Connect with us

Economy & Market

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

Published

on

Shares
  • 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

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Concrete

Wonder Cement appoints Mahesh Singh as VP Corporate Brand Communication 

Published

on

By

Shares

Singh brings 20+ years of brand and marketing experience, and will lead integrated corporate brand communication initiatives at Wonder Cement 

New Delhi

Wonder Cement, a leading cement manufacturer, has appointed Mahesh Singh as Vice President – Corporate Brand Communication. In his new role, he will oversee corporate brand strategy and communication, including digital and performance marketing, public relations, trade, events, exhibitions, sports and experiential marketing. 

Singh brings over two decades of experience across marketing and communications, with roles spanning the automotive industry, agencies and entrepreneurship. He spent more than a decade with Honda Motorcycle & Scooter India, working across integrated communication, media, digital, retail and consumer engagement. His stint also included helping build the company’s digital marketing capabilities. 

He moved to dentsu X India as Vice President – Strategy & Planning, working across categories such as automotive, auto components, electric vehicles, FMCG, consumer electronics, BFSI, apparel and brand consulting. His responsibilities included media and marketing strategy, product launches, content, performance marketing and consumer activations. 

Singh subsequently took an entrepreneurial route with Radiant Brands before joining Shriram Ltd (SPR Autotech) as Head – Marketing & Communications. There, his remit included brand and corporate strategy, communications, PR and ORM, retail identity, loyalty programmes and events. 

At Wonder Cement, Singh will be responsible for bringing together the company’s corporate brand communication initiatives across digital, performance marketing, PR, trade, sports and experiential platforms. The role will focus on creating an integrated approach to communication across consumers, trade partners and other key stakeholders. 

The appointment brings to Wonder Cement a marketer whose career has spanned the brand, agency and entrepreneurial sides of the communications ecosystem. 

Wonder Cement, part of the RK Group, is a cement manufacturer with roots in Rajasthan and a focus on quality, trust and transparency. The company has grown to six manufacturing plants, and a cement capacity of 21.5 MTPA. With more than 2,000 employees and a network of over 5,000 dealers, its operations span manufacturing, distribution and customer engagement, with a focus on consistent product quality and efficient execution. 

Continue Reading

Concrete

JSW Cement commissions additional 1 MTPA grinding unit at Nagaur

Published

on

By

Shares

With this commissioning, JSW Cement’s total cement grinding capacity has increased to 25.10 MTPA, 
Mumbai

JSW Cement, one of India’s leading green cement producers and part of the diversified JSW Group, today announced the successful commissioning of an additional 1.00 MTPA cement grinding unit at Nagaur, Rajasthan. The commissioning marks another significant milestone in the Company’s growth strategy.

With this commissioning, JSW Cement’s total cement grinding capacity has increased to 25.10 MTPA, while its total clinker manufacturing capacity, including clinker capacity at its joint venture, JSW Cement FZC, stands at 9.74 MTPA.

JSW Cement had commenced operations in North India in March 2026 with the Nagaur Integrated Plant, comprising a 3.30 MTPA clinkerisation unit and 2.50 MTPA cement grinding unit. With the commissioning of the additional 1.00 MTPA cement grinding unit, the plant’s total cement grinding capacity has increased to 3.50 MTPA, enhancing the company’s ability to cater to the growing cement demand across Rajasthan, Haryana, Punjab and the National Capital Region (NCR). The expansion has been funded through a strategic mix of equity and long-term debt.

During the quarter ended 30th September 2026, JSW Cement has also commissioned the Alternate Fuel Handling System and the Waste Heat Recovery system (WHRS) at the Nagaur Integrated Plant.

Nilesh Narwekar, CEO, JSW Cement, said: “The commissioning of additional 1.00 MTPA grinding capacity at Nagaur is a key strategic priority for us and will accelerate JSW Cement’s expansion into North India. We look forward to servicing the growing needs of the region and contributing to the economic growth of Rajasthan, Haryana, Punjab and the NCR area. I am delighted to share that the company has commissioned this grinding unit within the expected timeline, showcasing our project execution capabilities. Further, the Alternate Fuel Handling System and the Waste Heat Recovery system (WHRS) are expected to substantially reduce our production costs going forward.”

Continue Reading

Concrete

UltraTech becomes first Indian cement firm to cross 2 GW green energy

Published

on

By

Shares

UltraTech Cement has crossed 2 GW of captive green energy capacity, with renewables and waste heat recovery meeting 48 per cent of its power needs.

Mumbai

UltraTech Cement Limited has surpassed 2 GW of installed green energy capacity for captive use, becoming the first cement company in India to achieve the milestone. The Aditya Birla Group company commissioned 116.55 MW of wind capacity at its Inter-State Transmission System-connected wind-solar hybrid project in Barmer, Rajasthan, along with 10 MW of Waste Heat Recovery System capacity at Sarlanagar Cement Works in Karnataka.

With these additions, UltraTech’s cumulative installed green energy capacity has reached 2,024 MW. This includes 1,580 MW of renewable energy capacity and 444 MW of waste heat recovery capacity, together meeting around 48 per cent of the company’s current power requirements.

The company said the milestone reflects the progress of its long-term energy transition strategy. In FY27 so far, nearly one-third of UltraTech’s 76 manufacturing units in India have maintained green energy utilisation above 50 per cent of their electricity requirements, while five units have crossed 95 per cent.

K C Jhanwar, Managing Director, UltraTech Cement Limited, said, “Crossing the 2 GW green energy milestone is the result of a strategy we have pursued consistently over the past decade. Cement is an energy-intensive, hard-to-abate sector, and showing that reliability and growth can go hand in hand with a rapid shift to green energy sets a benchmark for the industry. With nearly half of our power needs now met through green energy, we are significantly less exposed to fossil fuel supply constraints and power price volatility. As we scale up renewables, waste heat recovery and battery storage across our operations, we are building an energy foundation for stable, long-term growth.”

UltraTech commissioned 430 MW of green energy capacity in FY26 and continues to expand its renewable energy and waste heat recovery portfolio.

The company is also progressively integrating Battery Energy Storage Systems across its operations to improve renewable energy utilisation and supply reliability.

In 2025, UltraTech operationalised what it described as India’s first on-site hybrid round-the-clock renewable energy project at Sewagram Cement Works in Gujarat. The project combines solar, wind and battery storage.

As part of its decarbonisation strategy, UltraTech said it has not invested in new captive thermal power capacity for either greenfield projects or brownfield expansions at its integrated units for more than a decade.

The company said its expanding green energy portfolio is helping reduce dependence on conventional grid electricity and fossil fuel-based power, while lowering exposure to fluctuations in coal and electricity prices.

UltraTech aims to increase green energy’s share in its total power mix to 85 per cent by 2030. As a member of RE100, it has also committed to meeting 100 per cent of its electricity requirement through renewable sources by 2050.

UltraTech Cement, the cement flagship of the Aditya Birla Group, has a total grey cement capacity of 210.1 MTPA and white cement and putty capacity of 3.5 MTPA. The company is also a signatory to the GCCA Climate Ambition 2050 and has committed to the GCCA Net Zero Concrete roadmap.

Continue Reading

Video Thumbnail
▶

    SIGN-UP FOR OUR GENERAL NEWSLETTER

    Trending News