Economy & Market

With capex plans delayed, cement sector could see better cash flows

Published

5 years ago

June 7, 2020

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According to analysts, leveraged balance sheets of many cement players, who have been on an acquisition spree, should get some breather from this
Although recent cement dealers’ channel check is indicative of pent-demand, one is not sure whether the improvement will last

The already struggling cement industry has been hit hard by the coronavirus crisis. Management commentaries on demand revival haven’t been very encouraging. So, many cement manufacturers have delayed their capital expenditure (capex) plans.

For instance, pan-India focussed cement company the Ultratech Cements Ltd has guided for a capex of ?10 billion for fiscal year 2021 (FY21). This is lower than the ?16 billion incurred in fiscal year 2020. In a post earnings conference call with analysts, the company’s management said that it has allocated any capex spend for Dalla Super in FY21. Also, it has deferred capex for the Cuttack grinding unit to FY22.

Its peer Shree Cements Ltd will decide on its large capex plan of doubling capacities in six years, after demand conditions improve. Speaking of demand outlook, the company’s management said that it expects more than 20% volume decline in fiscal year 2021.

While ACC Ltd is expanding its capacity by 18%, the management expects commissioning to happen by calendar year 2022 – this is after factoring in a likely delay of 6-12 months due to covid-19.

Not just pan-India focussed cement companies, a slew of regional firms such as India Cements Ltd, JK Cements Ltd and Orient Cements Ltd, have also postponed their capex plans.
Choosing cash over capex
Given the gloomy demand outlook, cement companies have postponed their expansion plans

Company	Delayed projects
Ultratech Cements	Cuttack grinding unit on hold
JK Lakshmi Cements	Capacity expansion by 2-2.5million tonnes in the North on hold
Birla Corporation	Work on 1.2 million tonne Kudanganj grinding unit on hold
Orient Cements	In FY21, capex to be hold as cash presrvation key area of focus
India Cements	Capex plans in Damoh, Madhya Pradesh, will be decided later
Deccan Cements	Commencement of 6megawatt waste heat Recovery

According to analysts, leveraged balance sheets of many cement players, who have been on an acquisition spree, should get some breather from this.

"The operating cash flow generation has been strong in the recent past but the free cash flow generation has been impacted due to acquisitions and expansions. We expect the industry to focus on cash and, hence, capex would likely come off, which should support free cash flow," said a report by Jefferies on 19 June.

Although recent cement dealers’ channel check is indicative of pent-demand, one is not sure whether the improvement will last.

"Our channel checks with dealers suggest that cement prices receded in June 2020 with easing supply-side constraints. Rural and pent-up demand has led to higher-than-expected volumes in May-June 2020 and the industry could just suffer ~40% yoy decline in 1QFY21E volumes, better than earlier expectations," analysts at Kotak Institutional Equities said in a report on 24 June.

Source: From live Mint

Concrete

15th Cement EXPO: A Step Forward in Cement Innovation

Published

3 weeks ago

January 17, 2025

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Mumbai

Following the immense success of the 14th Cement EXPO, held on December 14-15, 2023, at the Manekshaw Centre, New Delhi, the next edition of this premier event is set to take place in March 2025. The 15th Cement EXPO will be hosted at Yashobhoomi, Delhi, on 12th and 13th November 2025.

Meanwhile, the Cement Expo Forum 2025 is scheduled for 5th and 6th March 2025 at Taj Krishna in Hyderabad. This exciting 3-in-1 event, organised by FIRST Construction Council (FCC) and Indian Cement Review (ICR), will bring together industry leaders, innovators, and stakeholders to discuss the future of the cement sector.

Building on the Success of the 14th Cement EXPO

The 14th Cement EXPO was widely praised for its strong participation, attracting over 1,500 senior managers and decision-makers from across the cement industry. The event was inaugurated by Dr. Vibha Dhawan, Director General of TERI, and Ali Emir Adiguzel, Founder and Director of the World Cement Association, alongside Pratap Padode, Founder of FIRST Construction Council (FCC). The two-tiered exhibition space featured cutting-edge products and innovations from top companies within the cement industry’s supply chain.

