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Budget Analysis

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Union Budget was presented in the parliament on February 29th, 2016. ICR team has tried to capture the impact of the budget on cement, infrastructure and real estate as viewed by CRISIL Research and various experts in the industry.

CRISIL Budget Analysis
Cement, impact positive
Higher spending on infrastructure to benefit in medium term Positive

Key budget proposals:

  • Investment towards national highways increased by 49 per cent to Rs 1032 billion (budgetary plus internal and extra budgetary resources).
  • Rs 170 billion for irrigation projects under Accelerated Irrigation Benefit Project.
  • Outlay towards urban infrastructure increased 11 per cent to Rs 166 billion.
  • Ready mix concrete manufactured at the site of construction exempted from excise duty.
  • Clean energy cess on coal (domestic and imported) doubled to Rs 400 per tonne.

CRISIL Research?s View:
The government?s focus on infrastructure is evident with the total targeted spending in FY17 increasing 28 per cent over FY16.
This, along with a number of benefits provided on affordable housing, would aid recovery in cement demand. Further, the rise in duties and tariffs in the form of clean cess on coal is expected to have a muted impact on total cost, which is expected to increase 0.2 per cent. Power and fuel cost (~25 per cent of cost of sales) will increase 1 per cent. However, amid rising demand, players will be able to offset this with a hike in prices.

Infrastructure, impact positive
Focus on dispute redressal, tax clarifications to aid investor confidence Positive Key budget proposals:
Budgetary allocation: Total outlay for infrastructure has been increased by 28 per cent to Rs 3.4 trillion (roads, railways and power the biggest beneficiaries). Of this, Rs 1.29 trillion is on account of budgetary support
Roads: Investments for development of national highways is proposed to be hiked 49 per cent on-year to Rs 1032 billion.
This is on the backdrop of spending being 16 per cent lower than FY16 budgeted estimates in the segment
Railways: Total outlay raised by 24 per cent to Rs 1,210 billion. In Railway Budget FY17, there have been numerous announcements for improvement of port connectivity and three new dedicated freight corridors
Airports & ports: No new projects announced barring Rs 8 billion earmarked for greenfield ports and national waterways. Overall, outlay for civil aviation has been reduced by 30 per cent to Rs 44 billion, mainly in line with reduced equity support to Air India
Funding availability: The government has provided flexibility for select state entities to raise capital up to Rs 313 billion by way of bonds across infra segments
Other measures: Dividend distribution tax waiver to be applicable on income distributed from SPVs to INVIT holding entity. Furthermore, a mechanism to renegotiate of contracts and a public utility bill will be introduced to streamline resolution of disputes in infrastructure related construction contracts

CRISIL?s View
The Budget reiterated focus on roads and railways with almost 76 per cent of the incremental government spending (budgetary allocation plus inter and extra budgetary resources) focused on these two segments. Also, the increase in budgetary allocations of Rs 250 billion towards various infra segments were muted compared with Rs 1090 billion in the last Budget.

This clearly reinforces a shift in funding dependence from government outlays to cash flows of government entities and their borrowing capability to drive public investments in the sector.Of the Rs 250 billion incremental budgetary support, almost Rs 130 billion is directed towards railways, followed by Rs 40 billion towards power, Rs 30 billion for urban development and Rs 25 billion, for roads, respectively. Given the targets relating to electrification of villages, the Budget provides a thrust on investments in the distribution segment of power with a 84 per cent on-year increase in planned expenditure for key schemes.

For EXIM-focused sectors such as airports and ports, focus on single window customs clearance, backed by process simplification, is targeted towards de bottlenecking of capacity amid lower budgetary allocations.

The Budget continued to build up investor confidence for investing in infrastructure segments by providing clarity on dividend distribution tax for entities like INVITs and giving confirmation on contract renegotiation and introduction of the public disputes utility bill. This comes at a time when private sector interest in infrastructure development is low and the balance sheets of many developers in the sector remain stretched.

We believe the rise in overall government spends will boost execution of national highway projects to about 5,200 km annually in 2016-17 and create a robust construction opportunity for road and railway engineering procurement & construction companies.

While the Budget provisions are positive, it will continue to put to test the execution capability of implementing agencies such as the National Highways Authority of India and Indian Railways. This comes on the backdrop of overall spending in national highways being 16 per cent lower in FY16 as compared with the allocations. Addressing on-ground issues such as clearances and land acquisition becomes extremely critical to ensure a sharp increase in project execution.

