India Cement & Construction Materials (vol 1 / issue 5)

india CemWeek A CemWeek Publication

Cement VOLume 1

issue 5

march / april 2012

& construction Materials

From the Top

Q&A with HeidelbergCement India's Managing Director

Green Solutions

Carbon Negative Cement

Coal Equivalent?

News

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Analysis

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Market Coverage

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Interviews

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Algae Biofuel

People Moves

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FEATURES

DEPARTMENTS

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LEADING FROM THE TOP

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GREEN SOLUTIONS: CARBON NEGATIVE CEMENT

A Q&A with Ashish Guha, CEO and MD of HeidelbergCement’s Indian operation

Researchers make notable strides with the development of carbon negative cement products

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ALGAE BIOFUEL: A COAL EQUIVALENT

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BIRLA TO REPLACE COAL WITH CMB

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GYPSUM: A SECOND LOOK AT A HIDDEN ECONOMIC LINCHPIN

ACC and others working to turn the fastgrowing green plant into a viable fuel

Company switches to coal bed methane gas

Is the future supply of gypsum in doubt?

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INDIA: GYPSUM SUPPLY & DEMAND Guest contribution by Mr. Ramachandran, CEO of Zawawi Minerals (Oman)

GOING GREEN GAINING MOMENTUM

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NUMBERS IN BRIEF

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IMPROVING PERFORMANCE WITH LMMASTER

20 22 24

construction & building materials

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EQUIPMENT UPDATES

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INFRASTRUCTURE & PROJECTS

Bobcat launches 2012 line light construction products

Cement performance: details and analysis

ANALYST RECOMMENDATIONS Highlights of the latest in broker recommendations

PROFILES HCIL: Moving ahead despite cost challenges

STOCK PERFORMANCE Comprehensive data on major cement companies in India

MARKET AND COMPETITION Manufacturers ask government for additional incentives

VOLUME AND PRICING Cement prices projected to remain high in the coming fiscal year

PEOPLE Grasim Industries appoints new managing director

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M&A and FINANCE

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PROJECTS AND EXPANSIONS

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EQUIPMENT

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REGIONAL UPDATE

TECHNICAL INDIA ROUND TABLE Loesche conducts first round table in India

Eye toward innovation

CEMENT

Niche construction market to grow substantially by 2015

Case study of Nuh Cimento Sanayi’s decision to increase plant efficiency

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EDITOR’S LETTER

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FOCUS

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Manufacturers post higher earnings for third quarter of FY12 Several cement manufacturers gear up for further expansion Cachapuz Bilanciai reveals new SLV Cement Bags Counting Module Update on cement markets in the broader South Asia region

Cement & construction Materials

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letter from the editor

eye toward innovation see you at cbi india 2012 nnovation takes many forms. It can range from the creation of a better product, process, service, technology, or even a strategy, and it can come from anywhere. Often, research and development (R&D) forms the backbone for most innovations, providing industries with a multitude of scientific advancements that improve productivity.

Within the global cement community, R&D is ongoing, occurring in every corner of the world, and is as vast and varied as our industry. Whether it’s utilizing nanotechnology in the production process, creating biofuel alternatives, or testing new environmentally-friendly products, the research conducted, and ultimately the sharing of knowledge, is the key to cement’s future.

Therefore, in this issue, we turn our focus to highlighting but a small portion of the truly innovative R&D occurring both domestically and abroad. While it does not even begin to scratch the surface, it helps us to once more applaud those with an eye toward innovation.

In this issue, we look at research being conducted on reducing CO2, not just in the cement production process, but also in creating products that are carbon negative. M.I.T.’s recent work using nanotechnology to improve the existing cement “recipe” motivated us to take a closer look at cement product innovations underway.

Green Solutions: Carbon Negative Cement takes a closer look at how work is progressing on this particular unique product.

Sharing industry innovations and knowledge is a primary objective of ICCM, and our parent company the CW Group. It is why we have thrown our support behind the GMI Forum-organized “Cement Business & Investment (CBI) India 2012” event in Mumbai on October 10 and 11, 2012.

This conference, which will bring together global and Indian experts, is a must attend event, and we hope that you will join us in sharing your company’s own innovations.

The demand for viable biofuel products continues to grow, as oil and coal prices push higher. As such, the increase in research by industry leaders is heartening.

In Algae Biofuel: A Coal Equivalent, we peek at the ongoing research by ACC and others into converting algae into a sustainable fuel option.

As always, we welcome your input. If you are interested in contributing to the ICCM magazine with an article, or simply want to share your feedback, contact us at editor@cemweek.com.

In addition to our regularly featured departments, we include a Q&A with Ashish Guha, CEO and MD of HeidelbergCement’s Indian operations. Mr. Guha shares his insights into the direction of his company, also an industry innovator in its own right.

Diana Heeb Bivona iccm manager

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cbi Cement industry conference:

conference:

cement business & investment Mumbai, India. October 10-11, 2012.

The CBI India 2012 will focus on the various aspects of India’s cement industry from a business growth & investment perspective. Notably, the programme will take a dual-track business and technical approach to the issues around: ♦♦ Economic forecasts, infrastructure planning, and

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technical base ♦♦ Coal / fuel sourcing, technology decisions and

vertical integration ♦♦ Petcoke as fuel – business opportunity and

technology challenges

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numbers IN BRIEF

Is the wind picking up?

