Process

Work begins on Aerospace Park in Tamil Nadu

Published

7 years ago

June 30, 2017

admin

The State assembly was informed that the Tamil Nadu Government has taken steps to provide infrastructure facilities at a cost of Rs 30 crore at the proposed Aerospace Park in Chennai.

According to MC Sampath, Industries minister, The aerospace park will come up on a 267 acre site at Vallam-Vadagal SIPCOT Industrial Park in Sriperumbudur and would attract investments of Rs 1,000 crore over a five year period.

Earlier this year, the Government said it will be allocating land for 14 companies to set up office in the park, where an advanced computing and design engineering centre at an outlay of Rs 350 crore has also been planned. Tamil Nadu Industries Development Corporation (TIDCO) has initiated the aerospace park project in a bid to help the growth of industry.

‘The park, once operational, will create 10,000 direct and 25,000 indirect jobs’ Sampath further added.

Smart cities count touches 90!
The Government announced a list of additional 30 cities to be developed as smart cities under the Smart City Mission launched on June 25, 2015, taking the total to 90.

According to Ministry of Urban Development and Housing & Urban Poverty Alleviation around 45 cities contested for 40 available smart city slots but only 30 were selected to ensure feasible and workable plans that match the aspirations of the citizens.

The 30 cities announced proposed a total investment of Rs 57,393 crore under respective smart city plans. This includes Rs 46,879 crore for ensuring core infrastructure in the areas identified by citizens for area based development and Rs 10,514 crore for technology based solutions for improving governance, service delivery and utilisation of infrastructure. With this, the total investment approved under the smart city plans of 90 cities has gone up to Rs 191,155 crore.

Twenty more cities contesting for the remaining 10 slots under the smart city mission include Itanagar (Arunachal Pradesh), Biharsharif (Bihar), Diu (Daman & Diu), Silvassa (Dadra and Nager Haveli), Kavaratti (Lakshadweep), Navimumbai, Greater Mumbai and Amaravati (Maharashtra), Imphal (Manipur), Shillong (Meghalaya), Dindigul and Erode (Tamil Nadu), Bidhannagar, Durgapur and Haldia (West Bengal), Meerut, Rai Bareilly, Ghaziabad, Sharanpur and Rampur (UP).

Housing for All: A Demand Booster
According to the India Rating and Research, the Housing for All (HFA) project will give the Indian economy a much needed boost. Its success, however, will depend on ramping up existing urban infrastructure, fast tracking approval processes and targeting the actual beneficiary.

The two major challenges for HFA include acquiring funding worth Rs 15 lakh crore through public-private partnerships and ramping up the supply of raw materials for construction namely steel and cement.

Municipal services such as supplying piped water, sewerage, sanitation and municipal solid waste management are also far from equipped to take on a project of this magnitude in the next seven years.

Apart from providing impetus to the construction sector, the scheme will increase employment opportunities and help the service sector grow. Other sectors likely to benefit from this scheme include cement, iron and steel.

The biggest beneficiaries of HFA will be Uttar Pradesh, followed by Maharashtra and West Bengal. These are the top three states in terms of housing shortages and increased construction activity will help these states’ economies to grow.

Motilal Oswal arm to invest Rs.63 crore in Chennai project
Motilal Oswal Real Estate, the private equity real estate arm of Motilal Oswal Financial Services, will be investing Rs 63 crore in a residential project being developed by Incor Group in Chennai. The project is spread across 33 acres.

‘Southern market comprises three large markets and we continue to look for fresh opportunities there. It’s a structured mezzanine deal and we expect early 20 per cent kind of IRR (internal rate of return),’ said Sharad Mittal, Director and Head, Motilal Oswal Real Estate.

According to Mittal, the company will invest in PBEL City through India Realty Excellence Fund III, its third real estate fund. Hyderabad-based Incor Group is promoted by Anand Reddy and Surya Reddy.

Puducherry plans low-price cement scheme after sonia gandhi
The Puducherry Government announced that it plans to offer cement at a subsidised rate to people from low and middle income groups.

The scheme will be named after Congress President Sonia Gandhi.

‘We are also planning to emulate the scheme in the neighbouring state of Tamil Nadu. Cement would be available at a subsidised price and all the modalities would be worked out in consultation with the concerned officials,’ M Kandasamy, Welfare Minister, Puducherry, informed the Union Territory’s assembly.

This was in reply to a plea by A Anbalagan, AIADMK (Amma) Legislator, regarding the availability and cost of cement. In Tamil Nadu, the ‘Amma Cement’ scheme has been active for the past few years. Under this scheme, a 50 kg bag of cement is sold at Rs 190 for low and middle income groups for building houses up to 1,500 sq ft.

‘Since Puducherry does not have industries manufacturing cement, it will be procured from outside and sold at subsidised price,’ said V Narayanasamy, Chief Minister, Puducherry.

Indian cement producers continue to defend prices
Sagar Cements, India Cements and Bharathi Cements have continued to defend public concerns over cement pricing due to economic trends beyond their control. In a press conference, the producers reportedly blamed rising input costs, distribution costs, taxes and high margins by dealers for the same.

S Srikanth Reddy, Executive Director, Sagar Cements forecast that cement demand will rise by 10 to 18 per cent in Telangana and Andhra Pradesh over the next two to three years due to large government-run infrastructure projects. Tamil Nadu and Kerala are expected to rise by no more than 5 per cent and Karnataka is expected to rise by 2 to 5 per cent.