The event also garnered significant support from key government bodies, including the Ministry of Road Transport and Highways, Government e-Marketplace (GeM), and the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, Government of India (GoI).

Recognition and Excellence in the Cement Industry

The 7th Indian Cement Review Awards celebrated excellence by presenting awards to 11 companies in various categories, recognising their contributions to growth and innovation within the industry. Notably, Parth Jindal, Managing Director of JSW Cement, was honoured with the prestigious Indian Cement Review – Person of the Year Award 2023. Meanwhile, Vinita Singhania, Vice Chairman and Managing Director of JK Lakshmi Cement Ltd, received the Lifetime Achievement Award for her outstanding leadership and contributions to the sector.

A Vision for Sustainability

With the theme of “Driving Sustainability Through Technology,” the 9th Indian Cement Review Conference hosted thought-provoking discussions and presentations, highlighting the industry’s commitment to adopting innovative, sustainable practices. The conference served as a platform for dialogue on the latest technological advancements aimed at transforming the cement sector, addressing key challenges, and fostering growth.

What to Expect from Cement EXPO 2025

The 15th Cement EXPO, along with the 10th Indian Cement Review Conference and the 8th Indian Cement Review Awards, is set to be even bigger and more impactful than the 2023 edition. With an expanded exhibition space, greater participation, and more in-depth discussions, the 2025 event will continue to drive the industry forward. This 3-in-1 event promises to be a pivotal moment in the ongoing transformation of the cement sector.

As the industry evolves, the 15th Cement EXPO 2025 will serve as a crucial platform for showcasing innovations, discussing emerging trends, and forging new partnerships to shape the future of cement and construction.

For more details:

Cement Expo Forum 2025: https://cementexpo.in/forum

15^th Cement Expo 2025: https://cementexpo.in/

FOR CONFERENCE SPONSORSHIPS

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Mob: +91 842 2874 030

Email: sheetal@IndianCementReview.com

FOR EXHIBITION/SPONSORSHIPS

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Concrete

Construction sector growth slows to 8-10% for FY2025: ICRA

Published

3 weeks ago

January 15, 2025

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The revenue growth for construction companies in FY2025 is projected at 8-10 per cent, down from the earlier estimate of 12-15 per cent, according to ICRA. This marks the slowest growth in three years, driven by factors such as the Model Code of Conduct in Q1, prolonged monsoons, and milestone-based billing in Q2, particularly affecting road-focused players.
ICRA’s analysis of 19 companies with a combined turnover of Rs.1.28 trillion in FY2024 shows modest revenue growth of 1.5 per cent YoY in H1 FY2025. While execution is expected to improve in H2, FY2025 growth remains below the historical CAGR of ~15 per cent (FY2018-FY2024).
Order inflows in urban transport, water and sewage projects are healthy, but road-focused entities face challenges due to muted inflows and high competition. Operating margins are projected to remain range-bound at 10.5-11 per cent, with debt levels rising to manage working capital needs, though debt coverage metrics remain stable.

Concrete

SANY India expands Pune factory to boost production capacity

Published

3 weeks ago

January 15, 2025

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SANY India inaugurated a cutting-edge factory expansion at its 90-acre Pune facility, elevating its production capacity to over 14,000 units annually, alongside a robust fabrication capacity of 100,000 metric tonnes.

The advanced facility reinforces SANY’s commitment to ‘Make in India’ by enhancing localised manufacturing and supporting global exports. Chairman Xiang Wenbo highlighted the strategic importance of India as a global hub, while Vice Chairman Deepak Garg emphasised the expansion’s role in driving innovation and infrastructure development. This investment enhances efficiency, reduces timelines, and strengthens SANY’s leadership in the construction equipment sector.