Real Estate:
Affordable housing gets a shot in the arm; commercial realtors also benefit Positive

Key budget proposals:

  • Measures on affordable housing projects

  • Interest deduction limit under Sec 80EE increased from Rs 1 lakh to Rs 1.5 lakh for first-time home buyers (applicable only on loans not exceeding Rs 35 lakh for houses costing below Rs 50 lakh and sanctioned during April 1, 2016, to March 31, 2017) for the entire loan duration

  • Under the Pradhan Mantri Awas Yojana, 100 per cent deduction on profits from housing projects approved between June 2016 and March 2019, and completed in three years of getting approval and satisfying the following conditions, refer to Table 1

  • Service tax exemption on construction of affordable houses up to 60 square meters (646 sq ft) under any central or state government scheme, including public-private partnerships (PPPs)

  • Phasing out of deductions allowed on capital expenditure (other than land, goodwill and financial assets) under Sec 35AD from 150 per cent to 100 per cent w.e.f. April 1, 2017, for affordable housing projects

  • Exemption of dividend distribution tax (DDT) on distribution made by special purpose vehicles (SPVs) to real estate investment trusts (REITs)

  • Revival of national land record digitisation scheme with a funding of Rs 1.5 billion

  • 0.5 per cent Krishi Kalyan Cess on all taxable services

CRISIL Research?s View
Boost to affordable housing – especially tier II and tier III cities

Affordable housing segment has received a shot in the arm with the abovementioned measures and will see increased demand and PPPs in the medium term.

Increase in interest deduction for first-time home buyers will boost demand for homes priced in that bracket. Currently, nearly 40 per cent of the upcoming supply in the 10 major cities tracked by CRISIL Research is priced under Rs 50 lakh. The proportion of upcoming supply in this price bracket in tier II and tier III cities is expected to be even higher.
Refer to Graph 1

Table-1

(sq mt) 4 Metros Other cities
Maximum size of house 30 60
Minimum size of land parcel 1,000 2,000
Other,Within 25 km of municipal limit

However, the phasing out of deductions on capital expenditure will be a dampener to some extent.
Removal of DDT for SPVs distributing income to REITs is a positive for developers with significant exposure to rental-yielding real estate assets.
Digitisation of land records will aid transparency in the real estate sector and help tap foreign capital inflows in the medium to long term.
Krishi Kalyan Cess, applicable for under-construction projects, will hurt the industry marginally.
However, minimum alternate tax will apply.
Union Budget 2016-17 brings hopes of revival for the cement industry

?Rs 97,000 crore of outlay that has been kept for roads and infra by the finance minister is very promising and the industry will get a lot of benefits from this particular allocation of funds,? said Amandeep Gupta, joint CEO of OCL Cement, the flag ship company of Dalmia Group.

Middle and low income groups are benefitted by providing exemption on service tax on construction of affordable home and increase in tax exemption on home loan, a boost to first time home buyers. That makes housing more affordable. Infrastructure being part of the key pillars of the budget is something to look forward to in the long run. With 85% road projects coming back on track.

The industry has also acknowledged that the finance minister?s approach for this budget has been very targeted. ?He has laid a structure for an inclusive growth rather than distributing subsidies,? said Gupta.

The cement sector for quite some time had been asking for the removal of excise duty on ready-made cement, which was 12.5 per cent. The industry among its recommendations to the government has also been asking for the initiatives to lower the tax burden on the industry. In its annual report 2014-15, CMA acknowledged that cement is highly taxed at 60 per cent of ex-factory price, which is even more than the taxes levied on the luxury items.

?Exemption of excise duty on RMC is one of the encouraging moves taken by the finance minister. This step is another value addition in making the budget positive for the cement sector,? said MS Mani, senior director, Deloitte.

Source: ECONOMIC TIMES

Doubled Coal Cess to increase power tariff by 15 paisa/unit
The effort of the NDA government to give enhanced push to clean energy and environment conservation would lead to spiking of power price. The government for the third time in a row increased the cess on coal, lignite and pite production to Rs 400 per tonne to fund clean energy projects.

As the increase in price of coal comes under ?change of law? regulation of the Electricity Act and Tariff Policy, any change in price would be reflected in the final power tariff. As per industry calculations, this would amount to a change of 12-15 paisa per unit in the final power tariff.

