Economy & Market

Multiple headwinds to slow down cement cos earnings

Published

9 years ago

December 31, 2017

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The earnings projections of cement companies for FY18 are likely to suffer amid lower antic-ipated sales volumes and subdued prices. According to dealer estimates, the all-India average cement price fell by 2 per cent sequentially to Rs 326 per 50 kg bag in the December 2017 quarter. On a year-on-year basis, it rose marginally by 5 per cent. Historically, the sector has been reporting better traction in December. However, this time, realisation is under pressure due to several headwinds.

For instance, cost of sand, a key raw material, has increased by 4-5 times from the year ago due to lesser availability. In addition, construction activities in the real estate segment have slowed following demonetisation and implementation of Real Estate Regulatory Authority (RERA) Bill. The segment accounts for 60-65 per cent of total cement consumption. This has impacted offtake volume.

According to analysts, meeting the earlier expectation of 7-8 per cent volume growth for the full year will be a difficult task. To deliver that much growth, companies would require to clock 9 per cent growth in the second half of the fiscal.

Pet coke duty hike to hit operating margins
Cement companies operating profits may fall by one per cent following the Government’s decision to hike import duty on pet coke to 10 percent from the current 2.5 percent, a report said. ‘The operating margins of cement companies, which use high proportion of pet coke are likely to be affected following the government’s decision to increase the import duty on pet coke to 10 per cent from the present 2.5 per cent. The operating margins of cement manufacturers may fall by about 1 per cent, if increased cost is not passed on to end users,’ India Ratings said in its report.

The increase in import duty was announced after the Supreme Court decided to lift the ban on the use of pet coke. The Supreme Court allowed the cement industry to use pet coke as a feedstock, which had been banned last month to clean up the air pollution. While, issuing the exemption order for cement units, the apex court asked the government to frame guidelines for the use of pet coke.

Ind-Ra said that the cement manufacturers may resort to coal imports due to low domestic availability. Cement manufacturers prefer using pet coke, as it contains high calorific value (7,500-8, 500 Kcal/kg), to non-coking coal (2,200-7,000 Kcal/kg). The rise in the import duty on pet coke will result in a rise in power and fuel cost per metric tonne to Rs 5-7 per bag.

Total pet coke consumption in India increased by 34 per cent in October 2017 to 2 million metric tonne as compared with the level recorded for October 2015. Of the total pet coke consumed in the country during FY17-1HFY18, about 50 per cent was sourced domestically and the remaining through imports. According to Ind-Ra’s assessment, 35 per cent of the total pet coke imports were consumed by the cement industry.

Cement prices set to increase
Cement prices in India are expected to increase by Rs 3-4/bag by mid-January as the government has decided to hike the import duty on pet coke from the current 2.5 to 10 per cent. The rise in duty is expected to increase production costs by Rs 50-60/t and sector analysts predict the increase will be passed on to customers. ‘In case they are not passing it on, their EBITDA is likely to get affected and under the current scenario, no company will wish for it,’ an analyst with stockbroking firm Motilal Oswal Financial Services told. While the price of pet coke is currently 10-12 per cent higher than that of imported coal, its lower volume requirement means it is more cost-effective for cement producers to use.

Dalmia Bharat to acquire Murli Industries
Cement manufacturer Dalmia Bharat said its Rs 402 crore bid to acquire Murli Industries Ltd (MIL) has been approved by the Committee of Creditors (CoC) of the Nagpur-based company. The resolution plan submitted by Dalmia Cement (Bharat) Ltd, a subsidiary of Dalmia Bharat, to CoC of MMIL under the Insolvency and Bankruptcy Code, 2016 was approved recently.

‘Committee of creditors of MIL on December 20, 2017 approved the proposed resolution plan submitted by our subsidiary, DCBL for recommendation to NCLT Mumbai for its approval in relation to revival of MIL,’the company said.

It further added:
‘Following receipt of requisite approvals, the resolution plan provides for a payment of Rs 402 crore which is 1.7 times higher than the determined liquidation value.’

