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One's mindset needs to be changed to achieve sustainability

Published

3 years ago

October 14, 2021

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Edward Schwarz, General Manager, Holcim Foundation for Sustainable Construction.

Edward Schwarz, General Manager, Holcim Foundation for Sustainable Construction, talks to ICR about the core values that Holcim Foundation aims to promote and the challenges that the company faces.

What are the core values that Holcim Foundation aims to promote?
Holcim Foundation stands for sustainable construction and this is financed and sponsored completely by Holcim, which is one of the big international producers of cement. The goal of the foundation is to promote sustainable construction and now of course, if you think of sustainable construction, especially from the cement industry, you think of durable concrete or things like that or less energy in production. That’s true, of course, but that is not the full picture. So the full picture of sustainability is much boarder. It touches every element of our life. So it has to do with energy saving, using fewer resources, recycling. It has to do with economics because somebody has to pay for it all and it has to pay for itself. And it has to do with people because whatever we do with nature or with products it is always impacting people.

These are the main elements and then if you call something sustainable it has to be something that you can repeat and multiply, and in the case of construction, it has to be about good architecture as well. Our Foundation tries to promote all ideas that have to do with sustainability in construction and does different things. Every three years, there is an international conference called the Holcim Forum that brings together 100-300 specialists from all over the world under one roof to discuss one main topic. The other thing the Foundation does is regional, and global competitions for projects in sustainable construction. This competition is held every three years, a lot of money is involved and there is two million dollar prize money.

What makes a cement company do all this?
Most of the companies sell more or less the same gray powder and it is all made to turn into concrete. The differences you can make are at what step along the value chain of construction you step in and take an interest. Are you just interested in producing or can you impact people along the way, architects, engineers, planners, financers, builders, contractors, all the people along the value chain until you have got an end-user who then uses the school, the hospital, the house or whatever has got built. So for Holcim, this is a way of getting in touch with all these people, like inviting them to a forum or inviting them to participate in a competition, to make them consider that concrete is not just concrete. Nowadays, there are different kinds of cement for different applications and one of the things that the whole industry is striving for is to use fewer raw materials and less energy, which anslates to clean environment, happy people, and good economics. Thus our aim is to put more emphasis within Holcim and our companies on sustainability.

How does Holcim manufacture cement in a sustainable way?
Sustainability for us starts from the quarry to and ends with the delivery, without creating disturbance to the environment and by making the working conditions conducive for people as well as extracting maximum revenue in a year. The most important factor here is balance. It includes using as little energy as possible and using alternative fuels.

Way back in 1995, I was in Switzerland and Portland cement 42.5 was common for all types of construction. It was such a waste since this fantastic product was made with so much embedded energy and such a lot of raw material; it meant an immense of wastage. Now of course, you have 30 or 35 different products that are tailor- made for some applications and that is actually living up to sustainability because you do not waste material. Now, you use exactly what you need, where you need, and how you need it.

What are the challenges that a company faces when it comes to sustainability in India and in the world?
The challenges of sustainability are the same all over the world. It might vary a bit, though, from place to place. However, the basic challenge for sustainability is the mindset one has. You know, the things that we throwaway now, our elders would not have thrown away, they would have reused it. The production of cement in the US and India is exactly the same. Of course, 20 years ago, one started to install filters and before that, nobody had filters; then you started to improve the system, then you started to reuse heat. There was and are two triggers. The trigger on the one hand, is the environment and on the other hand, it is economics. With the filter you lose less material, so you can sell more. If you use less energy, you pay less for the energy. If you have less dust, you do not have to clean it and you can use it as a product. Sustainability is something we all have to live up to, for ourselves and for the generations after us. If the world were to continue living and consuming as we did in the 80s, in few years there would not be anything left for anyone anymore. So, we have to make resources last for more people, for a longer time. That is a challenge and I think it is one of the basics of sustainable thinking, remembering that we are not the last on this planet.

From the point of view of the Indian industry, the challenge is the same but maybe on different levels. Again taking an example of Switzerland, they have filters that you cannot imagine, and it is done legally. On the stack of our cement plants in Switzerland, you could put a sanatorium for people with lung problems, the air is so good. It is cleaner than what went in, but you invest millions and millions and millions of dollars to get that status of air. Now with a fraction of that money, we could within the same group, I bring down the emissions by 50 per cent in Poland or Czechoslovakia. It is our air and we all have to use it. I think there is a discrepancy between developed Western economies and developing countries all over the world. It calls for a lot of effort and an enormous amount to money invested in developed countries to make things different. But, taking into consideration that we have only one planet, it is worth it.

One of the big advantages of being a global player is that you can direct your financial means to the right ends, thus making a big impact with the smallest investments, wherever it is needed across the globe.

Sustainability for us starts from the quarry to and ends with the delivery, without creating disturbance to the environment

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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.

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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)

Published

3 years ago

October 21, 2021

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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.