Indian power industry consumes close to 500 million tonne of coal annually and with doubling of cess, close to 800 billion units of electricity will witness the impact of increased price of coal.

During the current fiscal, the coal cess collected was around Rs 12,000 crore taking the total to Rs 50,000 crore.

In the last Union Budget, cess on coal was doubled to Rs 200 per tonne. In his maiden budget in July 2014, Arun Jaitley increased it to Rs 100 per tonne from Rs 50 per tonne. The cess is collected as National Clean Energy Fund and is disbursed for renewable energy based initiatives and power projects.

But with the change in name to Clean Environment Fund, it is expected that the fund would be used for environment conservation drives of the government as well.

The heavy weight projects depending on NCEF for their funding are Rs 40,000 crore Green Energy Corridor project and to be launched National Wind Energy Mission, which will entail a total expenditure of Rs 18,000 crore.

Source: BUSINESS STANDARD

Steel, cement to cost more
Shailendra Chouksey, President, Cement Manufacturers? Association, and whole-time director, JK Lakshmi Cement, said cement prices would rise by? 3-4 a bag just on account of the clean environment cess.

?The total tax incidence on cement is over 60 per cent of the ex-factory realisation. The Krishi Kalyan Cess at 0.5 per cent on all taxable services from June 1 will push up production costs further,? he added.

Ready-mix woes
Ready-mix concrete (RMC) players believed that their long-pending demand of exemption of excise duty on RMC plants has finally been addressed but it is applicable only to dedicated RMC plants on site, the percentage of which is almost negligible, said Chouksey.

Ajay Kapur, Managing Director, Ambuja Cements, said while profitability of the cement industry would be impacted by the increase in cess, the excise on HDPE (high-density polyethylene) packaging bags (for 12.5 per cent to 15 per cent) and decrease in sale commission (from 10 per cent to 5 per cent) would add to the industry?s woes.

Source: THE HINDU BUSINESS LINE

Mahendra Singhi, Group CEO-Dalmia Cement in conversation with ICR
The focus of the budget has been on rural India and finance minister has thought ?how to boost up the economy?? Larger attention has been paid to the farm sector. FM?s efforts will have multiplying effect on the economy.

The second important aspect of the budget is allocation for infrastructure. Never before such allocation was done. There are many projects which have been held up and some remedial measures are required to be taken to rescue these projects. Funds have been made available for not just highways but also for ?Pradhan Mantri Gram Sadak Yojana? which is mainly for rural India. The allocation for MNREGA is another positive feature of rural focus.

We were expecting industry status will be given to infrastructure but that did not happen. Irrigation has been provided separate funding which is a long term investment and it is certainly a welcome feature of the budget.

The enhancement of carbon cess to Rs. 400 will have some impact but it is a movement in the direction of Green Energy. It will support generation of Solar and Wind power.

While giving concessions, the budget takes into account affordable housing, rental housing and first time home buyers.The taxation on provident fund withdrawn is some how difficult to digest. It is slightly going against the principles of saving habits.

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Economy & Market

SEW-EURODRIVE India Opens Drive Technology Centre in Chennai

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The new facility strengthens SEW-EURODRIVE India’s manufacturing, assembly and service capabilities

SEW-EURODRIVE India has inaugurated a new Drive Technology Centre (DTC) in Chennai, marking a significant expansion of its manufacturing and service infrastructure in South India. The facility is positioned to enhance the company’s responsiveness and long-term support capabilities for customers across southern and eastern regions of the country.

Built across 12.27 acres, the facility includes a 21,350-square-metre assembly and service setup designed to support future industrial growth, evolving application requirements and capacity expansion. The centre reflects the company’s long-term strategy in India, combining global engineering practices with local manufacturing and service capabilities.

The new facility has been developed in line with green building standards and incorporates sustainable features such as natural daylight utilisation, solar power generation and rainwater harvesting systems. The company has also implemented energy-efficient construction and advanced climate control systems that help reduce shopfloor temperatures by up to 3°C, improving production stability, product quality and working conditions.

A key highlight of the centre is the 15,000-square-metre assembly shop, which features digitisation-ready assembly cells based on a single-piece flow manufacturing concept. The facility also houses SEW-EURODRIVE India’s first semi-automated painting booth, aimed at ensuring uniform surface finish and improving production throughput.