AVERAGE MONTHLY REGIONAL PRICING (INR/bag) South

West

East

Central

North

350

February

January

December

November

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September

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200

July

275

Dispatches (mm tons; CMA members) 2011-12

2010-11

2009-10

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INDIA CMA VOLUMES IMPROVE Demand for cement improved by 3.5 percent, rising from 19.78 million tons in December to 20.48 million tons in January 2012.

However, it declined slightly higher to 20.44 million tons in February, down 0.2 percent. Meanwhile, based on data provided by CMA members, production improved in January, climbing 4.8 percent from 19.66 million tons in December to 20.61 million tons. Volumes slowed in February, dropping 1.3 percent to 20.34 million tons.

Prices trend up Regionally, prices in the north revised downwards by an average of Rs 5-15 in January, as cold weather curtailed construction activities. Prices in certain areas of Punjab did however remain stable, but corrected in February as elections led to lower demand throughout the region. Himachal Pradesh witnessed a price correction due to intervention by the state government and prices in Haryana were also affected by low demand because of a sand shortage.

Cement prices in the central region were expected to rise by the end of January, buoyed by the expectation of improving demand.

However, poor demand in Bareilly led to a price correction of an average Rs 8-10, and the scarcity of sand continued to affect construction activities in the region, leading to a price drop in the range of Rs 3-5 in February.

With a marginal hike in demand in the eastern region and a rollback of discounts by manufacturers, cement prices in West Bengal and Orissa witnessed an Rs 5-10 hike. A similar increase was seen in Bihar, although no major growth in sales was observed in January. While demand in Orissa went down in February because of elections, the other regions fared better, leading to a hardening of prices, further pushed up by logistics and transport issues that affected supply.

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Production (mm tons; CMA members) 2011-12

2010-11

2009-10

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In the western region, cement prices rose in Nagpur, Ahmadabad, and Rajkot by an average of Rs 5-10, but continued sluggish demand in Maharashtra did not encourage a price hike for January. In contrast, February saw a spike of Rs 10 in Maharashtra and Rs 20-25 in Gujarat, as demand improved. Production discipline and transportation problems further contributed to the price hike.

Finally, certain southern areas witnessed a slow revival in demand in January, and prices continued to remain firm in the face of ongoing production discipline. February saw no change in prices as demand revved up significantly.

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Effect of Lower Import Duties In March, the announcement of a reduction in the import duties on coal for the financial year 2012-2013 was expected to improve production costs by an average of Rs 300-400 per ton. However, while the lower preferential five percent coal import duty is likely to improve profit margins; cement prices are not likely to decline.

Most cement manufacturers had already passed on the increase in excise duty to consumers, increasing prices between Rs 5 and 10 per bag, which was slightly higher than the excise duty hike.

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leading from the top Q&A with ashish guha

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Cemweek catches up with Ashish Guha, CEO and MD of HeidelbergCement’s Indian operation. Mr. Guha shares his thoughts on a variety of industry issues, ranging from Heidelberg’s operational focus to the increase in production activity in the southern region to the most recent round of M&A activity.

Cemweek: HeidelbergCement’s operations are focused mostly in the central and southern regions at present; however, your company plans to commission new facilities in Damoh and Jhansi by the first quarter of 2012. How do these new facilities support your company’s strategic plans?

A. Guha: The Damoh and Jhansi expansion are brownfield projects (part of Central India operations). Central India capacity utilization is about 90 to 95 percent as the region had a capacity shortfall of approximately three to four million tons in 2011. It will help us strengthen our existing operations and help bridge the capacity demand gap.

Cemweek: There seems to have been a recent flurry of announcements over the last year or so from companies planning to expand production capacity in the southern region. Do you think this capacity can actually be absorbed? What are Heidelberg’s expectations in terms of utilization levels and volumes?

If the industry has to grow, consolidation is necessary, and as a first step, the number of players should at least drop from the present 50+ level.

A. Guha: The cement demand forecast was based on GDP projections of around nine percent which unfortunately did not come to fruition. Infrastructure spending was also not at the projected level, and this impacted cement demand adversely.

We anticipate that the deficit in infrastructure spending will come through in the year ahead.

Cemweek: Prices have increased in many regions in the last couple of quarters due in part to higher input costs. Margins for many companies, including Heidelberg, have diminished. Has Heidelberg been able to successfully raise its prices? If so, do you believe the higher price level is sustainable given current market conditions and that profit margins will improve?

A. Guha: HCIL has taken price increases, keeping in view the market dynamics of demand–supply. The increases have not been able to fully offset the cost increases, and therefore margins of cement companies are likely to be impacted to an extent.

The cost increases have been substantial, and the industry will have no alternative but to pass on the same to customers.

A. Guha: The southern region is operating at about 65 percent capacity utilization. We don’t see major capacity additions coming up in the near future. Furthermore, the gestation period for additional new capacity is about four to five years. In our view, it will be difficult to absorb new capacities until the time the existing capacity utilization rates reach about 85 to 90 percent.

Cemweek: The expectation for cement demand for 2011 was that it would trend a lot higher than what it actually did. Do you foresee demand levels improving for 2012, and if so from what sectors—i.e., real estate, infrastructure, rural development— will it likely come?

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HeidelbergCement India operations

Grinding unit Cement plant

Cemweek: Rising coal prices in particular have been a growing concern for the industry. What kind of impact do you expect climbing prices to have on Heidelberg in 2012? Are you looking into any alternatives? If so, can you share what those are?

