Economy & Market

How Indian cement companies can manage the impact of COVID-19

Published

5 years ago

January 6, 2020

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Following flatlining demand growth in FY 20, the impact of Covid-19 is expected to see cement demand contract by anywhere between 10 to 25 per cent according to the latest estimates by CRISIL.

The spread of the coronavirus pandemic and the resulting lockdown across India has created an unparalleled crisis for the Indian cement industry. Manufacturing has been severely disrupted by restrictions on plant operations and the movement of labour, while the suspension of construction activity and the closure of the retail channel has resulted in a precipitous collapse in demand.

Following flatlining demand growth in FY 20, the impact of Covid-19 is expected to see cement demand contract by anywhere between 10 to 25 per cent according to the latest estimates by CRISIL ‘ depending on when and how the Government lockdown eases. This could result in capacity utilisation falling from an estimated 65 to 67 per cent in FY20 to 56 to 58 per cent in FY21. Further, given the high degree of uncertainty about how the pandemic and its economic consequences will unfold, such projections could be subject to major revisions as we progress through the crisis. Given the scale and scope of Covid-19’s impact on the Indian cement industry, executives can be forgiven for feeling overwhelmed. However, by thinking and acting along three time horizons concurrently, it is possible for industry leaders to take steps to mitigate the impact of the lockdown, get their organisations back to work, and build a road to resurgence. By adopting this framework to manage through the crisis, leaders can break down the challenge into more manageable chunks and deploy dedicated organisational resources to tackle them in tandem.

Manage the lockdown
The current lockdown in place across large parts of the country has put severe restrictions on cement plant operations, supply chain logistics and the availability of labour. With the Covid-19 case count rising in many districts, cement companies will have to confront a geographic patchwork of restrictions and stop-start relaxations across their operational footprint. At the same time, cement companies have had to transition overnight from fairly traditional workplace practices to large-scale work from home, creating both technological and cultural hurdles to effective collaboration. In stark contrast to service industries, labour and capital intensive sectors like cement involve high-touch activity during manufacturing, transportation and sale of goods which makes maintaining physical distancing rules a particular challenge.

To manage the business during the lockdown cement companies should first ensure they have put in place an effective Covid-19 team. Within this team one task force should be designated with responsibility for crisis management and business continuity and should comprise leaders from supply chain, production, IT, HR, and government liaison. The priorities for this team should be ensuring the safety of employees and customers, defining and maintaining the minimum viable operation, coordinating with local authorities to ensure compliance and easing of emerging bottlenecks, and making work from home as productive as possible.

Building organisational resilience during this period is key. For example, cement supply chains will need to shift from previous focus on optimisation toward maximum resilience, as issues like inter-state transport bans disrupt previous patterns of movement for both inputs and finished goods. Using tools like visual dashboards can provide companies with a clearer picture of operational status and respond dynamically to changing on-ground situations.

Get back to work
As the lockdown eases, cement companies will be able to run at an increased level of operation but this will not be a return to the way things were. With the Coronavirus likely to persist throughout 2020 and probably beyond, companies will need to adapt to a new normal. Physical distancing rules will need to be maintained, resurgences of the virus may lead to a re-introduction of restrictions, and cement demand will remain below potential as the economic impact of the crisis plays out. Indian cement companies need to start preparing to cross this coming chasm today.

To think and act along this time horizon, a second task force of the Covid-team needs to focus on reviving revenue and ensuring cash conservation. This challenge will require major inputs from sales & marketing, finance, manufacturing and supply chain to help adapt the business model to the new operating climate.

The lockdown and ensuing economic slowdown will lead to acceleration of some earlier demand trends as well as emerging new trends. After years of sluggish growth, construction in the residential real estate sector will likely further retrench as consumer demand for new housing falls. In addition, the commercial real estate market which was an earlier bright spot, is expected to contract sharply. Therefore cement demand is likely to become more dependent on government spending on infrastructure and affordable housing. Demand may also shift geographically away from harder hit urban areas to rural regions where restrictions on activity may be more limited.

As well as identifying and targeting the most attractive customer segments during this period, cement companies will also need to track and tap into emerging trends in construction practices. One leading Indian cement company expects the combination of scarce labour availability in urban areas and the need for physical distancing to accelerate the demand for ready-mix-concrete (RMC). Companies may need to fast-track existing plans or pivot to new opportunities to revive revenues in the coming quarters.

Finally, in light of lower cement demand, companies will also need to review their capital investment and market entry decisions. Many Indian cement companies had earmarked substantial investments for new plant as well as entry into new geographies. Those plans will need to be urgently revisited given lower expected capacity utilisation at existing operations over the next year.