With the commissioning of the Chennai Drive Technology Centre, SEW-EURODRIVE India continues to strengthen its manufacturing footprint and reinforces its long-term commitment to supporting industrial growth and automation development in India.

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Concrete

Material Flow Efficiency

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We explore how material handling systems are becoming strategic assets in cement plants, enabling efficient movement of raw materials, clinker and finished cement. Advanced conveying, automation and digital technologies are improving plant productivity while supporting energy efficiency and sustainability goals.

Material handling systems form the operational backbone of cement plants, enabling the efficient movement of raw materials, clinker and finished cement across complex production networks. With India’s cement industry producing over 391 million tonnes of cement in FY2024 and possessing an installed capacity of around 668 mtpa, according to the CRISIL Research Industry Report, 2025, efficient material logistics have become critical to maintaining plant productivity and cost competitiveness. At the same time, cement production is highly energy intensive and contributes around 7 per cent to
8 per cent of global CO2 emissions, making efficient material flow and logistics optimisation essential for reducing operational inefficiencies and emissions states the International Energy Agency Cement Technology Roadmap, 2023. As plants scale capacity and integrate digital technologies, modern material handling systems, ranging from automated conveyors to intelligent stockyards, are increasingly recognised as strategic assets that influence plant stability, energy efficiency and environmental performance.

Strategic role of material handling
Material handling is no longer viewed as a secondary utility within cement plants; it is now recognised as a strategic system that directly influences production efficiency and process stability.
Cement manufacturing involves the continuous movement of large volumes of limestone, clay, additives, clinker and finished cement across multiple production stages. Even minor disruptions in conveying systems or storage infrastructure can lead to kiln feed fluctuations, production delays and significant financial losses. According to Indian Cement Industry Operational Benchmarking Study, 2024, unplanned downtime in large integrated cement plants can cost between Rs.15–20 lakh per hour, highlighting the economic importance of reliable material handling systems.
Modern cement plants are therefore investing in advanced mechanical handling systems designed for high throughput and operational reliability. Large integrated plants can process over 10,000 tonnes per day of clinker, requiring highly efficient conveying systems and automated stockyards to maintain continuous material flow, suggests the International Cement Review Industry Analysis, 2024. Efficient material handling also reduces spillage, minimises dust emissions and improves workplace safety. As cement plants become larger and more technologically advanced, the role of material handling is evolving from simple transport infrastructure to a critical operational system that supports both productivity and sustainability.

From quarry to plant
The transport of raw materials from quarry to processing plant represents one of the most energy-intensive stages of cement production. Traditionally, limestone and other raw materials were transported using diesel-powered trucks, which resulted in high fuel consumption, dust generation and increased operational costs. However, modern plants are increasingly adopting long-distance belt conveyors and pipe conveyors as a more efficient alternative. These systems allow continuous material transport over distances of 10–15 kilometres, significantly reducing fuel consumption and operating costs while improving environmental performance, states the FLSmidth Cement Industry Technology Report, 2024.
Milind Khangan, Marketing Manager, Vertex Market Research & Consulting, says, “Efficient and enclosed handling of fine materials such as cement, fly ash and slag requires modern pneumatic conveying systems. By optimising the air-to-material ratio, these systems can reduce energy consumption by 10 per cent to 15 per cent while ensuring smooth material flow. Closed-loop conveying further minimises dust loading and improves the performance of bag filters, supporting cleaner plant operations. In addition, flow-regulated conveying lines help prevent clogging and maintain reliable dispatch performance. Overall, automation in pneumatic conveying delivers immediate operational benefits, including improved equipment uptime, lower energy use, reduced material spillage and more stable kiln and mill performance.”
Pipe conveyor systems are particularly gaining traction because they provide a completely enclosed transport system that prevents material spillage and dust emissions. According to global cement engineering studies, conveyor-based transport can reduce energy consumption by up to 30 per cent compared to truck haulage, while also improving operational reliability. Several cement plants in India have already implemented such systems to stabilise quarry-to-plant logistics while reducing carbon emissions associated with diesel transport.