A. Guha: We had seen one round of price increase in Feb. 2011 followed by a new price increase w.e.f. 1-Jan-2012. Increases in linkage coal prices should not be seen in isolation. It would mean a direct linkage fuel bill hike for 25 to 30 percent of all industry players. What is more critical is the cascading effect of this increase. Increases in coal prices in grades E/F/G, which is used by power plants, would increase power rates, which in turn will have an adverse impact on other input costs.

The alternative of importing coal always exists for us. Between Oct. 2011 to Dec. 2011, international coal prices dropped approximately ten percent. However, U.S. dollar appreciation vis-a-vis the rupee by

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about 19 percent during CY11 has negated any benefit of this price drop.

and experience leveraged for the Indian operations?

Cemweek: There has been some recent M&A activity noted in the industry. In your opinion, how likely are we to see an even greater increase in acquisition activity in the industry over the next few years?

A. Guha: As part of HeidelbergCement Group, HCIL gets support from Group companies on a need basis. HeidelbergCement Group has a strong technical team which supports us on expansion projects and various other technical matters.

A. Guha: Consolidation in the cement industry has been a major challenge. Over the last decade, we have seen some activity, but other than the mega Holcim transaction, others have been pretty small.

If the industry has to grow, consolidation is necessary, and as a first step, the number of players should at least drop from the present 50+ level. With the positive changes expected in the next few months, we believe M&A activity should increase.

Cemweek: HeidelbergCement has a history of strong technical and operating expertise globally. How is this knowledge

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Cemweek: In closing, can you share any specific plans or goals Heidelberg is focusing on in 2012?

A. Guha: As new capacity is commissioned in 2012; HCIL will increase volumes in existing markets. Further, the company has already started seeding newer markets such as Bihar, and we will start seeding in Delhi, Uttrakhand. The increase in volumes will be aptly supported by increases in our already existing harmonious family, including our channel partners. BMWeek CemWeek BMWeek BMWeek

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Green Solutions

carbon negative cement

Research into making cement more environmentally friendly is occurring on several fronts. While some research focuses on reducing the amount of cement used and others look at using various combinations of polymers in the mix, these approaches do not directly tackle the problem of carbon emitted during the actual production process. However, scientists studying carbon emissions during production are making notable strides.

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Cement production is a highly carbon intensive process and the environmental consequences are significant. An estimated 50 percent of total CO2 emissions generated from the production process come from the raw materials (calcium carbonate) used, another 45 percent originates from the fossil fuels used to drive the needed chemical reaction, and the remaining five percent is attributed to the transportation of cement.

With roughly one ton of CO2 produced for every ton of clinker made, the global cement industry is responsible for at least five percent of all man-made CO2 emissions. Therefore, finding ways to reduce, and even reverse, the level of carbon dioxide emitted in the production process is an increasing priority for the industry.

MANY RESEARCH APPROACHES Research into making cement more environmentally friendly has taken many approaches. Some have focused on adding more aggregates to the concrete mixture to reduce the use of cement. Others have looked at using various combinations of polymers in the mix. These approaches, while valuable, have not directly tackled the problem of the level of carbon emissions emitted during the actual production process. In recent years, though, some researchers have devoted their energies to significantly reducing CO2 in the production process itself, and results have proven promising.

Take, for example, the breakthrough research conducted at the Massachusetts Institute of Technology’s (MIT) Concrete Sustainability Hub (CSH). In October 2011, researchers announced that with the use of nanotechnology they had developed a new “recipe” that would greatly reduce CO2 emissions while boosting the strength of cement. What is truly remarkable is that the recipe does not use any new ingredients, and scientists suggest no new structure or costs are required. While the whole process of bringing this new cement to

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market is still three to four years out, early test results are promising.

MIT is not the only group looking at reducing CO2 via the production process. Two other notable mentions include Novacem (England) and TecEco (Australia). Novacem has developed a cement product based on magnesium oxide (MgO) and hydrated magnesium carbonates and has received numerous recognitions for their research.

Finding ways to reduce, and even reverse, the level of carbon dioxide emitted in the production process is an increasing priority for the industry.

According to Novacem, its production process accelerates carbonation of magnesium silicates under elevated levels of temperature and pressure (i.e. 180°C/150bar).

The carbonates produced are heated at low temperatures (700°C) to produce MgO, and the CO2 generated is recycled back in the process. The use of magnesium silicates eliminates the CO2 emissions from raw materials processing. In addition, the

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low temperatures required allow the use of fuels with low energy content or carbon intensity (i.e., biomass), thus further reducing carbon emissions. Additionally, production of the carbonates absorbs CO2; they are produced by carbonating part of the manufactured MgO using atmospheric/industrial CO2.

Through this production process, Novcaem’s research indicates it can make one ton of Novacem cement that will absorb up to 100 kg more CO2 than it emits, making it a carbon negative product. Although still in development, the company’s carbon negative cement is already achieving strengths of up to 80 Mpa. TecEco has also developed a cement product that incorporates magnesium to reduce CO2. The cement, called Eco-cement, is a composite of magnesite, recycled waste, and Portland cement. As Eco-cement hardens, it is designed to absorb CO2 from the atmosphere, and the magnesite then converts it to carbonate. This process can continue for up to a year before the ability of the porous magnesite to absorb CO2 is exhausted. Like Novacem, TecEco’s product still has a way to go before it reaches the commercial application stage, but progress is being made.

Local Developments In October 2011, it was reported that ACC was close to launching its own environmentally-friendly cement within the year.

This new product is expected to emit less carbon dioxide during production. Reports suggest the cement could emit 400-450 kg of CO2 per ton at the time of burning limestone during production, nearly half the amount of conventional cement at 900 kg.