Build a new road to resurgence
Although a post-Covid landscape may seem far away today, cement companies need to start thinking about the new world that will emerge once the pandemic abates – and the challenges and opportunities that will come with it. Cement companies will emerge from the crisis to face a very different scenario in terms of the competitive landscape, customer behaviour, and employee mindset.

The fundamental shifts that Coronavirus will bring about require the focus of a dedicated team within the Covid-19 task force charged with thinking along a longer time frame and building a new road to resurgence. This requires a team with an aptitude for visioning, strategic insight and large-scale change management. Topics such as digitalisation, technological and product innovation, sustainability, and cultural transformation will come to the fore as cement companies look to reimagine their business models for a new world. By thinking and acting concurrently along these three time horizons and committing dedicated resources to each of them. Indian cement companies can mitigate the impact of the current lockdown, revive revenues in the coming quarters and chart a new path to sustainable success in the post-Covid world.

ABOUT THE AUTHORS:
Deepak Sharma is Director of Strategy at Kanvic Consulting. His advice is sought by Fortune 500 companies, large owner managed and multi national companies looking to tap growth opportunities and tackle the most complex strategic challenges. He can be reached at deepak@kanvic.com

Shiv Sharma is an Associate Principal at Kanvic Consulting. He works in Kanvic’s strategy team in Gurgaon and manages client engagements across industrial and consumer sectors in the areas of strategy, marketing, sales and organisation. He can be reached at shiv@kanvic.com

Concrete

Lohia Corp Expands Global Footprint With Acquisitionof J.j. Jenkins Inc and Strategic Joint Venture With Omgm

Published

1 month ago

October 22, 2024

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Lohia Corp Limited (LCL) is pleased to announce two significant milestones that mark our
expansion in the global market.

We have successfully acquired J.J. Jenkins Inc. a respected name in machine manufacturing for
high-tech industries, through our US subsidiary, Leesona Corp, a 130-year-old pioneer in winding
machines. This acquisition aligns perfectly with our strategic vision to expand our specialty yarns
and tapes portfolio in medical and defence applications.

In addition, we have formed a strategic Joint Venture with Italy’s O.M.G.M. sas, leading to the
creation of OMGM Extrusiontechnik Srl. With LCL holding the majority stake. This JV represents
a significant diversification of our product portfolio, introducing solutions in Extrusion and
Winding systems for a variety of technical applications.

These advancements are not just about growth; they’re about bringing cutting-edge solutions to
our customers and contributing to industries that make a difference. Stay tuned for more updates
as we continue to push the boundaries of technology and engineering excellence.

Mr. R K Lohia, Chairman & Managing Director of Lohia Corp Limited, expressed his enthusiasm
about the new ventures “Both these new partnerships are a pivotal move that will broaden our
product offerings and provide our customers with even more choices and will enhance our
presence in the North America and European market, at the same time strengthen our presence
in all other global markets.”

About Lohia Corp Limited
Lohia Corp Limited (LCL) stands as a testament to the power of innovation and commitment to
excellence. As the flagship company of the Lohia Group, LCL has established itself as a global
leader in providing comprehensive solutions for the raffia industry.

With an impressive installation base of over 2,250 extrusion lines and 95,000 Circular Looms
across more than 100 countries, LCL’s influence in the plastic woven fabric and bag sector is
unparalleled. The company’s dedication to quality and efficiency has resulted in an astounding
plastic processing capacity of 7.7 million metric tons per annum of PP & PE.

LCL’s products, ranging from packaging systems for solid bulk materials to roof underlays and
tarpaulins, are not just industrial applications; they are the building blocks of industries
worldwide.

The company’s commitment to sustainability and innovation is the driving force that makes it the
world’s largest producer of machines for the raffia sector. As we look to the future, LCL’s legacy
of excellence is more than just a benchmark; it is a continuous journey towards pushing the
boundaries of possibility.

About J. J. Jenkins, Inc
J. J. Jenkins Inc. is a very respected name based out of North Carolina, USA. They remain at the
forefront of the synthetic fiber and monofilament industries. Their unwavering commitment to
innovation, quality, and customer satisfaction has not only set industry standards but also
fostered enduring partnerships with Fortune 500 companies including some in the medical and
defence industries.

Their holistic approach, combining state-of-the-art technology with unparalleled after-sales
support, exemplifies their dedication to client success. With a vast inventory ensuring rapid
response times, J. J. Jenkins, Inc. is synonymous with reliability and efficiency.

