Connect with us

Process

CCI: Charting the path ahead

Published

on

In an exclusive chat with Indian Cement Review, R.P. Tak, CMD, Cement Corporation of India(CCI), a wholly owned Government of India Enterprise, speaks at length on the domination of the Indian cement industry by the private sector and the cement manufacturing companies in India importing the latest technology from around the world in order to cope with increased demands from all sectors.Can you brief us on the current status of CCI with regard to its various plants, production etc?Cement Corporation (CCI) was incorporated in the year 1965 as a wholly owned Government of India Enterprise and established 11 cement plants starting from the year 1970 to 1990. The total installed capacity of all the 11 plants was 42.48 lakh MT including an ailing plant of Dalmia’s at Charkhi Dadri, Haryana vested with the Company in June, 1981 for rehabilitation. Out of these plants, three plants are in operation and the rest were closed as these plants were unviable. The three operating plants are 1) Rajban (Himachal Pradesh) (2)Bokajan(Assam) and Tandur(Andhra Pradesh) with installed capacity of 2.48 lakh MT, 1.98 lakh MT and 10.00 lakh MT respectively.There were talks of disinvestment of some units? How far has it progressed?
Truly speaking, it is not disinvestment but it is sale of non-operating Units. As per the Sanctioned Scheme approved by Hon’ble BIFR, seven non-operating units were closed and put under sale process through a committee constituted by Hon’ble BIFR. The sale process is under way through e-auctioning and recently the committee has decided for revaluation of the plants through approved valuers. After revaluation of these units, fresh notice of auction will be published in news papers.Does CCI enjoy certain advantages or disadvantages in being a public sector unit?
Of course, certain pros and cons are always there and we are proud to be a public sector unit contributing to the Nation’s development. In 1991, the cement sector was decontrolled resulting in stiff competition from private players. Though CCI is Central Public Sector Undertaking, no significant advantage exists under the present policy after liberalization and globalization of the economy.Is there any kind of uniqueness that CCI brings to the cement sector – by way of technology, marketing or branding, etc?Till 1995, CCI plants were located pan India but after closure of 7 units, presently CCI is operating in the States of Himachal Pradesh, Assam and Andhra Pradesh. CCI Tandur Plant was having its uniqueness in technology and was set up with latest technology during the late eighties.What are your views on the sector in 2011?
The utilization of the production capacity of cement in India during the current financial year 2011-12 is expected to be around 72% owing to slackness in demand from across user industries. For the first half of the current financial year, utilization reduced even further to 71.7%. However, the demand is expected to grow by 5% in 2011-12.What are your predictions for the year 2012?
It is expected that demand for cement will grow at 8% in 2012-13 as against the current 4% to 5%. The Govt. spending on infrastructure and project developments will also determine the consumption of cement in coming years.What are the most crucial aspects that will affect cement sector in 2012?
Cement manufacturer being energy intensive operation, the high cost of power and coal including their availability are likely to affect the cement industry during the coming years.Tell us what has been significant for CCI in 2011?The constant efforts made by the Management and the employees as well has resulted in to the Company getting Turnaround Award from BRPSE for its performance in the last three financial years.How do you think India is placed vis-a-vis its foreign counterparts in adapting new technologies for cement manufacturing?
After opening up of economy in the year 1991 the Indian cement manufacturing companies started importing the latest technology from all-around the world and build up additional capacities to cope with the increased demands from all sectors as Govt. spending on infrastructure were increased manifolds. Presently, the plants set up by the private sector are with the State of the Art technology which is best in the world.Your thoughts on the private sector and the fact that the biggest companies are now owned by foreign entities?
In India cement manufacturing is dominated by private sector and the contribution of Govt. companies is insignificant. Moreover, the merger and acquisitions/takeovers by foreign companies has resulted in their dominance in some parts of the country mainly by cement giants like M/s Lafarge and Heidelberg from France and Germany.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Process

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

Published

on

By

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).

Source:moneycontrol.com

Continue Reading

Process

Wonder Cement shows journey of cement with new campaign

Published

on

By

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

ETBrandEquity

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.

Continue Reading

Process

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

Published

on

By

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.

Continue Reading

Trending News

SUBSCRIBE TO THE NEWSLETTER

 

Don't miss out on valuable insights and opportunities to connect with like minded professionals.

 


    This will close in 0 seconds