Stockyard management and homogenisation
Stockyards play a critical role in maintaining raw material consistency and stabilising kiln feed quality. Modern cement plants use advanced stacker and reclaimer systems to ensure efficient storage and blending of raw materials before they enter the grinding and pyroprocessing stages. Automated stacking methods such as chevron or windrow stacking enable uniform distribution of materials, while bridge-type or portal reclaimers ensure consistent extraction during kiln feed preparation. These systems are essential for maintaining stable chemical composition of raw meal, which directly influences kiln efficiency and clinker quality. The Cement Plant Operations Handbook, 2024 indicates that advanced homogenisation systems can reduce raw mix variability by up to 50 per cent, significantly improving kiln stability and energy efficiency. Integrated stockyard management systems also incorporate sensors for monitoring bulk density, moisture levels and stockpile volumes, enabling real-time control over material blending processes.

Clinker and cement conveying technologies
Once clinker is produced in the kiln, it must be efficiently transported to storage silos and subsequently to grinding and packing units. Modern cement plants rely on high-capacity belt conveyors, bucket elevators and pneumatic conveying systems to manage this stage of material flow. Steel-cord belt bucket elevators are now capable of lifting materials to heights exceeding 120 metres with capacities reaching 1,500 tonnes per hour, making them suitable for large-scale clinker production lines, states the European Cement Engineering Association Technical Paper, 2023.
For fine materials such as cement, fly ash and slag, pneumatic conveying systems provide a reliable and dust-free solution. These systems transport powdered materials using controlled airflow, ensuring enclosed and contamination-free movement between grinding units, silos and packing stations. Optimised pneumatic systems can reduce energy consumption by 10 per cent to 15 per cent compared to older conveying technologies, while also improving plant cleanliness and environmental compliance, according to the Global Cement Technology Review, 2024.

Automation and digitalisation
Digitalisation is transforming material handling systems by introducing real-time monitoring, predictive maintenance and automated control. Advanced sensors and Industrial Internet of Things (IIoT) platforms enable plant operators to track conveyor health, stockpile levels and equipment performance in real time. Predictive maintenance systems analyse vibration patterns, temperature fluctuations and equipment load data to detect potential failures before they occur. According to McKinsey’s Industry 4.0 Manufacturing Report, 2023, for heavy industries, digital monitoring and predictive maintenance technologies can reduce equipment downtime by up to 30 per cent and increase productivity by 10 per cent to 15 per cent. Digital control centres also integrate data from conveyors, stacker reclaimers and dispatch systems, enabling centralised management of material flows from quarry to dispatch.

Handling of AFR
The growing adoption of Alternative Fuels and Raw Materials (AFR) has introduced new challenges and opportunities for material handling systems in cement plants. AFR materials such as refuse-derived fuel (RDF), biomass and industrial waste often have irregular particle sizes, variable moisture content and lower bulk density compared to conventional fuels. As a result, specialised storage, dosing and feeding systems are required to ensure consistent kiln combustion. According to the Cement Sector Decarbonisation Roadmap published by NITI Aayog in 2026, increasing the use of AFR could enable India’s cement sector to achieve thermal substitution rates of around 20 per cent in the coming decades. To support this transition, plants are investing in automated receiving stations, shredding units, drying systems and precision dosing equipment to stabilise AFR supply and combustion performance.

Energy efficiency and dust control
Material handling systems also play a crucial role in improving plant energy efficiency and environmental performance. Modern conveyor systems equipped with variable speed drives and energy-efficient motors can significantly reduce electricity consumption. Permanent magnet motors used in conveyor drives can deliver 8 per cent to 12 per cent energy savings compared to conventional induction motors, improving overall plant energy efficiency according to the IEA Industrial Energy Efficiency Study, 2023. Dust control is another major concern in cement plants, particularly during material transfer and storage operations. Enclosed conveyors, dust extraction systems and advanced bag filters are widely used to minimise particulate emissions and improve workplace safety.

Future trends in material handling
The future of material handling in cement plants will be shaped by automation, digitalisation and sustainability considerations. Emerging technologies such as AI-driven logistics optimisation, autonomous mobile equipment and digital twins are expected to further improve plant efficiency and operational visibility. Digital twin models allow engineers to simulate material flow patterns, optimise stockyard operations and predict equipment performance under different operating conditions. According to the International Energy Agency Digitalisation and Energy Report, 2024, the adoption of advanced digital technologies could improve industrial energy efficiency by up to 20 per cent in heavy industries such as cement manufacturing. As cement plants expand capacity and adopt low-carbon technologies, intelligent material handling systems will play a critical role in maintaining productivity and reducing environmental impact.

