Concrete

Southern Comfort

Published

10 years ago

January 31, 2017

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If southern manufacturers are able to restore pricing in subdued markets, earnings may potentially surprise in FY18, says Vaibhav Agarwal of PhillipCapital.

We visited cement manufacturers, channel partners, builders and contractors in south India in the 2nd week of January 2017 for an update on the current situation and the forward outlook. The feedback from southern India continues to remain very positive, especially the volume commentary. Price upticks are likely to be seen in pockets where pricing is subdued (for example, in markets like Maharashtra and Gujarat, where southern players have an exposure).

In markets where prices are already buoyant, no major upticks may be expected. Cost pressures will be felt in Q3 with increase in fuel prices, but we don’t expect all companies to face a similar impact on the cost front.

Ramco Cement is believed to be best placed with high inventories of low cost fuel which will suffice requirements till 1QFY18. Debt repayment continues to remain the key objective of southern companies, and we see no deviation in management commentary on this front. India Cements is expected to repay debt of more than Rs 2 billion in the current fiscal, and the run rate is likely to increase in FY18. The commentary on east India volumes also seems to be encouraging, and Dalmia Bharat will be amongst the key beneficiaries here. We reiterate’Buy’ calls on south Indian cement manufacturers and maintain our price objectives with +50 per cent returns expected in our coverage universe of southern manufacturers.

No impact of demonetisation
The feedback from all southern Indian leaders continues to suggest that there has been no impact of demonetisation on volumes for cement manufacturers. All manufacturers are expected to report high double-digit growth in Q3. This is partially on account of low base effect, but even if we compare on a sequential basis, the volume impact for southern companies is likely to be very marginal (largely flattish). Notably, Q3 is a weak quarter for south India as it is the monsoon quarter.

Turnaround year for capacity utilisations
Management commentary remains extremely positive on volumes. Good demand revival is being sensed by southern manufacturers in Telangana and Andhra Pradesh. The commentary also remains very positive on eastern volumes. Both manufacturers and channel partners expect FY18 to be a turnaround year and expect utilisation uptick of 4-5 per cent for the region as a whole, from current utilisations of about ~60 per cent.

Focus on volumes
We see that all southern Indian cement manufacturers are now refocusing on volume growth with the support of demand and by establishing newer markets outside of the region where the volumes can be pushed. For example, we were told that India Cements is targeting nearly 1 million tonnes of sales in export markets in FY18 (~10 per cent of sales). Fresh orders for specialised cements to select manufacturers are also helping the company ramp up capacity utilisation and support blended realisations. They don’t expect much to come in from cement prices as they seem happy with the stable price scenario. However, they will try hard to push prices in subdued markets.

Our take

Despite demonetisation, Q3 will not be a disappointing quarter for south India-based manufacturers. EBITDA/tonne (Rs 100-150) decline will be largely on account of marginal price correction and cost push.
Volumes continue to remain strong though y-o-y volume growth may tone down in Q4 due to high base effect.
We reiterate’Buy’ on southern manufacturers. There are no disappointments expected in FY18 earnings. Along with volumes, if southern manufacturers are also able to restore pricing in subdued markets, earnings may potentially surprise in FY18.

Concrete

Meghalaya Cabinet Approves MCCL Closure, Writes Off Rs. 244.3 mn

Cabinet approves winding up of state-owned cement company

Published

13 hours ago

October 19, 2026

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The Meghalaya Cabinet has approved the closure and winding up of Meghalaya Cherra Cement (MCCL), a state-owned cement company, with pending liabilities of approximately Rs. 244.3 mn to be written off as part of the process. The decision was announced by Chief Minister Conrad K Sangma on October 13, 2026.

The approved write-off comprises about Rs. 89 mn in sales tax dues and Rs. 155.3 mn in royalty dues. The Cabinet’s decision addresses the liabilities that remained after the company’s operations and enables the government to proceed with its formal closure.

Sangma said employee dues owed by MCCL had been settled in line with the state government’s commitment. The settlement of employee-related liabilities is a key part of the winding-up process and removes outstanding obligations to the company’s workforce.

The Chief Minister explained that MCCL is owned by the government, meaning the pending liabilities would otherwise involve transfers between the state government and its departments. Writing off the dues is intended to simplify the accounting and administrative steps required to complete the closure.

