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Competitiveness in Challenging Times

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In the normal course, your editor would have extolled the virtues of competitiveness, and the importance of cost reduction, as applicable to commodity players, as a recipe for staying on top in the industry. But the events of the last few weeks have turned things upside down, and the resulting business environment is far from what can be termed as "normal". The shockwaves caused by the so-called "demonetisation" has left no one in the country unaffected, and it is not going to be "business as usual" for any kind of business for quite some time to come. It will certainly take some time for the dust to settle down and forecasts to crystallise.

Demonetisation is bad news for the cement industry. Just when the analysts were predicting an uptick in rural housing demand driven by a good monsoon, and industry observers were expecting a healthier demand growth in FY 17-18 to the extent of even 7 or 8 per cent, this bolt from the blue has sent everyone hurrying back to their workstations to revisit the potential scenario.

It is now reasonably certain that demonetisation will have a near-term negative impact; people seem to agree that volume impact is likely to be 20-30 per cent downward in November 2016 with possible marginal recovery in December. Since the last quarter is usually a good period for cement consumption, shipments may start limping back to the baseline, but experts are not ready to vouch for this. Given that the adverse impact of demonetisation is slated to be the sharpest on the real estate sector, which happens to be one of the large consumers of cement, the industry is getting ready for the worst. The government may step up the gas on infrastructure projects, but this may not be enough to mitigate the dip created by a potential slump in the real estate sector.

We have always connected our projections of cement demand growth to the GDP growth of the country, and in the face of predictions that GDP growth for FY17 is going to be snipped by 1 to 2 per cent, if not more, we can only draw correspondingly dismal conclusions for the cement demand growth forecasts. Overall, one must accept that the cement industry is in for challenging times in the next six months at least, if not more.

In such difficult times, when demand may be stagnant, and capacity utilisations may disappoint further, the subject of competitiveness assumes greater relevance. And this can only be achieved by cement companies through relentless cost-reduction efforts. Therefore, you may find that the topics covered in this issue, which are around cost management in general, and on energy efficiency, process optimization and logistics planning in particular, to be quite purposeful in today?s context. We do hope that these inputs add value to the discourse in the industry on the importance of competitiveness at all times, and particularly in these challenging times.

In the mean time, we wish that as a nation, we are able to prevail over corruption and black wealth, and get some returns on the huge investments being made by us in this demonetisation process.

Sumit Banerjee Chairman, Editorial Advisory Board

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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.

Image source:https://www.heavyequipmentguide.ca/

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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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