MIL has an integrated cement manufacturing plant with installed capacity of 3 MTPA in Chandrapur district of Maharashtra along with a captive thermal power plant of 50 MW. In addition, MIL also has paper and solvent extraction units in Maharashtra. MIL was referred to the corporate insolvency process by its lenders in April 2017. It had interests in cement, paper, solvent, power and pulp.

Coal shortage hits thermal power plants
Thermal power plants across India are facing a shortage of coal. If this situation does not improve over the next the few days, there is a real threat that power generated may stop. About 600 MW of coal-based power generation is already affected due to the coal shortage. The Western and Northern regions are the most affected, and in States such as Maharashtra and Rajasthan, about 40 per cent of power generated from coal is affected.

According to data of the Central Electricity Authority (CEA), most thermal power plants have just one to three days of reserve coal stock. Sources in Singareni Collieries say thermal plants to which it supplies coal are not facing any shortage of coal. These include plants in Telangana and Andhra Pradesh. According to CEA data, the number of thermal power plants in the country with critical stock (for only seven days) is four. The number of thermal power plants with super critical stock (for only four days) is 23.

CEA said that plants having low stocks due to outstanding dues, supply being more than committed quantity, and not lifting offered coal, are not listed in the critical and super critical data. In Andhra Pradesh, the Rayalaseema Thermal Power Station (RTPS) has coal stock for only four days, the Simhadri thermal power station has coal stock for two more days and Vizag thermal power plant has coal stock for three days. In Telangana, Ramagundam thermal power plant has coal stock for three days and Kakatiya and Kothagudem thermal power plants have coal stock for 10-21 days. There are nine plants in the northern region and 12 plants in the western region that are in critical and super critical stages.

The Union power ministry says that the issue of coal supply to power plants is being addressed in a coordinated manner by the three concerned ministries – power, coal and Railways. The Power Ministry said that this is being monitored at the highest level and that in spite of the the unprecedented rise in the demand for coal based power, due to better coordinated planning the demand of electricity in the grid is being met. More than 65 per cent of India’s electricity generation capacity comes from thermal power plants, with about 85 per cent of the country’s thermal power generation being coal-based.

The 10 biggest thermal power stations operating in India are all coal-fired.

SC allows use of pet coke in cement
The Supreme Court allowed the cement industry to use petroleum coke, a dirtier alternative to coal which had temporarily been banned as pollution levels shot up in Delhi last month. India is the world’s biggest consumer of petroleum coke, better known as pet coke, a dark solid carbon material that emits 11 per cent more greenhouse gas than coal, according to studies.

The Supreme Court in October banned the use of pet coke in and around New Delhi in a bid to clean the air in one of the world’s most polluted cities. But a blanket ban on the sale and use of petcoke could hit the country’s small and medium scale industries, which employ millions of workers and operate on thin margins, businesses say.

Supreme Court Judge Madan Bhimrao Lokur, in issuing the exemption order for cement and limestone industries, asked the government to frame guidelines for the use of pet coke. Shares of Indian cement companies, which use pet coke as feedstock, surged as much as 5 per cent on news of the court decision. Local producers of pet coke include Indian Oil Corp, Reliance Industries and Bharat Petroleum Corp.

Cement prices firm up in South
Prices of cement have jumped by an average Rs 25-30 per bag in the Southern States. The price is now hovering around Rs 310-320 per bag in Andhra Pradesh and Telangana. In Karnataka, its around Rs 340, while in Tamil Nadu and Kerala, it is being sold at over Rs 360. The prices were in the range of Rs 280 in Andhra Pradesh and Telangana. The present increase has not been normal, says M Prasad, a wholesale dealer of leading cement brands here. ‘Normally prices go up as the construction activity picks up during February to July for the year, which is seen as the best season for price realisation,’ he added.

Interestingly, the summer of 2017 proved different to the earlier three-four summers as prices unusually fell to around Rs 270 in Andhra Pradesh and Telangana. Typically, the prices are at peak with demand picking up and construction activity in full swing.

There has been no change in other factors such as production capacity and demand. Still the capacity utilisation and demand are under 40 per cent. The second quarter had seen a price erosion.

As per industry data, prices from August, September to October show that price erosion was in the range of Rs 5 in Andhra Pradesh and Telangana markets.

