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We have a target of producing and supplying 1.5 mtpa of cement by the end of year 2017

Published

10 years ago

July 31, 2014

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Vinayak M Koneri, Sr. Vice President-Sales and Marketing, Bagalkot Cement & Industries.

Bagalkot Cement & Industries belongs to Kanoria Group, which had acquired the cement division of Bagalkot Udyog in 2007. Bagalkot Cement & Industries, with over five decades of experience in cement manufacturing, had started its operations with a 300 tpd wet process kiln in Bagalkot. In 1982 the capacity was increased to a 1000 tpd dry process kiln. Currently the plant produces 1200 tpd of clinker and 400,000 tpa of cement.

Bagalkot Cement manufactures OPC 43, PSC and PPC grades of cement and has supplied its products to renowned projects such as Koyna Dam, Almatti Dam, Taj Exotica Hotel in Goa, Suvarna Soudha in Belgaum, etc. It is a leading brand in Karnataka, Goa and Southern Maharashtra. ICR interacts with Vinayak Koneri to know how the company is poised to tap the projected infrastructural growth in the state.

What is the thought process that drives your media plans?
Marketing function is all about two major tasks – Message creation and Message dissemination. Media planning supports message dissemination. It decides how your message is going to reach your audience and influence them.

Our Media planning is a three-step process, which consists of:

a) Defining media objectives
b) Planning and implementing a media strategy for the objectives, and
c) Evaluating the effectiveness of the media plan.

How is your marketing team organised?
The team structure consists of a General Manager (Marketing) with three deputy general managers and six area sales managers. These sales managers look after around 30 sales offices in various states. As a Sr Vice President-Sales and Marketing, I look after the functioning of entire team.

Brief us about the strength of your dealer network.
Our network currently has about 10,000 dealers. Most of our dealers are on an average associated with us for 20-25 years. Many of them are the second or third generation in their family to be associated with us. I think that speaks a lot about the strength of our network.

Which is a better strategy, distributing through few large dealers, or routing it via an extensive network of small dealer outlets?
Routing it through an extensive network of small dealers network is a better strategy. There are several reasons for this such as:

Product visibility is better with wide small dealer network
Small dealers are more loyal to the brand
Profitability and realisation can be improved
Better market share can be tapped, and
Consumer service and awareness is improved.

Are you planning to expand your network further?
We have our distribution network spread out primarily in Karnataka, in parts of Maharashtra, Kerala and Goa. In the past we were not able to meet the huge demand from our network. So, now we have gone ahead with our capacity expansion drive. The cement kiln No. 4 at the plant has started production now (since 14 July 2014). This adds another 500 tpd to our supply capacity. We have a target of producing and supplying 1.5 million tonnes of cement per year by the end of year 2017. And with this goal in mind we are taking steps to expand our market. We are looking at Mysore, Bangalore region for further network expansion.

What is the segment-wise break-up of revenue from distribution channels?
About 70 per cent of our cement is sold through the trade segment, while the remaining 30 per cent is consumed by project works in the non-trade segment.

How do you reach construction professionals at different levels, ranging from civil engineers and consultants to contractors and masons?
To create brand awareness and build brand loyalty, we arrange seminars for civil engineers, consultants, contractors and masons from time to time. The dealers/retailers act as an intermediate link between us and the end customer. They also have a big influence on the end customer. They are our channel partners. They help us build our brand position in local areas. We conduct educational seminars for the dealers and retailers to keep informing them about the product.

We arrange for knowledge sharing opportunities where engineers and architects can learn from each other and from our experts too. For example recently we had organised a technical workshop at Hubli, or had shared a technical presentation for builders and engineers at Karnataka.

Such efforts offer a great platform for networking and network strengthening. It also creates a community bonding between the builders, engineers and us. We treat them as our associates and not as our customers. These technical interactions help us to understand their needs better and in the process they too become aware of what we have to offer.

Now we are planning to celebrate Engineers Day at Goa along with the Engineers Association in the state. We have also started with a Mason Club, where we review performance of masons and give them awards, etc.

Does one have to opt for different branding strategies to appeal to professionals at different levels in construction business?
Yes, one has to have different approaches while communicating with professionals at different levels. We keep that in mind while selecting a media channel, the place where we put in our advertisements and the content of the message. For example, we have made two types of video presentations. One is focused towards high-end professionals, structural and civil engineers where we showcase the technical attributes of our product. The other video is targeted towards masons highlighting the projects done using our brand and the applications where our product can be used.

Quality perception of cement varies from customer to customer. How do you factor this in your marketing plans?
Quality is the most important factor in cement industry. Different people have different perception of quality in this industry. Some of them consider the colour as a parameter for quality, some have grade of the cement as a parameter for quality. We need to educate people that both are equally important but they cant be the only parameter to judge the quality. We conduct seminars for the dealers/retailers and masons who are intermediaries in this industry and educate them the important parameters that actually determine the quality of cement.

Other than price and quality, what other factors influence buying decisions?
Other than price and quality the service quality is the main factor, which influences the customer to stay loyal to your brand and influence the buying decisions.

How is the brand recognition of Bagalkot cement in the market?
In our region we are among the top three brands in the market. One is, customers identify our products with high quality, and secondly, they are aware about the renowned structures that are built using our cement. It incorporates trust in their mind about our brand. We have our own fleet of more than a hundred vehicles and our plants are strategically located close to the market. This gives us a small cost advantage that we pass on to our clients, which adds to the drive towards our brand.

What are the challenges that you foresee in the market?
Major challenge for the cement industry today is the rising input costs. Prices of raw materials like limestone and coal have increased and are still on upward trend. Freight cost has been rising significantly over last two years. We are trying to improve our brand value by various marketing and branding exercises, which will in long run allow us to charge a premium for our product.

What are your current marketing plans/initiatives for promoting your products?
The company and its product both are named after the place where its manufacturing plant was set up, in Bagalkot at Karnataka. Its gives a sense of "our brand" to the local population, which is the main market segment for the company.

The main customer for our industry is the common household owner. To create brand awareness and build brand loyalty, we organise seminars for these groups from time to time.

Recently there was an outcry from builders against the cement price hike. What are your views?
It is sad that when cement companies are going through tough time no such organisation comes forward to support them. You must be aware that in last few years the cost of power, coal and diesel has gone up drastically. But if you look at the cement price trend for last five years, you will understand the prices have remained almost stagnant.

It is very difficult for cement manufacturers to continue selling products at the same price when the input costs have multiplied several times. Of course I dont blame them (builders and allied associations). They have to take care of business at their end too. But to me it seems that the cement industry is not left with any other option than to increase the prices and the current hike is not unjustified.

The sluggish demand in the past had forced companies to cut down their prices significantly. Andhra was badly hit then, where prices had gone down as low as Rs 80 per bag. But we cannot continue selling at these prices. Today the prices are only bouncing back to their original levels.

Now with the new government in power and a slew of infrastructure projects lined up, we expect a growth in demand. This we hope will help the industry to bounce back and would in the long term lead to better pricing in favour of consumers too.

What are you doing to participate in forthcoming infrastructure projects?
We have recently appointed the Karnataka State Small Industries Development Corporation (Government of Karnataka Undertaking) as our cement distributor. With this, our cement will be made available to all the government projects in the state. That gives us a lot of mileage. This is one of the latest initiatives taken by us to tap the demand growth.

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

Published

3 years ago

October 21, 2021

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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

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Wonder Cement shows journey of cement with new campaign

Published

3 years ago

October 21, 2021

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

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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)

Published

3 years ago

October 21, 2021

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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.