Process

Efforts are on but miles to go

Published

5 years ago

January 9, 2020

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Emission is a very sensitive subject for cement industry. After CEMS, (Continuous Emission Monitoring System) the accountability has increased many folds. Through this coverage we have attempted to take stock of the existing situation vis a vis the rest of countries.

While industries of all kinds are exploring ways to reduce their carbon footprints, the cement industry is no exception. Cement is the most widely used man-made material in existence – it forms concrete when mixed with water, and is used in the construction of everything from buildings to bridges to roads and sidewalks and all kinds of other infrastructure.

The biggest problem for cement industry is its manufacturing process, because it releases large amounts of carbon dioxide. The industry’s huge carbon footprint stems from its high fuel requirements, which are mostly satisfied by fossil fuels. But more than half of its emissions-and perhaps as much as two-thirds, by some estimates-actually come from the chemical production process itself, which releases large amounts of carbon dioxide as a byproduct.

The carbon capture technology, though much talked about is yet to take off in real terms. There are many challenges, the cement industry is a highly conservative sector, Sant, one of the UK-based scientist noted – and not without reason. The construction of essential infrastructure, like buildings and bridges, carries a great deal of concern about safety and high anxiety toward the introduction of newer, less-proven materials. "Because we’ve used this material for as long as we have, there’s a lot of user confidence associated with it," Sant said. This may have made the industry more resistant than others to innovation.

CDP’s (a U.K.-based organisation) where Sant is associated with advocates for transparency about corporations’ environmental footprints. In one of the reports it evaluated 13 of the world’s largest publicly listed cement companies on their readiness for a low-carbon transition. It suggests that the companies’ emissions have been falling by about 1 per cent annually, on average. But it notes that this is hardly enough to keep pace with trajectories consistent with a 2 degree Celsius climate goal. The report also points out that investment in research and development, as a proportion of sales, is low compared with other industries. This has been the global scene in the cement manufacturing sector.

As pointed out in the discussion by Vivek Patni, Director, Wonder Cement on climate change, these groups (Climate change activists) will ask for reduction of CO2 and NOx (both are greenhouses gases). With the new development in technologies and research in progress, CO2 capturing will be possible. With changes in cement manufacturing process, NOx reduction is also very much possible. As he says but it will take some time, he further stresses that "However, the new technology of CO2 capturing and NOx reduction becoming technically and commercially viable may take some time but it will be possible to minimise the impact on climate change by technology adoption. The real challenges on capacity addition/size of plant are from the land owners in the context of cement industry, with the new regulations of land acquisition."

The overall changes of new regulations have been accepted by the industry. The industry has become more clean and green in the last two decade. It is continuously working on reduction of greenhouse gases. It may take a little longer than the schedule considering the COVID-19 pandemic. The enforcement of new regulation will force industry to adopt to new technologies, increase production of blended cements, more installations of WHRS, move towards alternate fuels and use of marginal quality of lime stone. The industry will have to invest money on all these new initiatives but in the long run it will bring down the operating cost and improve efficiency.

The new regulations of SPM of 30 mg/nm3 is very well adopted by industry. This limit depends upon the age and location of the plant. The Indian cement industry is working on controlling NOx as prescribed by regulating authorities. Achieving the latest requirement on NOx has been a challenge for industry. It is in the process of installing SCNR and also re-designing the process to minimise NOx generations. ESP is being replaced with bag filters. The limit of Sulphur dioxide emitted from a cement plant was increased from 100 mg/Nm3 to 100 to 1,000mg/nm3. This limit depends on Sulphur content in limestone, a raw material for making cement.

The limit for nitrogen oxide was relaxed from 600 to 800 mg/nm3 to 600-1,000 mg/nm3. This should come as a surprise because China, which is the largest producer of cement, has set the limit for the former to 200 mg/nm3 and for the latter to 400-800 mg/Nm3. Countries like South Africa, Australia, Germany and many other European countries have stipulated the emission limits for Sulphur dioxide as low as 50 mg/nm3. Similarly, countries like Colombia, Germany and other European countries have Nitrogen oxides emission limit as low as are 200 mg/nm3. Besides, many countries have stipulated limits for mercury, which India is yet to do.

According to the observations made by the Centre for Science & Environment, the revised norms are lenient as compared to the August 2014 norms for normal cement plants and the July 2015 draft norms for co-processing cement plants. While normal cement plants just make cement, co-processing cement plants also burn wastes, generating toxic pollutants such as hydrogen fluoride, hydrogen chloride, total organic carbon, dioxins and furans and heavy metals and their compounds, which require monitoring. Although the ministry specified separate norms for these plants, the limits for particulate matter, Sulphur dioxide and nitrogen oxide are the same as the normal cement plants.

However it is appreciable that world’s second largest producer by quantum is finally making moves to combat climate change.

The other topic though not directly of emission but we would like to touch up on which is indirectly connected with it. In this issue itself we are carrying coverage on construction and demolition waste. We are of the opinion that this has been a neglected subject by the regulators and seek immediate attention. It could have been well incorporated in the smart city initiative. We are all aware how the shortage of natural sand is badly hitting the construction sector. A well thought out tackling of construction and demolition waste can offer some relief. We would urge all the readers to download the detailed report here: https://www.cseindia.org/another-brick-off-the-wall-10325.

– VIKAS DAMLE

Process

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

Published

3 years ago

October 21, 2021

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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

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Wonder Cement shows journey of cement with new campaign

Published

3 years ago

October 21, 2021

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

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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.