In Bengaluru, the prices remained more or less stable. Chennai also saw a drop of another Rs 5-10. In the days to come, the expected volume growth in the industry could be varied.

In Andhra Pradesh, the non-grounding of works related to the new capital Amaravati did not give the anticipated boost to the industry. The industry is hoping to gain from new capital probably a year and year-and-a-half from now in a slow fashion to be ramped up later. Even in Telangana, the real estate sector in the capital Hyderabad, is seeing ups and downs as far as new projects are concerned.

Cement, steel at the core of strongest infra show in a year
India’s infrastructure sector logged the highest growth in more than a year in November, while the country’s biggest carmakers reported double-digit sales growth in December, kicking off the new year on a positive note for the economy and pointing to a persistent revival trend. The index of eight core industries rose 6.8 per cent in November, the Government data showed, riding high on growth in cement and steel sectors. These have a weight of more than 40 per cent in the Index of Industrial Production (IIP), suggesting strong industrial growth in November after a dismal October.

‘Steel and cement growth at very high growth rates of 16.6 per cent and 17.3 per cent indicates restoration of the production in these sectors over pre-demonetisation levels which augurs well for real sector investment,’ said Economic Affairs Secretary, Subhash Chandra Garg.

Part of the rise is due to the favourable base effect stemming from the disruption in the wake of demonetisation in November 2016 that will prevail over the next few months.

The core sector grew 3.6 per cent in November 2016. The core sector growth in November 2017 was the best since 7.1 per cent in October 2016.

‘The early indicators for industrial production in the organised sectors in November 2017 provide favourable signals, such as the uptick in growth of the core sector and sharp improvement in the expansion of automobile production and non-oil merchandise exports,’ said Aditi Nayar, Principal Economist, ICRA.

India’s GDP growth recovered to 6.3 per cent in the July-September period from a three-year low of 5.7 per cent in the preceding quarter. Most experts had expected a stronger rebound as the impact of demonetisation and rollout of GST in July had faded.

CIL assures captive power producers of coal supply
State-owned miner Coal India (CIL) has assured coal availability to power industry body ICPPA, whose members include firms from steel and aluminium segment, as they are heavily dependent on the dry fuel. CIL Chairman and MD Gopal Singh along with other senior officials held a meeting with members of Indian Captive Power Producers Association (ICPPA). In India, captive power producers’ capacity stands at 40,000 Mega Watts (MW) and about 30,000 MW is produced by using coal, which is about 75 per cent. The rest is produced through alternate materials like gas-based and others, ICPPA General Secretary Rajiv Agarwal told.

‘The industry is highly dependent on coal and the government must understand this. There are many plants who are on the verge of shut down. Many may become a non-performing asset (NPA),’ he said. CIL, in the meeting, said about 71 per cent materialisation of coal was done during April-December 2017 for both IPPs (integrated power producers) and CPPs and assured there is no shortage of coal.

ICPPA said it is not satisfied by the words of the PSU, who it said is supposed to supply the dry fuel to industry. Agarwal said, ‘The given figure included dispatches by both rail and road. The share of CPPs rail dispatches is in the range of only 30 to 50 per cent and out of this 30 per cent major supply was given to those plants who were near the pits.’

Even if coal linkage auction is concerned, 41.5 MT was offered to the CPPs, he said and added, that out this the industry could not bid for 8.5 MT offered at ‘Magad-Amrapali of CCL (Central Coalfields Ltd)’ a place with evacuation constraint.

Concrete

Nuvoco Vistas, CleanMax Partner for Wind-Solar Hybrid Project in Rajasthan

Published

15 hours ago

September 29, 2026

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The project – comprising 20 MW of wind and 26.4 MWdc of solar capacity – will support Nuvoco’s cement operations with cleaner power while strengthening its renewable energy and decarbonisation strategy.

Mumbai, September 29, 2026

Nuvoco Vistas Corp Ltd, part of Nirma Group and one of India’s leading cement companies, has partnered with Clean Max Enviro Energy Solutions Limited (CleanMax), a renewable energy solutions provider for the commercial and industrial (C&I) sector, to develop a 46.4 MW wind-solar hybrid renewable energy project in Rajasthan.