Advancements like these, focusing on the production process, are promising. If more environmentally friendly approaches continue to make inroads, the cement industry may shortly find itself transforming from a considerable emitter of CO2 to a significant absorber. BMWeek CemWeek CW Group BMWeek BMWeek

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FOCUS Algae Biofuel

A Coal Equivalent?

The demand for alternative, sustainable fuels is growing at a steady clip. Struggling with rising costs and the eventual demise of fossil fuels, numerous industries, including cement, are devoting more time and resources to developing viable alternatives. One such alternative gaining interest is the development of an algal biomass fuel.

Although they are not truly plants, algae have the same photosynthesis ability to convert sunlight into chemical energy.

Whole organisms within algae can actually convert sunlight into oil. Not only can algae potentially provide a high-yield source of biodiesel, ethanol and aviation fuels, but it can be done without taking up much space. In fact, algae can produce more oil in roughly a 24’ x 26’ plot then one acre of soybeans, corn or rapeseed. Algae can triple in size in just twenty-four hours and has a growth and productivity rate that is 30 to 100 times higher than these other types of crops mentioned.

VERSATILE ALTERNATIVE Algae is an attractive alternative for other reasons as well. Algae can be grown without competing with agriculture. It does not compromise existing food supplies and is not damaging to sensitive wetlands, rainforests or other arable, usable lands. As algae uses 99 percent less water than conventional agriculture, and it can be devel-

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oped in arid, dry areas far from vital water supplies. Areas that typically are unsuitable for agricultural development are prime locations for algal industrial farms.

Algae thrives on a high concentration of carbon dioxide (CO2) and nitrogen dioxide (NO2). Therefore, research suggests that some of the best locations for setting up algae “farms” are near sewage facilities, power plants and cement factories.

Exhaust gasses from the fossil fuels used at these types of facilities feed the growth of the algae while also cleaning the air.

Several organizations and researchers have been working with algae development in recent years and have had some success in engineering advanced biofuels from algae at a microbial level. Scientists have learned to “milk the algae” to consume CO2 generated from the smokestacks of factories and then secrete biofuels such as renewable diesel, ethanol and gasoline directly.

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Research and the Industry In 2008, the Asia Pacific Partnership undertook the Umbrella Project 8. The initiative was designed to promote biomass fuels as alternative, renewable sources of energy for clinker production in cement kilns. Two subprojects were outlined. One focused on the technical and economic opportunities for using biomass fuels for reducing greenhouse gas emissions in cement production, and the other focused on CO2 recycling through an algal bioreactor.

ACC India has been the coordinating leader on the algal initiative and is the location for the pilot plant study. The company has been working on a plan to sequester CO2 generated by its cement kilns in order to produce high-energy biomass which can then be reused as fuel in its cement kilns.

ACC hopes that the algal biomass produced by the bioreactor through recycling of the CO2 from its cement kiln stacks can be directly fired in its captive power plants

and cement kilns. In the future, ACC hopes to balance its algal production rate with the CO2 emission rate while ensuring a continuous supply of algal biomass fuel.

A bioreactor is needed to convert the CO2 into oil-bearing algae, and ACC is working on that design. A diagram of how the conversion process works is located to the right: In the Not So Distant Future…

While large-scale usage from biomass sources such as these may not yet be a practical alternative for the industry, projects such as those initiated by ACC and others indicate the industry is definitely closer to making it a reality. The days until effluent gasses emitted from cement facilities can be effectively used for growing algae, which can in turn provide biomass fuel year-round, are definitely shorter. BMWeek BMWeek BMWeek

Making Algae Biofuel Dream a Reality While still in its infancy, at least two companies have already made considerable gains in terms of using algae as an environmentally friendly alternative to fossil fuels such as coal. St. Mary’s Cement and Secil are each working toward making the use of algae biofuel an everyday reality. Both companies have invested a considerable amount of time, research, and money into the development of algae biofuel and look forward to the day when it can be used in conjunction with cement manufacturing on a sustainable basis.

St. Mary’s and Secil are still in the testing stages, but both feel that this investment will pay off in the end. Not only would algae-fuel offer companies a green alternative to current fuel regiments, but it may also potentially offer an extremely cost-effective approach in terms of sustainability thanks to the renewable properties of algae.

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St. Mary’s has been conducting tests for roughly three years and is seeing promising results, according to their environmental manager. “It is really just a matter of figuring out how to manage an existing system instead of creating a whole new ecosystem,” he says. Currently, it appears that the lack of enough algae to properly fuel the entire St. Mary’s operation, paired with the ecosystem question, is the only real stumbling block the company sees at this time.

St. Mary’s Cement reports that several university researchers and other entities have shown interest in exploring the process of using algae as a fuel alternative. The possibility of increased research and testing is what St. Mary’s feels will lead to the “future of energy.”

In another part of the world, Portuguesebased cement company Secil, in partnership with the company AlgaeFuel, has

Source: ACC India

been working on the production of microalgae for energy use for several years now.

The project has already gained recognition throughout Europe and has even been recognized by the International Environmental Awards, receiving the Environmental Innovation for Europe Award in 2009.

The company’s biotechnological project has been successful in significantly reducing carbon dioxide emissions, and Secil is incredibly satisfied with the progress they have made to date. They are heartened by the potential for using microalgae in not only the cement industry but other similar industrial sectors.

Only time will tell how far these companies and others like them will advance with this new and exciting technology, but with increased research and development, the environmental and economic possibilities are immeasurable.

