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Rail freight hike may impact cement margins : India Ratings

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India Ratings-Mumbai-27 February 2013: The proposed 5.79% increase in rail freight as per the Railway Budget 2013-2014 may negatively impact the margins of the cement industry. In the event cement manufacturers are unable to pass on the rail freight cost hike, their operating margins may reduce by 75bps-100bps.The cement manufacturers of South India will be particularly affected, given the unfavorable demand-supply situation may not be in a position to pass on the increased cost. However, cement players based in the rest of India would be able to pass on a significant portion of the cost increase. The railway freight hike may potentially increase the cement price by INR2 to INR4 per bag.Around 50%-60% of the freight expense of a typical cement company is related rail freight. This is essentially 15%-18% of total costs. Around 10.5%-11.0% of rail freight (by volume) is attributable to the cement industry. This is second only to coal which accounts for 45%-47% of the rail freight.The overall Stable to Negative outlook on the cement sector remains unchanged (please refer to ‘2013 Outlook: Indian Cement Manufacturers‘, dated 10 January 2013 and available at www.indiaratings.co.in.)

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Concrete

CCU testbeds in Tamil Nadu

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Tamil Nadu is set to host one of India’s five national carbon capture and utilisation (CCU) testbeds, aimed at reducing CO2 emissions in the cement industry as part of the country’s 2070 net-zero goal, as per a news report. The facility will be based at UltraTech Cement’s Reddipalayam plant in Ariyalur, supported by IIT Madras and BITS Pilani. Backed by the Department of Science and Technology (DST), the project will pilot an oxygen-enriched kiln capable of capturing up to two tonnes of CO2 per day for conversion into concrete products. Additional testbeds are planned in Rajasthan, Odisha, and Andhra Pradesh, involving companies like JK Cement and Dalmia Cement. Union Minister Jitendra Singh confirmed that funding approvals are underway, with full implementation expected in 2025.

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Concrete

JSW Cement gears up for IPO

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JSW Cement has set the price range for its upcoming initial public offering(IPO) at US$1.58 to US$1.67 per share, aiming to raise approximately US$409 million. As reported in the news, around US$91 million from the proceeds will be directed towards partially financing a new integrated cement plant in Nagaur, Rajasthan. Additionally, the company plans to utilise US$59.2 million to repay or prepay existing debts. The remaining capital will be allocated for general corporate purposes.

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Concrete

Cement industry to gain from new infrastructure spending

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As per a news report, Karan Adani, ACC Chair, has said that he expects the cement industry to benefit from the an anticipated US$2.2tn in new public infrastructure spending between 2025 and 2030. In a statement he said that ACC has crossed the 100Mt/yr cement capacity milestone in April 2025, propelling the company to get closer to its ambitious 140Mt/yr target by the 2028 financial year. The company’s capacity corresponds to 15 per cent of an all-India installed capacity of 686Mt/yr.

Image source:https://cementplantsupplier.com/cement-manufacturing/emerging-trends-in-cement-manufacturing-technology/

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