However, despite an increase in the short term, the cement producers anticipate problems for the industry in the south, particularly in Andhra Pradesh and Telangana, One reason for this is production overcapacity since producers increased their installed capacity in expectation of high demand. At present, producers are forced to run plants at 60 per cent production utilisation rates with high volatility in price and a highly fragmented market with over 50 brands.

All India cement prices dip in June
All India cement prices saw a decline of Rs 6 per bag on an MoM basis in June 2017, eroding some of the gains seen in the preceding two months. While West retained most of its price increases, North and Central have given up a large part of the increases taken at the start of the quarter. Q1FY18 will see realisations improve by Rs 400 per ton compared to the same period last year for pan-India players.

All India cement prices decreased by Rs 6 per bag on an MoM basis to Rs 343 per bag in June 2017 as prices decreased in the North, Central and South. Price decreases was sharpest in the South followed by North and Central region even as East saw some moderation. On a quarterly basis, West will see the maximum improvement in cement prices followed by South and trailed by North and Central.

Cement prices in North and Central decreased by Rs 10 per bag on an MoM basis each and stand at around Rs 320 per bag. In the West, prices improved by Rs 2 per bag on an MoM basis and stand at Rs 335 per bag at present

Debt protection metrics of cement firms to weaken
According to Crisil Ratings, debt protection metrics of cement companies is likely to weaken in the FY18, dented by a slew of acquisitions that the sector witnessed in FY17. The report further added that FY17 was a landmark year which saw the sector signing acquisitions worth Rs 32,000 crore, the biggest consolidation the sector has seen in a year, and was financed through debt of Rs 25,000 crore.

The rating agency expects net debt to operating profit ratio (Debt/Ebitda) to rise 2.9 times by the end of FY18 from 1.5 times in FY17. However, the agency sees it swiftly improving to 1.6 times by FY20 aided by volume-led growth in operating profit. Crisil rates 26 companies in the cement sector, representing 54 per cent of the installed capacity in India.

Mizo students force shutdown on 6 cement companies’ godown
The Mizo Students Union (MSU) has forced six cement companies in Aizawl to shut down their godowns as it began a campaign to lower cement prices in Mizoram. An MSU release stated that the six cement companies were forced to shut down their godowns as they refused to comply with the rate fixed by MSU for selling cement. The MSU said, it will continue a strict vigil to ensure that no cement companies sell cement higher than Rs 360 per bag.

Weak demand to keep cement prices under check
Given the Government’s thrust on infrastructure and allied activities, cement makers were expecting 18 per cent goods and services tax (GST). Unfortunately, the sector was categorised in the highest tax slab of 28 per cent, dashing these rose-tinted hopes.

But while cement manufacturers profess disappointment, tax experts and analysts say that post-GST, the tax burden of cement players should come down. In the pre-GST regime, effective tax incidence for packaged cement was in the 29 to 31 per cent range including indirect taxes such as excise duty and value added tax (VAT).Tax rates vary across states since tax is levied depending on whether the sale is made for retail or bulk use.

As for key raw materials, tax rates for coal, limestone and lignite has been reduced to 5 per cent. The exact impact of these changes on production costs will depend on the fuel mix of each cement player.

Correction in cement shares is an investment opportunity
After multiple price increases since March, resulting in a rally, cement stocks such as UltraTech, ACC, Ambuja Cements and Shree Cement have fallen from their highs. This is on the back of concerns related to a less inventory at the stockist level, ahead of implementation of the goods and services tax. Additionally, the onset of monsoon will impact offtake and is a dampener for the stocks. All corrections, however, are an opportunity to buy, given the improving realisations, better demand trajectory in the second half of the finan?cial year and improving demand-supply equation.

Andhra CM looks to cap cement prices
To thwart price manipulation through cartelisation, Andhra Pradesh’s Chief Minister N Chandrababu Naidu and his team of ministers held at least three meetings with key cement manufacturers in the State over the past month. Key cement manufacturers such as UltraTech, ACC, Ambuja and The Ramco were present at these meetings. The key agenda of these meetings was to arrive at a ceiling on selling price of cement in the State. After its creation, the Andhra Pradesh government has constructed nearly 5,000 km of cement internal roads, not including state highways.

From July, the State Government will be starting its new capital development project, ahead of which the prices have shot up steeply.

In the southern region, a 50 kg bag of cement is sold at Rs 350-400 compared with the all India average price of Rs 310. In April, Gummi Ram Reddy, President, Confederation of Real Estate Developers Association of India (Credai), Telangana, observed that cement prices in Telangana and Andhra Pradesh were raised by more than Rs 100 per bag within the first 15 days of the month. He said that cement manufacturers have formed a cartel and raised prices artificially.

CHECEA demands regulation of construction material prices
The Chennai Civil Engineers Association (CHECEA) staged a protest demanding that the Tamil Nadu government resolve the sand crisis in the state and regulate the prices of construction materials. According to the Vice-president of Thayanithi, the fluctuation in cost of construction materials was hitting the sector.

‘Against this backdrop, a Government regulatory body will help maintain stability in the prices of the key construction materials, sand prices have tripled from Rs 40 per cubic feet to 120 per cubic feet. Several construction works had been stalled due to the increase in sand rates and shortage of sand’ he added. He further sought the government to resolve the prevailing shortage of sand, which is affecting the ongoing construction works.

Process

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

Published

3 years ago

October 21, 2021

admin

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

Process

Wonder Cement shows journey of cement with new campaign

Published

3 years ago

October 21, 2021

admin

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

ETBrandEquity

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.

Process

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

admin

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.