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Birla Corp to Replace Coal with CMB

Rising coal prices have many cement manufacturers rethinking their energy needs. Although Coal India backed off of a recent proposed price hike because of strong opposition, one company is not waiting around for the next time an increase does occur. They prefer to avoid the long-term risks associated with coal prices linked to global benchmarks and are looking at other alternatives.

Birla Corporation announced in February that it would utilize coal bed methane (CBM) gas rather than coal for its Durgapur plant. The Durgapur unit, which houses a 14 MW captive power plant, plans to use CBM gas to run key pieces of its operating equipment.

The switch to gas is expected to have a positive impact on the company’s savings over the long term. Potentially, Birla could

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avoid using over 5,100 tons of coal each year and instead utilize 90,000 standard cubic meters per day of CBM. The area in which the Durgapur plant is located has one of the country’s first commercially developed CBM sites. Great Eastern Energy and Essar Oil have been producing the gas and are already selling it to nearby industrial centers.

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Birla’s move to explore alternative fuels more earnestly comes on the heels of a weaker operating performance in the third quarter. Net profits plunged 37 percent to Rs 43.72, with sales only marginally up at 537.83 crore. Rising power and fuel costs, as well as a suspension of limestone mining activity affecting its Chanderia unit were cited as the primary factors for the decline. BMWeek CemWeek CW Group BMWeek BMWeek

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cbi THE SHIFT FROM WEST TO EAST:

HARNESSING THE POTENTIAL CEMENT INVESTMENT IN INDIA AND BEYOND round 200 CEOs and industry stakeholders will assemble in Mumbai, India, to attend the 1st Cement Business & Investment India (CBI India) 2012 Conference on the 10th and 11th of October 2012. This is an international event with a unique focus on India’s cement sector that will emphasize the critical executive, investment, technology and traditional and alternative fuel issues facing the sector.

“A new forum is needed in India to critically look at the industry’s issues. Not just as the ‘conference engines’ do today, but as industry analysts and technologists to build a real and insightful dialog, from the CEO down. The CBI event is set to become a forum of choice to hone competitive insights, form new business relationships and shape the industry agenda,” said Mr. Robert Madeira, Managing Director and Head of Research at the CW Group, the parent of CemWeek and owner of the India Cement & Construction Materials journal.

The two day interactive program, which is organized by London-based Prescon and the Global Management and Investment Forum, supported by CemWeek and India Cement & Construction Materials, will cover key aspects of India’s cement industry. Sessions will center on the principal issues facing the Indian cement sector today and in the future. In particular, industry leaders will take a closer look at the evolution and direction of the market, balance views on the ever critical traditional and alternative fuel sourcing situation,

new policies and legislation, infrastructure plans, and technology maximization.

The conference will also take a closer look at Indian’s growing role in the international markets as companies expand globally through acquisitions, greenfield units and exports as well as technological updates and best-practices.

“So far the marketing of Indian cement has largely taken place inside the country to meet the great demand that arose from India’s infrastructure boom,” said Mr. Demsas Faloppa, CEO of Prescon. “But things are slowly changing and those companies that lead the Indian cement market are actively looking for investment and new ventures. This is the right time to discuss these dynamics and developments.”

CBI India attendees will include not only cement companies but also investors, bankers and advisors, fuel traders and suppliers, engineering organizations, among many other constituents. The conference will include over 25 presentations by industry experts and government officials, a CEO led panel discussion, various networking breaks, an exhibition, lunches, cocktail reception, and a gala dinner. BMWeek BMWeek BMWeek

Conference registrations are now open at a 25% early bird discount. Please e-mail sales@gmiforum.com, or call +91 98923 61085 (India) / +44 207 1007940 (UK) for more information.

Organised by Prescon and the Global Management and Investment Forum.

Supported by CemWeek and the India Cement & Construction Materials journal

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Gypsum

A Second Look at a Hidden Economic Linchpin

The limited availability of one key Ordinary Portland Cement (OPC) ingredient – gypsum – may soon become a widespread topic of general conversation. Nowhere may this be truer than in India. Longer-term demand growth for cement is running at nearly 10 percent year over year, with long-term projections of 8 to 10 percent annual growth through the middle of the century. for many Indian cement manufacturers.

The quality is a known factor, and mining and freight costs are generally lower than imported gypsum, particularly in the north and west where gypsum production is concentrated. Unfortunately, domestic production of gypsum peaked in 2007 – 2008, leaving many manufacturers scrambling to secure sufficient supplies as production falls but demand increases. While a certain amount of gypsum will always be mined in India, it can no longer keep up with national production needs.

The availability and affordability of key raw materials is a critical underpinning to the nation's ongoing growth and the continued health of the Indian cement sector. Thus understanding just why gypsum is so important, the nuances of current and future sources, and the impact on the cement industry over time is critical for comprehending just how fragile economic pillars can become in a world of limited natural resources.

The cement industry is well aware that depending on just one element represents a dangerous vulnerability in operations.

To date, many substitutes for gypsum have

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been tested, but none have made the leap into widespread industrial use. As a result, ready availability of gypsum at an affordable price is a key concern for producers in the 12th Five Year Plan, particularly since world supplies are reaching their limits.

Supplies Stretched Thin Currently, only three methods exist for sourcing gypsum. It may be mined locally in India, reclaimed as an industrial byproduct, or imported. Each of these sourcing arrangements comes with its own unique challenges and inherent limitations.

