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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

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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Concrete

AI boom drives demand, says ACA

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The American Cement Association projects a nearly 1Mt annual increase in US cement demand over the next three years, driven by the surge in AI data centres. Consumption by data centres is expected to grow from 247,000 tonnes in 2025 to 860,000 tonnes by 2027. With over 5,400 AI data centres currently operating and numbers forecast to exceed 6,000 by 2027, the association cautions that regulatory hurdles and labour shortages may impact the industry’s ability to meet demand.

Image source:https://img-s-msn-com.akamaized.net/tenant/amp/entityid/AA1zOrih.img?w=2000&h=1362&m=4&q=79

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Concrete

GoldCrest Cement to build plant in India

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GoldCrest Cement will build a greenfield integrated plant with a 3.5Mt/yr clinker capacity and 4.5Mt/yr cement capacity. GoldCrest Cement appointed Humboldt Wedag India as engineering, procurement and construction contractor in March 2025 and targets completion by March 2027. It has signed a 40-year supply agreement with Gujarat Mineral Development Corporation for 150Mt of limestone from its upcoming Lakhpat Punrajpur mine in Gujarat.

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