The decision is also intended to ensure that the winding-up does not create an additional financial burden for the state government. With employee payments settled and the sales tax and royalty liabilities addressed through the approved write-off, the Cabinet’s approval marks a further step towards completing the formal closure of MCCL.

The action follows the state government’s decision to discontinue the company and resolve its outstanding obligations through an orderly winding-up process. The approved measures cover the principal liabilities identified for settlement and allow the government to advance the remaining formal procedures associated with closing the state-owned enterprise.

Concrete

Fornnax Wins AIRIA’s Special Export Award for Rubber Machinery in 2025-26

Published

17 hours ago

October 19, 2026

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Fornnax Technology Pvt. Ltd. has been honoured with the Special Export Award – Rubber Machinery for 2025–26 by the All-India Rubber Industries Association (AIRIA), in recognition of its highest exports of tyre recycling plants to the European region.

With more than a decade of experience in India’s tyre recycling industry, Fornnax has contributed to the development of advanced recycling technologies and infrastructure. The company currently holds a 90% market share in India’s domestic tyre recycling sector, while exports account for 30% of its business, spanning markets such as Europe, Australia and the GCC.

The award marks another milestone for Fornnax, whose tyre recycling lines and advanced shredding technologies are supporting the growth of the circular economy in India and international markets.

Commenting on the recognition, Mr. Jignesh Kundaria, Founder and Director of Fornnax, said:

“This honour from AIRIA is a reflection of an incredible journey we have undertaken over the years. When we started Fornnax, there was no established recycling industry in India to follow. We chose to build for the future instead. Today, when you see India’s tyre recycling sector, it has already transformed into a dynamic, high-growth industry and we are extremely proud to have played our part in building it.”

Unlike standalone equipment suppliers, Fornnax focuses on developing complete, high-capacity recycling infrastructure. Its integrated systems combine multiple stages of shredding and size reduction to enable efficient, continuous operations. This system-level engineering approach helps recycling operators improve throughput, equipment reliability and operational consistency.

The recognition reinforces Fornnax’s commitment to developing engineering technologies that contribute to a more efficient and circular recycling ecosystem.

Looking ahead, the company aims to expand its international presence while continuing to develop advanced shredding and recycling solutions to address the growing volumes and evolving requirements of the global recycling industry.

For more information, visit: www.fornnax.com

Concrete

Cement Prices Likely to Rise Rs. 10-15 per Bag from Mid-October

Input costs and steady demand may drive cement price increases

Published

6 days ago

October 14, 2026

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Cement manufacturers in India are likely to raise prices by Rs. 10-15 per bag from mid-October, as they seek to offset persistent increases in power and fuel costs. Emkay Research said its channel checks indicated a high probability of an increase from October 12, supported by the start of the busy construction season and favourable demand-supply conditions.

The sector had implemented similar rate adjustments of Rs. 10-15 per bag during the first quarter, but the increases were insufficient to cover higher operating costs. Prices also softened during July and August because of the monsoon, widening the gap between realisations and input expenses. Delayed plant expansion programmes have pushed clinker utilisation rates towards 79 per cent by FY28, helping to balance market fundamentals.

Emkay Research said steady volume offtake was supporting cement consumption, with non-trade demand driving activity across regional markets. Industry volumes are expected to grow by 7-8 per cent year on year during the first half of FY27, while demand momentum is projected to remain firm over the following 18 months. The outlook includes the busy construction season in the second half of FY27 and infrastructure activity linked to general elections in the first half of calendar year 2029.

The brokerage expects overall cement demand to record a compound annual growth rate of about 7 per cent between FY26 and FY28. However, elevated operating expenses are likely to continue weighing on profitability. Input costs have risen by Rs. 300-400 per t over the past six to seven months, with the full impact expected to become visible in second-quarter earnings and remain persistent through the second half of FY27.

Spot prices for petcoke and imported coal are approximately 20 per cent and 16 per cent above their second-quarter averages, at USD 175 per t and USD 150 per t, respectively. Packing costs have also increased, with polypropylene granule prices rising above Rs. 135 per kg. Emkay Research estimated that second-quarter earnings could decline by Rs. 200-250 per t sequentially because of higher fuel bills and negative operating leverage, and said the sector requires sustained price increases of about Rs. 10 per bag to offset cost inflation.