Domestically mined gypsum is preferable

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Reclamation of gypsum is possible and something that many producers are already doing. Gypsum is a by-product of sulfide oxidation and can be recovered using flue-gas desulfurization at coal-fired electric plants and factories, a process that also works to reduce emissions for the site in question. Environmental groups have mandated that many manufacturing plants using coal-fired electric sources on site in India perform flue-gas desulfurization, but not all such plants strive to reclaim gypsum, and there is no denying that the process has significant costs for a limited amount of recoverable gypsum. What gypsum is recovered sits at a relatively fixed level year to year without much potential to grow to meet industry needs for more.

These limits on what can be mined or reclaimed domestically means that the demand difference must be made up with imports. This is no straightforward process.

One of India's neighbors with a significant gypsum supply is Thailand, but the country is currently limiting exports in an effort to protect their own internal cement producers. The gypsum Thailand does make available is part of a price-optimization program run by the Thai government, which seeks the highest price for the gypsum that the market will bear. Currently, the price for gypsum is around US$16.50 per ton, but Thailand's optimization price for its domestic producers is US$33 per ton. This sharp potential price increase is unpopular with regional buyers who want fixed lower prices. It has also raised tensions between the nations.

Unfortunately, India's next choice source for gypsum is mired in global controversy. Iran is a key Indian trading partner for oil and also home to significant gypsum deposits. However, the global sanctions against the country make it difficult for Indian producers to rely on Iran as a gypsum supplier. Even with reasonably healthy trade relations with Iran for other resources, India must do a delicate diplomatic dance to maintain any gypsum flow.

Future Supply Sources Faced with limited sources and rising costs, Indian firms are seeking new sources of gypsum in distant and less exploited areas.

These areas include previously overlooked gypsum sources that have been made more viable by the rising cost of the mineral.

A star in this area is the Sultanate of Oman.

The export volume from Oman reached one million tons in 2011, a significant amount given India's consistent limit of six to seven million tons, though not all of Oman's supply was bound for India. More could be made available to Indian produc-

ers, but Oman's ability to move gypsum out of its local markets is currently limited by its shipping capacity.

ment eliminated entirely, but this was not included in the most recent Union Budget, despite industry group recommendations.

In this area, there is positive progress afoot. To move this and other dry goods cargo more effectively to market, the Sultanate is expanding the main Port of Salalah. When the project is complete in 2014, Shalalah will be able to handle the deeper drafts of larger cargo freighters and provide nearly 1,300 linear meters of berth space for more efficient and affordable movement of goods. Though the net price for exported gypsum from Oman is predicted to be somewhat higher than the current US$16.50, it is not expected to be anywhere near Thailand's estimated US$33 asking price.

Transport efficiencies are also getting a second look. The 2012 rail freight increases have a heavy impact on producers located far from the gypsum mining sites in Rajasthan, making imported gypsum more cost effective than domestic gypsum in some cases. On-site reclamation efforts, which eliminate some transport costs, are also being more carefully monitored as opportunities.

Managing in the Meantime As work is done to bring this new source online for Indian producers, the cement industry is working every supply angle that it can to control costs. A successful campaign on gypsum import taxes lowered the customs duty assessment from five percent to 2.5 percent. The cement industry as a whole would like to see the duty assess-

It is true that gypsum accounts for just two to three percent of the total cement price, but margins are increasingly important for Indian cement producers. Each price hike is a painful moment where either margins thin even more or costs are passed through to protesting consumers. In this way, a seemingly minor ingredient in OPC becomes a major economic linchpin and flashpoint, one that should be understood and monitored by anyone looking to predict the future of the Indian cement industry. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek

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India Gypsum Demand and Supply

by Mr. Ramachandran, CEO, Zawawi Minerals

As per the planning commission working group, India's cement manufacturing capacity may climb to 479 million tons by the terminal year of the 12th Five Year Plan, ending 2017, despite the existing over-capacity scenario. According to some analysts, India’s cement production will expand to 550 million tons by 2020 and its annual per capita use of cement will rise to 350 kg from 150 kg. Some event point to India achieving 860 million tons of cement capacities by 2030.

According to various research reports, and in view of upcoming massive infrastructure projects, cement consumption is expected to advance at around ten percent CAGR growth during 2012 – 2014 and thereafter at around eight to ten percent on a year on year basis. This rate of growth is expected to strengthen the long-term investments viability of the Indian cement industry.

Rising Costs The rising cost of energy, transportation and persistent raw material pressures (like gypsum and coal) have placed a heavy strain on the cement and construction industry. As a result, Indian companies need to explore alternate sources of energy and raw materials.

Present gypsum sources for India include local natural gypsum, imported natural gypsum, and by-product gypsum. Historically, the cement industry in India met their gypsum requirement predominantly from natural gypsum sources in Rajasthan and byproduct gypsum from industrial sources. However, such sources for gypsum peaked and stagnated in recent years,

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2001 - 2010 (10 Years) Natural Gypsum Production in INDIA (In Million Tons) 4

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resulting in more imports mainly from Thailand and Iran.

Thailand has already restricted the export of gypsum by quota and price control mechanisms with the goal of protecting the local cement and gypsum board manufacturing industry and of preserving its mineable gypsum reserves. Iran could be a source for gypsum, but trade barriers will continue to obstruct gypsum imports.

With awareness of greater gypsum importation, the Union Budget 2011 reduced the

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import duty on “critical raw material gypsum” and coal by half from five to 2.5 percent. The cement industry had asked that the import duty on gypsum and coal be reduced to zero percent to partly offset rising manufacturing costs, and in February 2011 the department-related parliamentary standing committee on commerce recommended a zero percent import duty on gypsum.

