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Erection and commissioning of cement plants

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Gautam Padukone lists some of the challenges that spring up during the erection and commissioning phases of a cement plant.

The erection and commissioning of a plant, cement or industrial, are the last two major phases of any project. This is the proverbial last lap of the project and the eagerness of the stake-holders to experience the thrill of seeing the first product emerge from the production line is directly proportionate to its long duration. After several years of waiting, this is the point where the management begins to see light at the end of the tunnel and consequently, the performance pressure on the teams increases several times. More often, all the delays that may have occurred in the previous phases of the project are sought to be compensated in these last two phases. Often, it is at the start of the erection phase that the project manager realises that he is perhaps looking at a delayed project. With commissioning normally being of shorter duration than the erection phase, pressure mounts on the erection team to recover lost time. The erection team, however, has its own challenges. Lack of fronts to start work, lack of skilled manpower and inclement weather are only a few. Amidst this, the team is asked to expedite the erection activity to bring the project back on schedule! The most common challenge faced by any erection team is the lack of a realistic time schedule to do quality work. The contractor is always under pressure to finish the erection work quickly and vacate the work front. This is done in an attempt to gain valuable time in this phase and to try and bring the project back on track. The implicit assumption is that any job can be expedited if adequate resources are deployed. The next challenge is the lack of skilled manpower.

Facing down challenges

For overcoming these challenges, L&T Construction, India’s largest engineering and construction organisation, founded the Construction Skills Training Institute (CSTI) way back in 1995. CSTI was established with a motive to regulate and promote construction vocational training in India in a professional manner, in order to develop a Modular Training System for construction related trades, which will supply the industry with significant numbers of workers, trained to limited but recognised skill levels, in the shortest possible time.

Any discussion about lack of manpower today usually focuses on the area of civil construction. What is equally disturbing is a similar lack in the area of erection. While high- tech cranes are available in the market for lifting, positioning and erecting larger and heavier pieces, their utilisation is limited. The one, time-tested method to speed up erection is to carry out as much ground assembly as possible. Implicit in this is the assumption that adequate cranes are available at site for the heavy lifts that will then become necessary. For overcoming these challenges, L&T Construction, India;s largest engineering and construction organisation, founded the Construction Skills Traning Institute (CSTI) way back in 1995. CSTI was established with a motive to regulate and promote construction vocational training in India in a professional manner, in order to develop a Modular training System for construction related trades, which will supply the industry with significant numbers of workers, trained to limited but recognised skill levels, in the shortest possible time. L&T Construction has achieved the distinction of erecting the complete rotary kiln shell of 4.75 m diameter and 74 m long, weighing 467 tonnes in a record time of 23 hours in one of our cement projects. L&T Construction has also erected as much as 3,200 tonnes of structural steel and equipment, and fabricated 1,600 tonnes in a single month.

A new initiative was taken up last year by L&T, for the first time in the country: a 25 tonne tower crane was used in the construction of cement plants. It was strategically placed near the pre-heater tower and the raw mill for structural and equipment erection. This has reduced the overall cycle time of erection activities. The total structure can be lifted in two to three cycles, resulting in speedy erection. The main advantage is the crane’s 3600 accessibility. The ducting complex in the raw mill and cement mill building was also erected using the tower crane. A considerable savings in man-hours spent in welding and joining of individual components at elevated heights was gained by adopting this methodology. The general practice of using 450 – 500 tonne cranes was not recommended as the lifting capacity is very less and the 160 m height cannot be reached. So, the usage of a tower crane is justified with its diversified use. Another challenge that the erection team faces is inclement weather. Erection activities slow down during the monsoon, but that may not be the season when it does. At certain sites, summers are so severe that outdoor work not only slows down but almost comes to a grinding halt during the afternoon hours. At some other sites, severe winters curtail the number of effective working hours per day. Two- shift operations at such sites is certainly out of the question. Most project plans do not take into account an overall reduction in the rate of erection due to such climatic conditions. L&T Construction believes in carrying out detailed project planning, weather protection of work areas and construction of approach roads to reduce the effect of inclement weather on the erection schedule.