Conclusion
Material handling systems have evolved from basic transport infrastructure into strategic operational systems that directly influence plant efficiency, reliability and sustainability. From quarry transport and automated stockyards to digital dispatch platforms and advanced conveying technologies, modern material handling solutions enable cement plants to manage large production volumes while maintaining process stability.
As India’s cement industry continues to expand to meet infrastructure and urban development demands, investments in advanced material handling technologies will become increasingly important. By integrating automation, digital monitoring and energy-efficient systems, cement manufacturers can improve operational performance while supporting the industry’s long-term sustainability and decarbonisation goals.

  • Kanika Mathur

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Concrete

Modernise to Optimise

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Cement plant modernisation is reshaping the industry through upgrades in
kilns, energy systems, digitalisation, AFR integration and advanced material
handling. We explore these technologies that improve efficiency, reduce
emissions, strengthen competitiveness, while preparing the industry for India’s
next phase of infrastructure growth.

India’s cement industry, the world’s second-largest, is undergoing a rapid transformation driven by infrastructure demand, decarbonisation targets and technological advancement. The sector’s installed capacity stood at approximately 668 million tonnes per annum (mtpa) in FY2025 and is projected to reach 915–925 mtap by 2030, supported by large-scale capacity expansions and infrastructure investment cycles, suggests CRISIL Intelligence Industry Report, 2025. At the same time, cement production remains highly energy intensive and contributes about 6 per cent to 7 per cent of India’s total greenhouse gas emissions, making efficiency improvements and modernisation critical for long-term sustainability as stated in CareEdge ESG Research, 2025. As a result, cement manufacturers are investing in advanced kiln technologies, digital monitoring systems, waste heat recovery, alternative fuels, and modern material handling infrastructure to enhance productivity while aligning with global decarbonisation pathways.

Need for modernisation
The need for plant modernisation is closely linked to the sector’s rapid capacity expansion and rising operational complexity. India’s installed cement capacity has grown significantly in the last decade and is expected to exceed 900 mtpa by 2030, driven by demand from housing, infrastructure and urban development projects, as per the CRISIL Intelligence Industry Report, 2025. However, increasing scale also places pressure on energy efficiency, logistics, and production stability. The report also suggests that the cement plants must upgrade equipment and processes to operate at higher utilisation rates, which are projected to reach 75 per cent to 77 per cent by the end of the decade, compared to around 72 per cent to 74 per cent in FY2026.
Environmental imperatives are another major driver of modernisation. Cement manufacturing is responsible for a significant share of industrial emissions because clinker production requires high-temperature processes that depend heavily on fossil fuels. According to CareEdge ESG research, the cement sector contributes 6–7 per cent of India’s total greenhouse gas emissions, with approximately 97 per cent of emissions arising from direct fuel combustion and process emissions in kilns. Consequently, plant modernisation initiatives now focus not only on productivity improvements but also on reducing emissions intensity, energy consumption, and reliance on conventional fuels.
“One of the most impactful upgrades implemented at Shree Cement in the last five years has been the adoption of advanced data management platforms that provide real-time visibility across major process areas. This digital advancement has strengthened plant automation by enabling faster and more accurate responses to process variations while improving the reliability of control loops. Real-time dashboards, integrated analytics and automated alerts now support quicker, data-driven decision-making, helping optimise kiln and mill performance, improve energy control and detect deviations early. By consolidating data from multiple systems into a unified digital environment, the company has enhanced operational consistency, reduced downtime and improved both productivity and compliance. This shift towards intelligent automation and real-time data management has become a key driver of operational excellence and future-ready plant management,” says Satish Maheshwari, Chief Manufacturing Officer, Shree Cement.