Local Natural Gypsum India produced around 16 million tons of gypsum between 2006 and 2010, averaging

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Thailand has reserves of 200 million tons, but the Thai government is taking steps to increase the selling price of gypsum before stopping exports. Based on its calculations, the Thai government may likely push its imported gypsum price up to an estimated US$33 per ton from the current FOB price of around US$16.50 per ton. Additionally, reports suggest the country will in the years to come need to stop exporting its gypsum and devote the remainder of its resources to domestic consumption; otherwise, it will face paying higher prices to

By-Product Gypsum As per the Indian Bureau of Mines (IBM), around five million tons of waste gypsum, such as phospho- and flouro- gypsum, are generated annually. In the last three years, the cement sector has used between 2.25 and three million tons. These quantities are constant and cannot increase substantially due to higher transportation costs.

Indian producers are dependent on the import of high quality natural gypsum.

In total, local gypsum production/availability is limited to six to seven million tons per year; thus, the balance of demand must be met by imported gypsum.

import foreign, likely Australian, gypsum at prices more expensive than the current Thai FOB selling price.

Imported Natural Gypsum Indian cement producers are dependent on the import of high quality natural gypsum, mainly from Thailand. Other reserves that India could use are in the Sul-

At present, the Thai government has taken steps to stop new mines from opening, has controlled gypsum exports through a quota system, and has divided the export market into different segments that prevent

INDIA – Imported Gypsum Consumption Growth 25.0

Total Gypsum consumed / to be consumed in million tons (5% of Cement Production)

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In Rajasthan, FCI Aravali Gypsum and Minerals India and Rajasthan State Mines and Minerals control gypsum mining.

Rajasthan accounts for nearly 99 percent of the total production of gypsum in the country. However, as it is located in the northwest region, transportation costs are prohibitive for many cement producers.

tanate of Oman and more distant countries like Australia, Mexico, and Morocco.

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around three to 3.5 million tons annually.

In 2010, it produced around 2.5 percent of the world’s 146 million tons of natural gypsum. The country’s total recoverable cement and plaster grade gypsum reserves are 54 million tons (2005) with the majority located in Rajasthan (over 97% of total reserves).

exporters from expanding into new markets. This has increased the selling price of Thai natural gypsum export, but not significantly.

Importing gypsum from Iran is becoming difficult because of various restrictions/ sanctions imposed by the United States and the United Nations, and there have been challenges around payments to Iran.

However, few Indian traders appear to be importing gypsum directly from Iran, possibly choosing a more indirect route of working with other Iran-friendly countries to facilitate the transactions.

Opportunity for Sultanate of Oman Given the potential shortfall in supply, and an increase in gypsum demand in India, a significant price increase for gypsum in the coming years is likely. Even though gypsum accounts for just two to three percent of the total cost of cement sales, cement manufactures cannot help but remain sensitive to any price increase. Against this backdrop, the potential supply of gypsum from the Sultanate of Oman becomes a very interesting prospect.

Oman is gearing up for an increase in exports. For example, the Port of Salalah has started a massive expansion to handle future general cargo, including gypsum, exported from the Sultanate of Oman. The US$130 million expansion will be completed by 2014 and includes the construction of 1,266 meters of linear general cargo berths with drafts of 18 meters. Once completed, the port will be able to handle the capacity of 40 million tons per annum of dry bulk commodities.

In 2011, the Sultanate of Oman gypsum export volume reached nearly one million tons, and Oman gypsum exporters are forecasting a FOB selling price above US$16.50 per ton in the coming years. Indian cement manufactures will be attracted to Oman’s affordability, as the smaller increase in the total cost of cement sales will be easier to justify, given it can be adjusted against local cement transportation costs and the marginal increase on the cement selling price. BMWeek CemWeek CW Group BMWeek BMWeek

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cement market & competition

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arket and competition

ement manufacturers asked the government for additional incentives and for the sector to be classified as a core industry and subject to a lower excise rate like coal and steel. In February, the government increased the base excise duty rate on cement from 10 to 12 percent. The cement industry responded in mid-March with a Rs 7 to 10 per bag price hike, which is likely to further impact the slowdown in demand for cement noted in February.

ulations have caused problems for the industry. The current system, they say, taxes raw material imports but allows duty free cement imports, which makes locally made cement uncompetitive. Manufacturers assert that import duties for coal destined for cement companies must be waived and their coal supply assured.

Finally, cement makers add that the industry should be recognized as a strategic industry and thus must be given adequate support and protection by the government. They point out that the industry is a key enabler for the country’s ambitious infrastructure programs.

List of Demands Presented In February, India's Cement Manufacturers Association (CMA) asked the government to cut the excise duty rate from ten percent to six to eight percent. It also demanded that the duty structure be simplified and based on either a specific rate per MT or an ad-valorem basis, without relating to MRP.

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According to one source, the CMA requested that the government scrap the import duty on coal, pet coke, gypsum, and other fuels, and that a level playing field be provided. This included levying a basic customs duty on cement imports.

Manufacturers claim that the rising cost of imported coal and raw materials such as gypsum are affecting the industry. They argue that the country’s importation reg-

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Subsequent Price Hike Cement manufacturers in March revealed plans to increase cement prices by Rs 7 to 10 per bag. With the latest round of price hikes, cement prices now hover between Rs 280 and 300 for a 50kg bag. Manufacturers argue an increase was inevitable after the government raised the base excise duty rate from 10 to 12 percent. New cement price hikes took effect in mid-March.

