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Fuel for Thought

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As the world moves towards novel exchange denominators like cryptocurrency, the cement industry is busy battling one of the oldest currencies in the world – fuel.

With the war between Russia and Ukraine continuing to rage, fuel prices have hit the roof, as can be seen from the rising cost of pet coke, diesel, freight and energy, which are important factors for cement manufacturing and mobilisation. The most likely scenario would have been a resulting increase in cement price, however the price correction did not follow through and the cement sector witnessed flat rates in May and a dip in prices in June across India. This has adversely affected the profitability of cement. Amid elevated costs of raw materials and decrease in demand, Emkay Global Financial Services has cut its earnings before interest tax depreciation and amortisation (EBITDA) estimates for the sector by 5-6 per cent for FY 23/24/25.
Apart from this, currently sustainability is also detrimental to cost efficiency for cement companies. Green energy initiatives, such as alternative fuel and raw materials (AFR) and waste heat recovery system (WHRS), are adding to the production costs. These costs are not getting translated into price hike, leaving the cement makers to bear the brunt. However, sustainable production and net zero targets are not to be toyed with, and each player has to put in their best effort. With regards to input costs, experts are hopeful of price corrections through rise in demand for cement in the months to come.
All eyes are right now on Russia, thanks to the compelling need to sourcing fuel from low-cost destinations. Giants from the steel and power industries are already dealing with Russia for its pulverised coal. India has also shown an interest in increasing its import of thermal and coking coal from Russia, and is estimated to import 40 million tonnes tonnes by 2035.
Corrections in pricing and innovations in raw materials and alternative energy might be at different ends of the spectrum but they are bound to have a long lasting impact on cement companies, as each player puts in their best effort to win this fuel fight.

Concrete

True north seeks exit from shree digvijay cement

True north seeks exit from shree digvijay cement

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Private equity firm True North is reportedly exploring an exit from its investment in Shree Digvijay Cement. The firm is considering divesting its entire stake in the cement manufacturer and is in talks with several strategic investors and private equity players for the sale. True North has held its stake in Shree Digvijay Cement since acquiring a majority share in 2019. The exit is part of the firm’s strategy to unlock value after growing the company’s business. Potential buyers may view this as an opportunity to enter the rapidly growing cement sector, driven by India’s booming infrastructure and real estate markets. Shree Digvijay Cement, known for its steady operational performance, could attract considerable interest as the industry faces increased demand.

The sale process is expected to generate significant attention, especially from industry players looking to expand their market share or investors seeking strong returns. As the cement sector plays a vital role in India’s development, the transaction could also lead to consolidation in the industry, further enhancing the competitiveness of large players.

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Concrete

JSW cement expands vijayanagar plant capacity

JSW cement expands vijayanagar plant capacity

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JSW Cement has successfully increased production capacity at its Vijayanagar plant in Karnataka by 2 million tonnes per annum (MTPA). With this addition, the plant’s total production capacity now stands at 6 MTPA. This expansion is a crucial part of JSW Cement’s broader strategy to increase its overall capacity to 25 MTPA by the financial year 2025, strengthening its presence in India’s growing cement market.

The Vijayanagar plant, located near JSW Steel’s facility, benefits from operational synergies, such as efficient raw material procurement and energy use. The expansion will enhance the supply of high-quality cement to meet the increasing demand in Karnataka and the surrounding regions. Additionally, this move aligns with JSW Cement’s focus on sustainability and innovation, as the company continues to adopt eco-friendly practices in cement production.

JSW Cement’s increased capacity is expected to support infrastructure projects in southern and western India, contributing to the country’s booming construction and real estate sectors. As India accelerates its development in urbanization, infrastructure, and housing, the demand for high-performance cement continues to rise, and JSW Cement is positioning itself to cater to this growing need.

This capacity addition at Vijayanagar also emphasizes the company’s commitment to strengthening its supply chain and ensuring timely product delivery while maintaining sustainable practices.

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Concrete

Shree cement signs mou with dpiit

Shree cement signs mou with dpiit

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Shree Cement has signed a Memorandum of Understanding (MoU) with the Department for Promotion of Industry and Internal Trade (DPIIT) to support startups in India’s manufacturing sector. This collaboration is a strategic initiative aimed at fostering innovation, growth, and sustainable development within the industry. The MoU reflects Shree Cement’s commitment to driving forward the country’s manufacturing capabilities by providing guidance, financial support, and industry expertise to emerging startups.

The initiative aligns with the government’s “Make in India” vision, which encourages domestic manufacturing and aims to build a self-reliant economy. Through this partnership, startups will have access to Shree Cement’s vast industry experience, network, and resources, enabling them to scale their operations and develop innovative solutions. This move is expected to generate new job opportunities, enhance local production, and reduce dependency on imports, strengthening the nation’s industrial ecosystem.

Shree Cement will focus on key areas such as process improvement, technology adoption, and sustainable practices, encouraging startups to introduce eco-friendly and efficient manufacturing solutions. The partnership is also designed to facilitate the use of emerging technologies like artificial intelligence (AI) and machine learning (ML) in manufacturing operations, driving modernization across the sector.

This MoU marks a significant step toward encouraging innovation in the Indian manufacturing landscape, providing a boost to startups while enhancing industry capabilities. With Shree Cement’s support, aspiring entrepreneurs will gain the necessary tools to overcome challenges and contribute meaningfully to the sector’s growth.

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