Kiln and pyroprocessing upgradation
The kiln remains the technological heart of cement manufacturing, and modernisation efforts often begin with upgrades to pyroprocessing systems. Many older plants in India operate with four- or five-stage preheaters, while modern plants increasingly adopt six-stage preheater and pre-calciner systems that significantly improve heat efficiency and clinker output. These systems enhance heat transfer, reduce fuel consumption, and stabilise kiln operations under high throughput conditions.
Professor Procyon Mukherjee suggests, “Cement manufacturing is, at its core, a thermal process. The rotary kiln and calciner together account for energy consumption and emissions. The theoretical thermal requirement for clinker production is around 1700–1800 MJ per tonne, yet real-world plants often operate far above this benchmark due to inefficiencies in combustion, heat recovery and material flow. Modernisation, therefore, must begin with the
kiln system, and not peripheral automation or
isolated upgrades. The shift from wet to dry process kilns, combined with multi-stage preheaters and precalciners, has already delivered step-change improvements, making dry kilns nearly 50 per cent more energy efficient.”
Recent investment programmes across the industry have included kiln cooler upgrades, advanced burners, and improved refractory materials designed to increase operational reliability and reduce specific heat consumption. Such upgrades are essential because cement production remains highly energy intensive, and continuous efficiency improvements are required to meet global decarbonisation targets. According to the International Energy Agency (IEA) Cement Tracking Report, 2023, the cement sector must achieve annual emissions intensity reductions of around 4 per cent through 2030 to align with global net-zero scenarios.

Energy efficiency and WHRS
Energy efficiency remains one of the most important areas of modernisation in cement manufacturing, given the sector’s heavy reliance on thermal and electrical energy. Modern plants deploy advanced process controls, efficient grinding systems, and improved combustion technologies to reduce specific energy consumption. The adoption of energy-efficient technologies is particularly important in India, where energy costs account for a large share of production expenses. As demand grows and plants expand capacity, improving energy performance becomes essential to maintain competitiveness.
Waste Heat Recovery Systems (WHRS) have emerged as a key solution for improving plant energy efficiency. During cement production, large volumes of high-temperature gases are released from kilns and coolers. WHRS technology captures this waste heat and converts it into electricity, thereby reducing reliance on external power sources. According to energy benchmarking studies for the Indian cement industry, installed waste heat recovery capacity in the sector has reached approximately 840 MW, with an additional potential of around 500 MW states the Green Business Centre, Energy Benchmarking Report, 2023. Several leading producers have already implemented large WHRS installations; for example, UltraTech Cement has deployed systems with around 121 MW of waste heat recovery capacity, reducing carbon emissions by nearly 0.5 million tonnes annually according to the Energy Alternatives India Case Study, 2024.

Integration of AFR
The integration of Alternative Fuels and Raw Materials (AFR) is another critical dimension of cement plant modernisation. AFR refers to the use of industrial waste, biomass, refuse-derived fuel (RDF), and other non-fossil materials as substitutes for conventional fuels such as coal and petcoke. Increasing the use of AFR helps reduce fossil fuel consumption while simultaneously addressing waste management challenges. According to the NITI Aayog Decarbonisation Roadmap, 2026, scaling the use of RDF and other alternative fuels could enable the sector to achieve thermal substitution rates of around 20 per cent in the coming decades.
However, integrating AFR requires significant plant modifications and operational adjustments. Waste-derived fuels often have inconsistent calorific values, higher moisture content, and heterogeneous physical properties compared to traditional fuels. As a result, modern plants invest in advanced fuel preparation systems, dedicated feeding equipment, and automated dosing technologies to ensure stable kiln operation. These upgrades allow plants to maintain consistent clinker quality while increasing the share of alternative fuels in their energy mix.

Digitalisation and smart plant operations
Digitalisation is rapidly transforming cement plant operations by enabling data-driven decision-making and predictive maintenance. Industry 4.0 technologies such as IoT sensors, artificial intelligence (AI), and advanced analytics are now used to monitor equipment performance, optimise process parameters, and anticipate maintenance requirements. These digital tools enable plant operators to detect early signs of equipment failure, minimise unplanned downtime, and improve operational efficiency. Predictive maintenance systems, for example, analyse vibration, temperature, and acoustic signals from rotating equipment to identify potential faults
before they escalate into major breakdowns. Digital twins and integrated control systems further allow operators to simulate plant performance under different scenarios and optimise production strategies. Such technologies are becoming increasingly important as cement plants operate at larger scales and higher levels of process complexity.
Maheshwari also adds, “Plant modernisation is also increasingly central to the global competitiveness of Indian cement manufacturers. As cost pressures rise across energy, logistics and regulatory compliance, modern plants offer the structural efficiency required to operate reliably and competitively over the long term. Technologies such as AI-driven Advanced Process Control (APC) integrated with real-time data systems are emerging as essential investments for the future. These platforms use predictive algorithms, machine learning and live process inputs to optimise kiln, mill and utility operations with greater precision than traditional control systems. By continuously analysing variations in feed chemistry, temperature profiles, energy demand and equipment behaviour, APC enables stable operations, lower specific energy consumption, reduced emissions and improved product consistency. As regulatory expectations tighten and plants pursue higher efficiency with lower carbon intensity, AI-enabled APC will play a crucial role in strengthening automation, enhancing decision-making and ensuring long-term operational resilience.”