The project will support Nuvoco’s cement operations with cleaner power while strengthening its renewable energy and decarbonisation strategy. It is expected to increase the share of renewable energy in Nuvoco’s power mix, reducing fossil fuel consumption and associated emissions.

Developed by CleanMax, an Independent Power Producer (IPP), at Bhikamkhore, Rajasthan, the project will comprise 20 MW of wind capacity and 26.4 MWdc of solar capacity, along with a 2-MWh Battery Energy Storage System (BESS). Power generated from the facility will be supplied to Nuvoco through the State Transmission Utility (STU) Open Access network.

The hybrid project is expected to generate approximately 100 million units (MU) of renewable electricity annually and help avoid around 1,25,485 tonnes of CO₂ emissions every year across Scope 1 and Scope 2 emissions.

The initiative supports Nuvoco’s ongoing efforts to reduce the carbon intensity of its manufacturing operations through renewable energy adoption, Waste Heat Recovery Systems (WHRS), energy-efficiency measures and increased use of alternative fuels. It also aligns with the company’s DIRE (Digitalisation, Innovation and Renewables) agenda, which focuses on climate action, renewable energy transition, water stewardship, circularity and biodiversity conservation across its manufacturing ecosystem.

Commenting on the initiative, Jayakumar Krishnaswamy, Managing Director, Nuvoco Vistas Corp Ltd, said, “This marks an important step in advancing Nuvoco’s journey towards more sustainable and resilient operations. Our collaboration with CleanMax will increase the share of renewable energy across our Rajasthan operations, strengthening our energy mix while improving long-term cost efficiency and reducing our dependence on conventional power sources. Initiatives such as these reinforce our commitment to operational excellence and responsible growth, while supporting our vision of Building a Safer, Smarter and Sustainable World.”

Kuldeep Jain, Founder and Managing Director, CleanMax, said, “Cement plants run continuously, so the power behind them has to be dependable for decades, not years. We’re seeing manufacturing industries view clean energy as an integral part of their core operations and long-term strategy. Our partnership with Nuvoco reflects that shift, and we’re pleased to support its decarbonisation journey. This wind-solar hybrid project is designed to deliver long-term cost certainty while supporting the Company’s transition to cleaner power.”

Nuvoco has been advancing its sustainability initiatives through renewable energy, operational efficiency and technology-driven solutions. The company operates across Cement, Ready-Mix Concrete (RMX) and Modern Building Materials (MBM) segments, with a presence across East, North and West India.

The company began operations in 2014 with a greenfield cement plant in Nimbol, Rajasthan, and later acquired Lafarge India Limited, which entered India in 1999, along with Emami Cement Ltd in 2020 and Vadraj Cement Limited in April 2025. With planned expansion initiatives, including a new grinding mill at the Arasmeta Cement Plant and multiple debottlenecking projects, Nuvoco aims to achieve a cement capacity of 35 MMTPA.

The company reported total income of Rs 113.62 billion in FY 2025-26, reflecting its continued growth trajectory. Its cement portfolio includes Concreto, Duraguard, Double Bull, PSC, Nirmax and Infracem brands, while its RMX business offers products under Concreto, Artiste, InstaMix, X-Con and Ecodure brands. Nuvoco also provides construction solutions under its Zero M range of modern building materials.

Concrete

UltraTech Cement achieves 100% green energy milestone at Chhattisgarh plant

Published

16 hours ago

September 29, 2026

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UltraTech Cement’s Kukurdih Works becomes its first integrated unit to meet 100 per cent electricity needs through green energy every month.

Raipur (Chhattisgarh)

UltraTech Cement Limited, the world’s largest cement company outside China, has achieved a significant decarbonisation milestone, with its Kukurdih Cement Works integrated unit in Chhattisgarh meeting 100 per cent of its electricity requirement through green energy every month since April 2026.

Commissioned in 2024, Kukurdih Cement Works has an installed grey cement capacity of 3.3 million tonnes per annum. The unit achieved this milestone through a combination of renewable power sourcing and Waste Heat Recovery Systems (WHRS), which now collectively meet its entire electricity demand while ensuring operational reliability.

