way. A baby of the Wadhera Group, the ICR was started in 1986. It is the only magazine covering the Indian cement and allied industries and has already made a name for itself in the industry. We had organised the Cement Expo ’90 – an exhibition which brought together cement manufacturers and cement machinery manufacturers and allied fabricators under one roof in January 1990. Together with the Cement Expo ’90 a seminar on cement industry ‘Towards the 21st Century’ was organised attended by the doyens from the industry and research institutions and papers were presented.In February 1992, the ICR organised a seminar, on ‘Future Development in the Cement Industry’ where the ICR Annual 1991 was released. In July 1993 we organised another seminar, ‘Bulk Cement Distribution – Future Scenario’, which was the first of its kind, propagating and encouraging, the use of bulk cement. The ICR Annual’ 92 was released at this seminar.The second exhibition on the cement, cement machinery and allied industries in India, Cement Expo’93, was held in January 1994 at the Nehru Centre, Mumbai. The Cement Expo became a regular feature of the cement industry, and the third Cement Expo’96 was organised in Bombay on 15-16-17 February 1996. This too, was a huge success. The ICR Annual 1998 was released in August 1998.On 19 February 1999 the fourth Cement Expo ’99, along with a National Seminar on ‘Cement and Concrete Industry in the New Millennium’ was held. Despite the difficult times the industry was passing through, we were able to present a full house. The ICR Annual 1999 was released in December 1999.’Cement Expo 2001′ the Fifth Exhibition and Seminar was held at the Centaur Juhu Hotel, Mumbai on 23 February 2001. The event was a grand success. The ICR Annual 2001′ containing papers presented at the seminar was released in August 2002.’Cement Expo 2004′ Sixth Exhibition and Seminar was held on 13 October 2004, at Nehru Centre, Mumbai. Cement Expo 2006, the 7th Exhibition and a Seminar on cement based products, ready mix concrete, construction chemicals, building materials, machineries & equipments was held on 1 November 2006 at Nehru Centre, Mumbai. The voluminous ICR Annual 2006 was brought out in 2007.Due to age factor I have given the responsibility of bringing out the magazine to ASAPP Media Information Group who is doing excellent job in the service of the Indian cement industry by introducing many new useful and relevant features. And with the support and good wishes of our readers, we hope to do much more in the years to come.

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Price hikes, drop in input costs help cement industry to post positive margins: Care Ratings




Region-wise,the southern region comprises 35% of the total cement capacity, followed by thenorthern, eastern, western and central region comprising 20%, 18%, 14% and 13%of the capacity, respectively.

The cement industry is expected to post positive margins on decent price hikes over the months, falling raw material prices and marked drop in overall production costs, said an analysis of Care Ratings.

Wholesale and retail prices of cement have increased 11.9% and 12.4%, respectively, in the current financial year. As whole prices have remained elevated in most of the markets in the months of FY20, against the corresponding period of the previous year.

Similarly, electricity and fuel cost have declined 11.9% during 9M FY20 due to drop in crude oil prices. Logistics costs, the biggest cost for cement industry, has also dropped 7.7% (selling and distribution) as the Railways extended the benefit of exemption from busy season surcharge. Moreover, the cost of raw materials, too, declined 5.1% given the price of limestone had fallen 11.3% in the same aforementioned period, the analysis said.

According to Care Ratings, though the overall sales revenue has increased only 1.3%, against 16% growth in the year-ago period, the overall expenditure has declined 3.2% which has benefited the industry largely given the moderation in sales.

Even though FY20 has been subdued in terms of production and demand, the fall in cost of production has still supported the cement industry by clocking in positive margins, the rating agency said.

Cement demand is closely linked to the overall economic growth, particularly the housing and infrastructure sector. The cement sector will be seeing a sharp growth in volumes mainly due to increasing demand from affordable housing and other government infrastructure projects like roads, metros, airports, irrigation.

The government’s newly introduced National Infrastructure Pipeline (NIP), with its target of becoming a $5-trillion economy by 2025, is a detailed road map focused on economic revival through infrastructure development.

The NIP covers a gamut of sectors; rural and urban infrastructure and entails investments of Rs.102 lakh crore to be undertaken by the central government, state governments and the private sector. Of the total projects of the NIP, 42% are under implementation while 19% are under development, 31% are at the conceptual stage and 8% are yet to be classified.

The sectors that will be of focus will be roads, railways, power (renewable and conventional), irrigation and urban infrastructure. These sectors together account for 79% of the proposed investments in six years to 2025. Given the government’s thrust on infrastructure creation, it is likely to benefit the cement industry going forward.

Similarly, the Pradhan Mantri Awaas Yojana, aimed at providing affordable housing, will be a strong driver to lift cement demand. Prices have started correcting Q4 FY20 onwards due to revival in demand of the commodity, the agency said in its analysis.

Industry’s sales revenue has grown at a CAGR of 7.3% during FY15-19 but has grown only 1.3% in the current financial year. Tepid demand throughout the country in the first half of the year has led to the contraction of sales revenue. Fall in the total expenditure of cement firms had aided in improving the operating profit and net profit margins of the industry (OPM was 15.2 during 9M FY19 and NPM was 3.1 during 9M FY19). Interest coverage ratio, too, has improved on an overall basis (ICR was 3.3 during 9M FY19).