Access to the work area is anotherd cranes canno challenge that erection teams usually face. One type of problem is when the requiret approach the erection area in a safe manner. This can happen due to inadequate load-bearing capacity of the soil around the buildings, a sub-optimal layout which hampers the approach to the buildings or sometimes, unplanned erection. A change in the erection plans midway through the project can also create this problem (e.g, a decision to do more ground assembly should be taken only after ascertaining that it is possible to erect the assembled part). To overcome this problem, L&T Construction has established Construction Methods & Planning Cell (CMPC), which meticulously plans and prepares all scheme drawings prior to erection. CMPC checks and ensures the access and site location along with soil compacting to sustain the heavy loads of vehicular movement. The physical room available to carry out the erection activity is also ensured. A detailed lifting plan with crane position for each major lift is worked out vis-ß-vis the erection drawing and work methodology.

Total construction solutions

Another type of access problem relates to housekeeping. Access to the workplace is quite often restricted due to debris or construction material lying on the way. The civil construction contractor is usually not keen to remove the scaffolding lying in or around the buildings as this does not give him an adequate revenue. This creates an impediment to the erection contractor and the work front is not available on the scheduled date. In order to counter this challenge, the customer can assist by deploying their own housekeeping team, to make the fronts available and can get the cost of this activity reimbursed from the contractor who is originally responsible for this activity.

L&T Construction, with the visible management commitment and leadership has, on its rolls a team of permanent Environment Health and Safety professionals who on a daily basis visit the site area and clear debris and scrap for safe operations. This not only saves time but also provides a safe working environment for the erection team. Delay in completion of civil construction is perhaps the most common cause of delays in starting erection activity. This may be due to a delay in mobilisation, delay in construction or sometimes rework required due to bad quality in construction. In any case, erection work may not start on the scheduled date. To surmount this, L&T Construction provides a single point Total Construction solution, in which civil and mechanical works can be executed with close co-ordination with micro- scheduling to address dynamically shifting priorities required by the stake-holders.

Another challenge that erection teams face is local disturbances at site. While most of the problems of such kind are issues that the customer needs to deal with, it is a fact that a disturbance often leads to a slow-down, or even stops work, which de-motivates the workers and finally, requires additional workforce, time and effort to ramp up once again.

Commissioning of the plant has its own set of challenges, the primary one being lack of experienced manpower. Commissioning is usually carried out by the customer’s operating personnel assisted or supervised by experienced commissioning engineers from the technology supplier. The operating personnel need to be recruited well in time, preferably during the erection phase itself. This is sometimes missed out and can become a major cause for holding up commissioning. Electrical controls are a typical source of problems in commissioning. Every machine is wired to the electrical room and to the control panel. There may be up to 25,000 terminations for a typical cement plant. Each of these connections must be checked which by itself is an arduous task. Analysis of previous data shows that typically, 10 to 15 per cent will be wrongly connected. Every one of these must be found and corrected for smooth commissioning. The temptation can be great for project managers to rush commissioning in order to stay on schedule and keep within budget, but this always proves to be false economy. Good commissioning requires time, but ultimately saves even more time. Weather can also become a hindrance. Commissioning a plant in the monsoon is always a challenge.

Mitigating the problem

While many of the challenges cited above are beyond the control of the erection contractor, L&T Construction has done everything it can to mitigate as many of such issues as possible. To mitigate the lack of skilled manpower, L&T Construction has started more than ten residential institutes all over India, where trades required for construction and erection are taught to young and deserving rural students. The cost of education, boarding and lodging are fully borne by L&T Construction. Additionally, a nominal stipend is also paid to the students during the course. The students who pass out of this certificate course are usually employed at various L&T sites.

An additional benefit to the customer is that when local youth from villages near the plant site are sponsored to these institutes, the demand for employment of local people on the project site also gets addressed to some extent.

The setting up of a cement plant involves interfacing of many different activities. For such a complex plan, it is important that the upstream phases like engineering delivery, equipment supply, statutory approvals etc. are delivered to the project in time for on-schedule completion. While the erection phase is not without its challenges, proper planning, resource allocation and execution will mitigate these challenges to the fullest extent possible, not only in adherence to schedules but also in executing it with the highest standards of quality and safety. L&T Construction is particularly proud that by implementing the above innovations and construction methodologies, it was able to contribute to the completion of a 1.3 million- tonne greenfield cement plant in just 15 months, from ground- breaking to cement despatch!

Gautam Padukone, Head – Engineering, Cement & Plant Construction, Larsen & Toubro Construction

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

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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

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

ETBrandEquity

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)

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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.

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