About OMGM sas
Since 1965, OMGM sas is a distinguished Italian leader and has been at the forefront of the plastic
processing industry, pioneering in Monofilament Extrusion, straps, ropes and various other niche
applications. Their commitment to excellence is evident in their advanced technologies and
versatile extrusion lines, handling a variety of materials for diverse industries.

As we look ahead, it’s clear that OMGM Extrusiontechnik Srl will continue to lead and transform
the industry with their precision, innovation, and bespoke solutions. They are more than a
company; they are a trusted partner in progress.

Concrete

Adani acquires Orient Cement at INR 8,100 crore equity value

Published

1 month ago

October 22, 2024

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Acquisition adds 16.6 MTPA capacity (8.5 MTPA operational, 8.1 MTPA Ready to Execute).

Accelerates Ambuja’s journey to achieve 100+ MTPA operational capacity in FY 25

Provides 6 MTPA potential additional capacity in North India, leveraging OCL’s high quality limestone reserves in Rajasthan

EDITOR’S SYNOPSIS

Ambuja enters into a binding agreement to acquire 46.8% stake in Orient Cement Ltd (OCL). The acquisition helps to move towards target capacity of 140 MTPA by 2028.
OCL has an existing 5.6 MTPA clinker and 8.5 MTPA cement operational capacity, 95 MW CPP, 10 MW WHRS, 33 MW Renewable Energy spread across the states of Telangana, Karnataka and Maharashtra. It improves Adani Group’s market share pan-India by 2% in the cement industry.
OCL has secured a concession from Madhya Pradesh Power Generating Company Ltd (“MPPGCL”) to set up 2.0 MTPA Cement GU within the premises of Satpura Thermal Power Station in Sarni, MP.
OCL also has a large high quality limestone mining lease in Chittorgarh, Rajasthan, providing the potential to set up additional 6 MTPA capacity in North India.
The acquisition of OCL complements Ambuja’s existing cement footprint, reducing overall lead distances and logistics costs for the cement business and improving market share in our core markets.
Acquisition will be funded through internal accruals, Ambuja remains debt free.

Ahmedabad, 22 October 2024: Ambuja Cements, the cement and building material company of Adani Cement and part of the diversified Adani Group, today announced the signing of a binding agreement for the acquisition of Orient Cement Ltd (OCL) at an equity value of Rs. 8,100 crore. Ambuja will acquire 46.8% shares of OCL from its current promoters and certain public shareholders. The acquisition will be fully funded through internal accruals.

“This timed acquisition marks another significant step forward in Ambuja Cements’ accelerated growth journey, increasing cement capacity by ~30 MTPA within two years of Ambuja’s acquisition,” said Mr Karan Adani, Director of Ambuja Cements. “By acquiring OCL, Ambuja is poised to reach 100 MTPA cement capacity in FY 25. The acquisition will help to expand Adani Cement’s presence in core markets and improve its pan-India market share by 2%. OCL’s assets are highly efficient, equipped with railway sidings and well supported by captive power plants, renewable energy, WHRS and AFR facilities. OCL’s strategic locations, high-quality limestone reserves and requisite statutory approvals present an opportunity to increase cement capacity in the near term to 16.6 MTPA.”

Mr CK Birla, Chairman of Orient Cement and the CK Birla Group, said, “The CK Birla Group is continuously reallocating capital to sharpen its focus on consumer centric, technology driven and service-based businesses. I take pride in Orient Cement’s impressive track record of building premium brands and maintaining a leading market share in the geographies it operates in. We are confident that the Adani Group, with its strong focus on cement and infrastructure, is the ideal new owner to drive continued growth at Orient Cement for our people and stakeholders”.

Ms Amita Birla, Co-Chairman, CK Birla Group, added, “Orient Cement has a strong market presence, with sustainability initiatives, particularly in renewable energy, being a significant part of its DNA. I am convinced that Ambuja Cements is the right home for all our colleagues at Orient Cement, as well as our customers.”

OCL has 5.6 MTPA clinker capacity and 8.5 MTPA cement capacity along with statutory clearance to increase the clinker capacity by another 6.0 MTPA and cement capacity by another 8.1 MTPA. In addition, OCL also has a limestone mining lease in Chittorgarh for setting up an Integrated Unit (IU) with clinker of 4 MTPA and a split Grinding Unit (GU) of 6 MTPA in North India. OCL has also secured a concession from MPPGCL, Madhya Pradesh for setting up a Grinding Unit within the premises of Satpura Thermal Power Plant. Both these complement the Adani Group’s existing cement footprint. (Refer Annexure – 1 for OCL’s location wise cement capacity and other assets and Annexure – 2 for Adani Cement’s footprint post-acquisition of OCL.)

