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Cement Machinery: Poised for a big leap



Cement production in India has increased rapidly during the last few years. Despite recession, Indian cement industry performed well with the boom in infrastructure and housing markets. In view of the upcoming infrastructure projects, manufacturers are expanding their production capacities. This is where the cement machinery firms can play a vital role in meeting the demand with the latest technology machines and equipment. Nitin Madkaikar, Economist, First Infocentre, elaborates on the renewed vigour in the cement machinery market.

Cement plant and machinery based on raw mill grinding, pyro-processing and cement grinding process technology, for capacities up to 10,000 tonne per day (tpd), are being manufactured in India in collaboration with foreign technology providers. Unlike conventional, modern cement plants are designed for zero downtime, high product quality and better output with minimum energy consumed per unit of cement produced.

Currently, there are only six major suppliers of complete cement plant machinery in the organised sector. They together have an installed capacity of around Rs 600 crore per annum and are fully capable to meet the domestic demand. Including the unorganised sector, the total production was worth Rs 2,000 crore in 2010.

This industry is de-licensed and foreign direct investment (FDI) up to 100 per cent under automatic route as well as technology collaboration, is allowed free. Import of old and new machinery too is allowed free. However, the industry has made no significant progress in importing or exporting cement plants in the past five years.

The manufacturing process

Cement manufacturing process is mainly divided into three segments:

  • Wet process,
  • Semi-dry/semi-wet process and
  • Dry process.

Older cement plants are based on wet process but the modern plants invariably adopt the dry process except in rare cases where the raw material characteristics may decide for wet or semi-dry process. The dry process is very much superior in terms of fuel economy. Due to this single major factor, a number of older wet process plants are converted to dry process for the reason they being economically viable.

Indian cement machinery manufacturing industry is backed by collaboration agreements with world-renowned machinery manufacturers and are capable of supplying plant, machinery and equipment for large size cement plant of capacity 3,000 tpd and above, based on the latest state-of-the-art technology.

Technical development in cement industry

Cement production has reached 215 million tonne in 2010-11, more than doubling over the decade. To achieve this, different unit operations have undergone substantial development with introduction of dry process technology based on pre-heater and pre-calciner. Various kiln systems have been developed to achieve improved fuel efficiency. The size of modern dry process kilns is now standardised between 1,500 tpd to as high as 4500 tpd. Recently it has gone up to even 10,000 tpd.

The development in other areas include use of vertical roller mills in place of ball mills for grinding raw materials and coal, use of pre-blending stockpile and continuous homogenising silos for homogenisation of raw meal, use of roller press and high-efficiency separators for energy-efficient cement grinding, electronic packing machines for improved weight reliability and efficiency, packed bag loading machines, advanced process control and instrumentation etc.

Dry process for pollution control

The dry process cement plants presently being installed are equipped with most effective pollution control measures to fulfill the stipulations laid down by the Pollution Control Authorities. Many old plants are now installing pollution control equipment to meet the stipulations. Suitable pollution control equipment of advanced design including ESP, fabric bag dust collectors, gravel bed filters etc, are now available in India from reputed manufacturers.

Machinery for mini cement plants

Mini cement plants which have contributed significantly towards the growth of cement industry are based on either vertical shaft kiln technology or rotary kiln technology. The vertical shaft technology provides the following advantages:

  • Low cost of installation
  • Plant can be designed for lower capacity so that small limestone deposits also can be used
  • Machinery can be fabricated by small workshops
  • Plant emits low dust
  • Low maintenance and refractory cost
  • Lesser space needed
  • Clinker is easier to grind and therefore, consumes less energy

Mini plants based on rotary kiln usually follow dry process with suspension pre-heater. The machinery is supplied by a number of medium-scale manufacturers. The designs for mini cement plants (rotary kiln/VSK-based) are developed indigenously.

Research and development

Technology absorption and adaptation depends largely on the research & development (R&D) activities of the licencees. A number of R&D organisations are devoted to cement industry in India, viz, National Council for Cement and Building Materials (NCB), Central Research Station (CRS) of ACC Limited and Dalmia Institute of Scientific and Industrial Research (DISIR). Larsen & Toubro and Walchandnagar Industries Limited are two main machinery suppliers who have their own R&D divisions.

The R&D units have contributed significantly to the development of indigenous technology as well as adaptation of imported technology. Areas which may be considered for detailed study by a centralised research institute include energy conservation, production optimisation, quality enhancement, development of special cement, human resources development, modern computerized methods for quarry planning and waste heat recovery.

Jump in plant and machinery gross block

Twenty-three cement majors’ aggregate gross block in plant and machinery stood at Rs 44,000 crore as of March 2011. This was Rs 4,000 crore higher than the gross block of March 2010. In 2009-10, plant and machinery assets of these companies had jumped Rs 6,100 crore over and above the increase of Rs 6,500 crore recorded in the year ending March 2008-09. This implies that capacity addition, modernisation of machinery and change in spares had shot up in both the years. In 2010-11, cement majors ACC and Ambuja Cements added close to Rs 2,000 worth of plant and machinery, implying a major leap for cement machinery suppliers. However, most of these machinery were imported.

Upcoming business

As of end-April 2011, there are 102 cement projects under implementation entailing an aggregate capacity of 183 million tonne. The total investment envisaged in these projects is Rs 70,200 crore. Another 240 projects have been announced by various companies and are under implementation. The total capacity of such projects is 480 million tonne envisaging an investment of Rs 131,000 crore. Even if, half of these intentions are implemented the total investment works out to about Rs 130,000 crore over the next 3-4 years. This implies demand for plant and machinery of around Rs 30,000 crore per annum in the project implementation period.

The largest cement project is being proposed by Reliance Industries (RIL) which has signed a Memorandum of Understanding (MoU) with the Government of Gujarat during the 5th Global Summit of Vibrant Gujarat in January 2011. It proposes to set up new cement plant at Kachchh and will invest Rs 15,000 crore for a 5 million tonne per annum (mtpa)cement plant. RIL was scouting for limestone reserves from the State Government.

The largest project under implementation was of Reliance Cementation which is investing Rs 10,000 crore to set up cement project in Madhya Pradesh. In the phase I, the company is setting up a 5 mtpa, a 3.6-mtpa clinker plant and a 75-MW capacity captive power plant. The project was announced in May 2008 and is being set up at Maihar in Satna district of Madhya Pradesh. It will be executed in four phases, with 5-mtpa capacity cement units in each phase.

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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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