Since April 2026, nearly one-third of UltraTech’s 76 manufacturing units in India have maintained green energy utilisation above 50 per cent of their electricity requirements. Five units, including Kukurdih, have exceeded 95 per cent green energy utilisation. The company is also progressively deploying Battery Energy Storage Systems (BESS) across its network to enable deeper renewable energy integration.

As part of its decarbonisation strategy, UltraTech has not invested in additional captive thermal power capacity for greenfield projects or brownfield expansions at its integrated units for over a decade.

As of Q1FY27, the company’s captive green energy capacity stood at 1,897 MW, comprising 1,463 MW of renewable energy capacity from solar, wind and hybrid sources, along with 434 MW of WHRS capacity. Under its RE100 commitment, UltraTech aims to increase the share of green power in its total energy mix to 85 per cent by 2030 and achieve 100 per cent by 2050.

UltraTech Cement Ltd, the cement flagship company of the Aditya Birla Group, is a $10-billion building solutions company and the largest cement producer globally by sales volume outside China. The company has a total grey cement capacity of 210.1 MTPA and white cement/putty capacity of 3.5 MTPA. It is a signatory to the GCCA Climate Ambition 2050 and has committed to the Net Zero Concrete roadmap announced by GCCA.

Economy & Market

From First Mile to Last Mile

Published

2 days ago

September 28, 2026

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Praveen Vashistha, Founder, Gxpress Solutions, speaks about building a holistic logistics network that encompasses latest technology and current challenges faced by logistics service providers.

Logistics may seem to only entail transporting a package from one location to another. However, there is more to this term than just that. Logistics refers to the entire process of controlling all movement, transfers and decisions in the correct way at the right time and cost and with the desired level of visibility.

People nowadays want to receive more than just the delivery. They want quick, efficient, reliable and transparent logistics service. On the other hand, companies are facing higher operating costs, broken supply chains, congested cities, changing habits of consumers and growing complexity of logistics services. In this situation, a full logistics package is gaining importance not only as a competitive advantage but also as a necessity for a successful business.

The main challenge lies in uniting the first mile, the middle mile and the last mile into one seamless process.

The journey begins before the package moves

First-mile logistics may be the least recognised part of the logistics chain, but they have a crucial influence on all that follows.

This stage starts from the moment the shipment leaves the manufacturer, supplier, farm, warehouse or distribution centre. Depending on the industry, first-mile logistics may involve grouping shipments from multiple suppliers, compiling paperwork and checking the inventory before sending the shipments to a central hub.

Flaws in first-mile logistics produce effects later down the supply chain. Delays in cargo pickup can affect warehouse operations; improper packaging can damage goods in transit; and incorrect inventory information may cause stockholding or unnecessary replenishments.

This is why building a reliable network involves simplifying the operations done at the beginning of the supply chain.

Companies require accurate demand forecasts, supplier visibility, standard procedures, and software to capture information from the moment a shipment enters the supply chain. Route planning and fleet management are also important at this stage, especially as it may involve contacting multiple suppliers.

The main goal is simply to make the first mile predictable.

The middle mile: Where scale meets complexity

When products leave the original site, they travel through the ‘middle mile,’ which connects fulfilment centres, warehouses, sorting centres, and regional distribution points. In this phase, logistics networks begin operating on a large scale. A shipment can pass through several facilities before reaching the final destination. Each additional transfer entails the risk of delay or damage and information losses. Accordingly, the ideal solution is not to minimise the number of transfers but rather to optimise them. The use of hub-and-spoke networks, regional distribution centres, and strategically placed distribution centres can help companies shorten transportation routes and optimise distribution costs. Besides, data can be used to determine the optimal placement of inventories.

For instance, a retailer may find that it takes more time and is more expensive to deliver goods to customers if everything is stored in a central warehouse. Meanwhile, regional distribution helps meet the customer’s needs quicker and more efficiently.

The last mile is where the customer judges you

When it comes to the logistics experience, the customer experience comes down to the delivery. While the last mile might comprise a small part of the entire journey in actual distance, it could also entail expensive and difficult processes. Delivery runs through densely populated cities, through traffic jams, through unsuccessful delivery attempts, and through changing consumer preferences and narrowed time frames.