Modern material handling and logistics
Material handling systems play a critical role in ensuring smooth plant operations and efficient logistics. Modern cement plants rely on advanced conveying systems, automated stockyards, and digital dispatch platforms to manage the movement of raw materials, clinker, and finished cement. Long-distance belt conveyors and pipe conveyors are increasingly replacing truck-based transport between quarries and plants, reducing fuel consumption, dust emissions, and operational costs. Automated stacker-reclaimers ensure consistent blending of raw materials,
which improves kiln stability and clinker quality. Meanwhile, advanced packing and dispatch systems equipped with high-speed rotary packers and robotic palletisers enhance throughput and reduce manual labour. These technologies allow cement plants to optimise logistics efficiency while supporting higher production capacities.

Emission control and environmental compliance
Environmental compliance has become a central focus of cement plant modernisation as regulators and investors place greater emphasis on sustainability performance. Modern plants deploy advanced emission control technologies such as high-efficiency bag filters, electrostatic precipitators, and selective non-catalytic reduction systems to reduce particulate matter and nitrogen oxide emissions.
Sine Bogh Skaarup, Vice President, Head of Green Innovation and R&D, Fuller Technologies says, “One of our key focus areas is decarbonisation. We help cement producers reduce CO2 and overall carbon emissions. We offer alternative fuel solutions and calcined clay technologies to enable the production of LC3 cement, which play a significant role in decarbonising the cement industry. By combining alternative fuels and calcined clay solutions, CO2 emissions can be reduced by up to 50 per cent, making this a highly impactful approach for sustainable cement production.”
Continuous emission monitoring systems are increasingly used to track environmental performance in real time and ensure compliance with regulatory standards. In addition to air pollution control, cement companies are also investing in water recycling systems, renewable energy integration, and carbon reduction initiatives. These measures are essential for aligning the sector with national climate goals and improving the environmental footprint of
cement manufacturing.

Economic benefits and future outlook
Beyond environmental and operational advantages, cement plant modernisation also delivers significant economic benefits. Energy efficiency improvements, digital process optimisation, and advanced material handling systems reduce operating costs and improve asset utilisation. Waste heat recovery and alternative fuels help lower fuel expenditure and reduce exposure to volatile fossil fuel markets. As the industry expands capacity to meet growing demand, modernised plants are better positioned to achieve higher productivity and maintain profitability. The long-term outlook for the sector remains positive, with India expected to continue large-scale infrastructure investments in roads, housing, railways, and urban development.
Milan R Trivedi, Vice President – Projects, Prod & QC, MR, Shree Digvijay Cement, says, “The main focus in case of modernisation projects drives through the investment decision, which is mainly based on IRR and impact on overall efficiency improvement, cost optimisation and improvement in reliability. However, there are certain modernisation, which has high impact on environmental impact, statutory requirements, etc. has higher priority irrespective of ROI or payback period.”
“The energy efficiency and reliability investment projects generally provide fast return on investment whereas strategic, digitalisation and environmental investment projects provide long term and compounded benefits. Typical modernisation investment projects are decided with IRR of about > 20 per cent, payback period of typically 2-3 years for fast-track projects,” he adds.
In this context, modernisation will remain a key strategic priority for cement manufacturers seeking to maintain competitiveness in an increasingly sustainability-focused market.

Conclusion
The modernisation of cement plants is no longer a purely technical upgrade but a strategic transformation that reshapes how the industry operates. As India’s cement sector expands capacity toward the next growth cycle, improvements in energy efficiency, digitalisation, alternative fuels and advanced logistics will determine the competitiveness of individual plants. Modern technologies allow producers to operate at higher productivity levels while simultaneously reducing energy consumption and emissions intensity.
Looking ahead, the pace of technological adoption will play a decisive role in shaping the future of
the cement industry. Companies that successfully integrate modern equipment, digital systems, and sustainable production practices will be better positioned to meet rising infrastructure demand while aligning with global climate commitments. In this evolving landscape, plant modernisation stands as the cornerstone of both operational excellence and environmental responsibility.

  • Kanika Mathur

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