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Cement industry shifting gears




– Mark Yseboodt, Sales Manager Automation – Minerals, Siemens AG

In recent years, the cement sector has gone through rapid changes. Could you share with us some of the developments that have happened in process control or automation in cement plants!

The cement industry in general is facing several challenges. An important challenge is related to the environmental impact of the cement production. Governments are imposing measures on the cement industry to reduce the ecological footprint. The result is that cement producers need to:

  • Be more efficient in the use of natural resources
  • Reduce emissions
  • Reduce fuel and power consumption
  • Many cement producers have already taken actions and have made serious improvements. Automation and digitalisation play an important role in these improvements, as many solutions wouldn’t be possible without them.

    In addition, rapid changes are currently visible in the cement market. The competition is getting tougher and the quality requirements are becoming stricter. Cement producers need to adapt to their requirements as well as their customers" requirements, which means that the prices need to be competitive and the production must be able to quickly change from one cement type to another. Automation and digitalisation are the only way to achieve this.

    Most major players have rolled out their global modernisation plans for the coming years and India is no exception.

    Could you touch upon the challenges of cement plants automation when compared with other segments in India?
    When it comes to adopting new technologies, the cement industry has been very conservative. However, due to the challenges the industry is currently facing, the cement producers are catching up as quickly as possible. Some can even stand proudly alongside other industries when it comes to innovative technologies such as Artificial Intelligence.

    A big challenge, however, is recruitment of right people. However, change is just around the corner. Once the cement plants are equipped with modern, clean, air-conditioned control rooms integrated in the plant’s IT infrastructure, with the possibility of remote access and the use of apps on tablets and smart phones, the young generation will be more attracted to the industry.

    The lack of skilled people in the plants can be partly compensated for by allowing experts to access the system from a remote location. This means that the plant must be connected to the IT network and that’s where cyber security becomes a crucial issue. As long as the plant is disconnected from the outside world, all is pretty safe. However, as soon as the plant is connected to external sources, the plant managers and workers would have to master Windows updates, security patches, virus scanners, etc. Currently, this knowledge is hard to find in many plants.

    Siemens is a global player. What sort of product innovations has taken place in the cement industry over the last few years?
    The innovation started 45 years ago with the introduction of CEMAT, the automation system for the cement industry. Numerous innovative features were introduced over the years and one of the latest new tools that we integrated in CEMAT is the Scalable Production Control (SPC), as part of the Minerals Standard (MinAS) rolled out for the cement industry.

    SPC is a recipe manager, integrated in CEMAT. There is no need to buy additional hardware or software. It allows cement producers to define their different recipes for all types of cement. It makes the operator’s life a lot easier. Today, a lot of cement plants do this manually. When the operator needs to change the type of cement, he will manually put all the settings to new values that he obtained from a list or an Excel table. With SPC, all the operator needs to do is to select the correct type of cement from the list in CEMAT and the automation does the rest. It looks for the right raw material from the right storage place, calculates the right routing, calculates the right set points of the weigh feeders and selects the correct routing to the right storage silo. If necessary, it adds additional time before changing from the old to the new recipe to allow the belts to run empty.

    How does integration of various processes work in the cement industry?
    A lot of innovations are not always noticeable at a first glance. For example, over the last number of years our automation software and hardware have been fully optimised for Profinet communication. Profinet is the ideal industrial communication standard for digitalisation because it combines the advantages of standard Ethernet with Profibus. It allows flexible architectures with a high data rate while having real-time communication with detailed diagnostics and high availability.

    The Remote I/O lines SIMATIC ET 200SP and SIMATIC ET 200SP HA now have standard Profinet communication.

    To integrate standard field devices into the Profinet network, Siemens launched the SIMATIC CFU (Compact Field Unit). It automatically recognises and initialises the connected field devices. What used to take 30 minutes, now takes less than one. That’s Plug & Produce. The SIMATIC CFU combines a digital field bus with traditional I/Os. This substantially reduces the footprint of the entire I/O system. The device also reduces the risk of errors in operation and makes plant expansion or modernisation easier while, at the same time, reducing the costs of the hardware FAT.

    Digitalisation and modern automation put higher demands on the capability of the controller.

    The CPU 410-5H is currently the fastest and most powerful controller in the market. The performance is scaled according to the number of process objects. This enables a single hardware and firmware platform to cover all deployment scenarios, application sizes and performance ranges. From grinding stations to complete integrated cement production plants, the same controller is fully scalable to suit every need.

    The CPU 410 is an essential component of the proven SIMATIC PCS 7 process control system. In the product certification according to IEC 62443-4-1 and 62443-3-3, T+?V S+?D tested and confirmed the security functions implemented in the SIMATIC PCS 7 process control system.

    – LIZA V

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





    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).

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    Wonder Cement shows journey of cement with new campaign





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


    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.

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    In spite of company’s optimism, demand weakness in cement is seen in the 4% y-o-y drop in sales volume. (Reuters)





    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.

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