OCL has recently commissioned a WHRS in Chittapur IU and is in the final stage of commissioning 16 MW solar in Chittapur and 3.7 MW solar in Jalgaon. OCL’s efficient plants, highly motivated teams, strong balance sheet and well-distributed dealer network will be excellent additions to the Adani Group’s existing cement business. OCL’s existing dealers will move to Adani Cement’s market network, creating formidable synergies.

Ambuja plans to optimize OCL’s overall capacity utilization to enhance its cost and competitiveness and improve its operating performance while leveraging the synergies inherent in the existing cement business.

About Ambuja Cements Ltd (ACL)

Ambuja Cements Ltd is one of India’s leading cement companies and a member of the diversified Adani Group – the largest and fastest growing portfolio of diversified sustainable businesses. Ambuja, with its subsidiaries ACC Ltd, Penna Cement Industries Ltd and Sanghi Industries Ltd, has taken the Adani Group’s cement capacity to 88.9 MTPA, with 20 integrated cement manufacturing plants, 20 cement grinding units and 12 bulk terminals across the country. Ambuja has been recognized among ‘India’s Most Trusted Cement Brand’ by TRA Research in its Brand Trust Report, 2024 and among ‘Iconic Brands of India’ by The Economic Times. Ambuja has provided hassle-free, home-building solutions with its unique sustainable development projects and environment-friendly practices since it started operations. The company has many firsts to its credit – a captive port with six terminals that facilitates timely, cost-effective and cleaner shipments of bulk cement to its customers. Its innovative products like Ambuja Cement, Ambuja Plus, Ambuja Compocem and Ambuja Kawach are now listed in the GRIHA product catalogue. These products not only fulfil important customer needs but also help in significantly reducing their carbon footprints. Being a frontrunner in sustainable business practices, Ambuja Cements ranks among ‘India’s Top 50 companies contributing to inclusive growth’ by SKOCH and ‘India’s Top 50 Most Sustainable Companies’ Cross-Industry by BW Businessworld.

For further information on this release, please contact: roy.paul@adani.com

Annexure -1 | Existing Cement Assets of Orient Cement Limited

Plant	Clinker (MTPA)	Cement (MTPA)	CPP/WHRS/Solar	Railway Siding
Devapur IU, Telangana	3.5	3.5	CPP – 50 MW	Yes
Chittapur IU, Karnataka	2.1	3.0	CPP – 45 MW WHRS – 10 MW Solar – 16 MW*	Yes
Jalgaon GU, Maharashtra	–	2.0	Solar – 13.5 MW+ 3.7 MW*	Yes
Operational Capacity	5.6	8.5

* capacity is in commissioning stage

Annexure – 2 | Footprint of Adani Group – Cement business post OCL Acquisition

Economy & Market

Fornnax Announces a Major Launch With Sr Max Series: Sr-max2500 Primary Shredder a Revolutionary and Game-changer

Published

1 month ago

October 18, 2024

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Fornnax, a renowned shredding and recycling equipment provider with years of experience in designing and developing SR-Series dual shaft shredders, has unveiled its advanced level SR-MAX2500 shredder specially designed for the Municipal Solid Waste category.

The launch was held IFAT India 2024, a most prestigious event in the waste management industry, on October 16th, 2024, at the Bombay Exhibition Centre in Mumbai.

Fornnax’s successful track record of developing many proven machines for different types of tires, ferrous and non-ferrous metals, which are the most difficult applications has made them a pioneer in the shredding and recycling equipment manufacturing global market over the decade now. The design of the SR-Series machine, a legacy that has prevailed for over a decade, continues to be used in the design of SR-MAX series machines. The advanced SR-MAX2500 shredder features high capacity, modern engineering, and innovative technology.

The remarkable event was inaugurated by Mr Ulhas Parlikar, Ex-Director of Geocycle India; Mr Sanjay Shripatrao Katkar IAS (Municipal Commissioner and Administrator) MBMC; Mr Sharad Nanegaonkar Executive Engineer (Water Supply and Sewerage Department) MBMC; Mr Deepak Khambit (City Engineer) MBMC; Mr Jignesh Kundaria CEO & Director of Fornnax Technology Pvt. Ltd.;

Mr Manoj Kumar Sure, JK Cement Head AFR; Mr Manoj Kumar Modha, Director of Millennium Multi Trade Pvt. Ltd.

Jignesh Kundaria, CEO and Director of Fornnax, shared insights into their newly launched innovation, “With the SR-MAX2500, we’re poised to transform the waste management landscape in India and beyond. Our goal is to line up municipal waste recycling industries with a robust, efficient, and sustainable solution. Our commitment to sustainability and enhancing recycling process is a step forward towards achieving PM’s vision of a Net Zero emissions future by 2050.”