Customers want to have control over their delivery. Delivery means that customers expect to know the exact moment when their order is delivered. They need to receive current updates about their orders and the ability to decide whether they want scheduled deliveries, or whether they want their order to be dropped off at a designated location far from their house.

As a result, last-mile logistics must incorporate both efficiency and experience. The technology may be used to ensure timely and accurate delivery, through such products as route optimisation and real-time delivery tracking.

However, technology is not enough to guarantee success in terms of last-mile delivery. Knowledge of the local area is still an important aspect that contributes to successful delivery.

One network, not three separate operations

First, the common mistake that organisations can make is treating the first mile, the middle, and the last mile separately.

An effective first mile of logistics does not matter much if the shipment waits in a hub for many hours. A perfectly working warehouse does not make a happy customer if the last-mile delivery fails. Therefore, even the fastest last-mile delivery can become an expensive operation if the supply is not well geographically positioned.

The three moments should work together as one whole system.

This implies having a common view on inventory, transport capacities, shipment statuses and demand. The Transportation Management System, Warehouse Management System and order management system should give information to each other instead of acting like separate islands.

That is where real-time information comes into play!

If something happens, such as a vehicle gets delayed, the company has to know that from the start. If not, someone from Customer Service should be informed about the situation.

Visibility is the new infrastructure

Previously, companies had to rely on physical assets, such as warehouses, trucks, and sorting facilities, to create their logistics networks. Today, they have an additional layer of technology providing visibility.

Command-and-control systems now include GPS tracking, Internet of Things devices, bar-coding, RFID, cloud computing, artificial intelligence, and analytics, which allow companies to know what the goods are doing, how well they are doing, and what is going to happen next.

Predictive analytics reveal possible delays. AI-powered forecasting increases availability. Digital dashboards enable the manager to monitor all operations in one place. The efficiency of such technologies is not measured in the amount of information they gather, but rather in their capability of converting data into knowledge.

Logistics managers should be able to answer the following questions: Where is it? When is it supposed to arrive? What causes the delay? What impact does it have? Can it be delivered some other way? How much will it cost?

The sooner the answers are given, the more resilient the logistics system is.

Resilience must be designed into the network

The events of recent years have highlighted the vulnerability of interconnected supply chains. Geopolitical tensions, bad weather, a lack of labour, poorly developed infrastructure and an unexpected spike in demand are some events that can cause problems for logistics systems without prior notice. Thus, companies should create an end-to-end network not just for normal times but also capable of functioning quickly in problematic situations. In order to create such a network, it is necessary to find alternative suppliers, use several means of transportation, create several routes of delivery, and establish inventory. It is also important to use scenario planning to define what to do if the main hub becomes unavailable or any means of transportation is blocked.

Sustainability: Part of the delivery equation

The future of logistics will also be shaped by environmental considerations.

As delivery volumes rise, businesses are under increasing pressure to reduce emissions without compromising service. Better route planning, load optimisation, electric vehicles, alternative fuels, renewable-energy-powered warehouses and consolidated deliveries can all contribute. The most sustainable shipment is often the one that does not require unnecessary movement in the first place.

Better demand forecasting and inventory placement can reduce empty miles and avoid repeated transportation. Consolidating deliveries can improve vehicle utilisation. Reverse logistics can ensure that products, packaging and materials return efficiently instead of becoming waste.

Sustainability, therefore, should not be treated as a separate initiative. It should be incorporated into network design itself.

The future belongs to connected logistics

An end-to-end logistics network ultimately seeks to close existing gaps between various processes.

Every mile of the process should be interconnected with the other miles. Warehouses should be aware of the restraints imposed by transportation. Delivery crews should be able to know at every moment the inventory at their disposal. Clients must have access to this useful information.

Companies that will be successful in this area will not necessarily be the ones with the biggest fleets or the most warehouses. They will simply be the ones that can employ their resources in the most effective manner.

The future of logistics will be represented by an ecosystem consisting of the combination of the physical aspect, digital intelligence, and personnel decisions. Every mile in the process of delivery is important. However, the key advantage here is getting those miles to work together.

For companies, it means having minimal resistance, enhancing their efficiency and improving customer care. For clients, it means simply having the right product delivered at the right time.

About the author: Praveen Vashistha, Founder, Gxpress Solutions,