According to Cement Manufacturers Association, India accounts for over 8% of the overall global installed capacity. Region-wise, the southern region comprises 35% of the total cement capacity, followed by the northern, eastern, western and central region comprising 20%, 18%, 14% and 13% of the capacity, respectively.

Installed capacity of domestic cement makers has increased at a CAGR of 4.9% during FY16-20. Manufacturers have been able to maintain a capacity utilisation rate above 65% in the past quinquennium. In the current financial year due to the prolonged rains in many parts of the country, the capacity utilisation rate has fallen from 70% during FY19 to 66% currently (YTD).

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Wonder Cement shows journey of cement with new campaign




The campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV…


Cement manufacturing company Wonder Cement, has announced the launch of a digital campaign ‘Har Raah Mein Wonder Hai’. The campaign has been designed specifically to run on platforms such as Instagram, Facebook and YouTube.

#HarRaahMeinWonderHai is a one-minute video, designed and conceptualised by its digital media partner Triature Digital Marketing and Technologies Pvt Ltd. The entire journey of the cement brand from leaving the factory, going through various weather conditions and witnessing the beauty of nature and wonders through the way until it reaches the destination i.e., to the consumer is very intriguing and the brand has tried to showcase the same with the film.

Sanjay Joshi, executive director, Wonder Cement, said, "Cement as a product poses a unique marketing challenge. Most consumers will build their homes once and therefore buy cement once in a lifetime. It is critical for a cement company to connect with their consumers emotionally. As a part of our communication strategy, it is our endeavor to reach out to a large audience of this country through digital. Wonder Cement always a pioneer in digital, with the launch of our IGTV campaign #HarRahMeinWonderHai, is the first brand in the cement category to venture into this space. Through this campaign, we have captured the emotional journey of a cement bag through its own perspective and depicted what it takes to lay the foundation of one’s dreams and turn them into reality."

The story begins with a family performing the bhoomi poojan of their new plot. It is the place where they are investing their life-long earnings; and planning to build a dream house for the family and children. The family believes in the tradition of having a ‘perfect shuruaat’ (perfect beginning) for their future dream house. The video later highlights the process of construction and in sequence it is emphasising the value of ‘Perfect Shuruaat’ through the eyes of a cement bag.

Tarun Singh Chauhan, management advisor and brand consultant, Wonder Cement, said, "Our objective with this campaign was to show that the cement produced at the Wonder Cement plant speaks for itself, its quality, trust and most of all perfection. The only way this was possible was to take the perspective of a cement bag and showing its journey of perfection from beginning till the end."

According to the company, the campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV. No other brand in this category has created content specific to the platform.

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In spite of company’s optimism, demand weakness in cement is seen in the 4% y-o-y drop in sales volume. (Reuters)




Cost cuts and better realizations save? the ?day ?for ?UltraTech Cement, Updated: 27 Jan 2020, Vatsala Kamat from Live Mint

Lower cost of energy and logistics helped Ebitda per tonne rise by about 29% in Q3
Premiumization of acquired brands, synergistic?operations hold promise for future profit growth Topics

UltraTech Cement
India’s largest cement producer UltraTech Cement Ltd turned out a bittersweet show in the December quarter. A sharp drop in fuel costs and higher realizations helped drive profit growth. But the inherent demand weakness was evident in the sales volumes drop during the quarter.

Better realizations during the December quarter, in spite of the 4% year-on-year volume decline, minimized the pain. Net stand-alone revenue fell by 2.6% to ?9,981.8 crore.

But as pointed out earlier, lower costs on most fronts helped profitability. The chart alongside shows the sharp drop in energy costs led by lower petcoke prices, lower fuel consumption and higher use of green power. Logistics costs, too, fell due to lower railway freight charges and synergies from the acquired assets. These savings helped offset the increase in raw material costs.

The upshot: Q3 Ebitda (earnings before interest, tax, depreciation and amortization) of about ?990 per tonne was 29% higher from a year ago. The jump in profit on a per tonne basis was more or less along expected lines, given the increase in realizations. "Besides, the reduction in net debt by about ?2,000 crore is a key positive," said Binod Modi, analyst at Reliance Securities Ltd.

Graphic by Santosh Sharma/Mint
What also impressed analysts is the nimble-footed integration of the recently merged cement assets of Nathdwara and Century, which was a concern on the Street.

Kunal Shah, analyst (institutional equities) at Yes Securities (India) Ltd, said: "The company has proved its ability of asset integration. Century’s cement assets were ramped up to 79% capacity utilization in December, even as they operated Nathdwara generating an Ebitda of ?1,500 per tonne."

Looks like the demand weakness mirrored in weak sales during the quarter was masked by the deft integration and synergies derived from these acquired assets. This drove UltraTech’s stock up by 2.6% to ?4,643 after the Q3 results were declared on Friday.

Brand transition from Century to UltraTech, which is 55% complete, is likely to touch 80% by September 2020. A report by Jefferies India Pvt. Ltd highlights that the Ebitda per tonne for premium brands is about ?5-10 higher per bag than the average (A cement bag weighs 50kg). Of course, with competition increasing in the arena, it remains to be seen how brand premiumization in the cement industry will pan out. UltraTech Cement scores well among peers here.

However, there are road bumps ahead for the cement sector and for UltraTech. Falling gross domestic product growth, fiscal slippages and lower budgetary allocation to infrastructure sector are making industry houses jittery on growth. Although UltraTech’s management is confident that cement demand is looking up, sustainability and pricing power remains a worry for the near term.

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