Revolutionizing Waste Reduction: The SR-MAX2500 Advantage We’re excited to introduce the Fornnax SR-MAX2500, a revolutionary primary shredder designed for efficient volume reduction of diverse materials. This high-capacity machine boasts advanced modern engineering and technology, featuring hydraulic motors driving each shaft for optimal power and torque. Its unique cutter design, replaceable cutting table, and shaft design make it an ideal solution for various applications.

Waste Management Reimagined! SR-MAX2500 Primary Applications Our primary focus for the SR-MAX2500 is serving large-scale municipal waste recyclers, cement plants, waste-to-energy plants, mechanical biological treatment facilities, materials recovery centres, construction and demolition recyclers, aluminium recyclers, and other applications requiring highcapacity machines and robust technology.

The SR-MAX2500’s Impressive ROI Streak The SR-MAX2500 offers several commercial benefits, including increased efficiency, reduced operational costs, and enhanced productivity as it is specially designed for the Indian market. Its robust design and advanced technology ensure minimal downtime, maximizing profitability for our customers. Additionally, our commitment to quality and reliability helps build long-term relationships with clients, fostering loyalty and repeat business.

Innovation Meets Efficiency: Why Choose the SR-MAX2500? Fornnax has carved out a distinctive niche in the highly competitive market and its relevance stems from a unique, tailored approach that addresses specific needs. Thus, the SR-MAX2500 shredder differentiates itself through its versatility, catering to a diverse array of waste management and user needs, specifically designed for Indian waste, which is highly contaminated compared to global waste. Additionally, our unwavering focus on innovation, quality, and customer-centricity sets us apart from competitors and establishes our position in the market.

Turning Trash into Treasure with MSW Waste As you see due to the rapid urbanization and over population, India is among the world’s top 10 countries generating municipal solid waste (MSW) and generates around 62 million tons of waste in a year. Therefore, it is extremely critical to prioritize recycling and conversion of MSW into RDF fuel. Cement industry, which uses a significant amount of coal. Cement industries substituting coal with RDF or alternate fuel to reduce the greenhouse gas emissions, conserve natural resources like coal and more and ultimately minimise the waste disposal issues.

Fornnax’s Exceptional Contribution to India’s Sustainability Goals India has made significant strides in waste management and recycling, and with continued investment, innovation, and policy support, there’s no doubt it can achieve its goals. Fornnax is committed to contributing to India’s sustainability and waste management journey through their advanced recycling solutions, supporting the country’s transition to a more circular and environmentally conscious economy.

Fornnax’s Unwavering Commitment to R&D and Innovative Solutions Fornnax stays updated with global advancements in recycling technology and sustainability practices through several key strategies, such as we invest heavily in research and development to ensure our equipment are at the forefront of technological innovation. Our team closely monitors industry trends, emerging technologies, and regulatory changes to identify potential opportunities for improvement. We also actively seek feedbacks from our valued clients to understand their evolving needs and challenges. This input helps us identify areas where we can boost our meet market demands.

Expanding Horizons: Fornnax’s Growth Plans for the Year Ahead The SR-MAX2500 launch is a strategic step towards expanding our market presence and strengthening our position as a leading shredder manufacturer around the globe.

Also, we are optimistic about the coming year, driven by the growing demand for sustainable waste management solutions and the increasing awareness of environmental issues. We are actively investing in equipment enhancement, engineering, and strengthening our partnerships to meet the evolving needs of our customers. Fornnax’s focus areas for the next year include expanding the manufacturing capacity to meet the rising demand and we already started working on it by acquiring 23-acre land parcel in Ahmedabad, Gujarat. The new site is expected to become operational by March 2025. Its focus will be on producing high-capacity machinery applicable in tyre, cable recycling, ewaste, metal processing and more.

About Fornnax FORNNAX is one of the world’s leading shredding and recycling equipment manufacturers, offering Primary shredders, Secondary shredders and Granulators for tyres, municipal solid waste, cables, e-waste, aluminium and many other industrial applications. Quick after-sales services that increase our customer’s uptime and productivity.

We are committed to shaping the landscape for sustainable recycling solutions in the future. Because we’re not just selling equipment, we’re building business. That’s what we believe. That’s who we are. Fornnax Equipment is built with the idea that the simple, most significant and heaviest is better. Our equipment is an evolution of advanced products designed for the challenges of the recycling world.

The global sales partner network makes us successful worldwide. Our corporate culture is based on our history of providing value to our customers’ success worldwide. This motivates our employees to work together, develop innovative products, and produce high-quality equipment.