Rising cement prices are expected to put

Average cement prices went up by 17 percent to Rs 283 in January from Rs 242 in the same period last year. Cement sales slowed due to lower off-take by real estate and infrastructure companies. Cement dispatches in January were up three percent to 16.27 million tons, largely due to a lower base last year.

Cement production and sales among the India CMA members grew by six percent to 144 million tons and 145 million tons.

At the same time, capacity utilization fell to 73 percent as cement companies trimmed output to align with the slowing demand, leading to lower capacity utilization.

Operation: Busted Police unearthed three illegal cement operations selling product under different popular brand names at Ranti in Madhubani. The police located the factories and seized 3000 sacks of cement. Guddu Kumar, accountant for the operations owned by Sanjay Singh, was arrested. The factories had no licenses. The cement was

sold in the retail market in sacks with tags of premier brands like ACC, Lafarge, LT and Birla Gold.

Shift to Core Business VRL Logistics plans to sell its wind power and cement business units and concentrate on its core business. VRL is leaving the cement industry due to its large investment requirements and for other notable reasons—for instance, its difficulties in acquiring land around Karnataka and problems securing energy and water from state owned utilities.

The company set up its cement unit VRL Cements in June 2010. Initially, VRL planned to set up a 2-mtpa cement plant at Karnatake for an investment of Rs 954 crores.

Help Wanted State officials have called on the government to help salvage state owned Mawmluh Cherra Cement (MCCL) by releasing funds for its expansion. MCCL at Sohra is facing neglect, as the expansion and modernization project once initiated by the government is now in limbo. Thus the company, struggling with old machinery, frequent breakdowns and continuous operational problems, has suffered a decline in production and earnings. BMWeek BMWeek BMWeek

focus New Line Launched Jaypee Cement has launched its product lines in Hyderabad and plans to increase its retailer network to achieve a dominant position in that market. It plans to utilize more than 1,100 dealers in the state.

CEMENT: MARKET AND COMPETITION

even more pressure on demand. Demand was down in February, slowing the recovery seen in January. Most cement companies reported marginal growth in sales for January, except for Ambuja Cement, which reported a fall in sales even after tightening its production.

Beneficial Tax Laws Cement companies in the southern region are expected to benefit from a reduction in the excise duty. The government reportedly is increasing the excise duty from 10 to 12 percent, while reducing the fixed component of the duty from Rs 160 to Rs 120 per ton. The move is expected to increase the effective excise duty by one to 1.5 percent; however, for most cement companies it will have little impact, as the excise duty hike is expected to be passed on to consumers. The cement industry gets close to one-fourth of its total coal requirement through imported coal.

The proposal to exempt non-coking coal from basic customs duty will have a positive impact of one to 1.5 percent on the cement industry’s operating profit.

Overall, at the company level, the net impact of the move will vary based on individual dependence on imported coal.

CW Groupexpect Coal Week CemWeek Still, analysts the impact to be CemWeek CW Group Coal Week positive for southern operators like India CemWeek CW Group Coal Week Cements and Dalmia Cements as their proportion of coal imports is higher.

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cement volume and pricing

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olume and pricing

ement prices are projected to remain high in the coming fiscal year, thanks in large part to rising input costs. Five million tons is the magic number for ACC and EACC. ACC plans to increase its production by five million tons, and EACC will add five million tons of capacity over the next three years. Not to be outdone, Lafarge ups the ante with plans to expand its capacity in India in the coming years by two million tons per year.

Cement Prices to Remain High Cement prices are seen as remaining steady and high in the coming fiscal year on the back of continued pressure from rising input costs, according to the Centre for Monitoring Indian Economy (CMIE).

During 3Q FY12, power and fuel costs rose by 10.7 percent YoY due to the twin effects of higher coal prices and a cheaper rupee against the dollar.

Freight costs were also higher by 12.5 percent YoY due to an increase in diesel costs and a surcharge levied by railways. Prices were expected to average 3.8 percent higher in FY13.

ACC to Increase Production Spurred by higher output in February, ACC reported plans to increase production by five million tons in the coming years. February cement production hit 2.14 million tons, up by nine percent from the 1.97 million tons last February, while dispatches accounted for 2.15 million tons compared with two million tons, an increase of eight percent.

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For the first two months of this calendar year, cement production stood at 4.40 million tons compared with 4.03 million tons in the corresponding period last year, an increase of nine percent. Furthermore, sales were at 4.38 million tons, up by eight percent from the 4.04 million tons in the January and February period of last year.

EACC Ups Capacity EACC plans to create five million tons of additional annual capacity, investing an estimated Rs 3,000 crores. The expansion, which is likely to come on stream over the next three years, will take the cement manufacturer’s overall capacity to 35 million tons a year.

Lafarge to Expand Lafarge says it will continue to expand its presence in the Indian market, adding capacity in the coming years. The company reports it has achieved eight million tons of cement manufacturing capacity in the country and plans to add more, mostly through internal expansion at its existing plants.

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The company's cement manufacturing capacity has increased from 6.5 million tons in FY10 to eight million tons currently. Lafarge plans to increase production capacity in India by two million tons per annum.

According to sources, the company recently expanded its capacity through new production lines at Jojobera in Jharkhand and at Mejia in West Bengal. Its four Greenfield projects in Rajasthan, Karnataka, Meghalaya and Himachal Pradesh are in different stages of development.

CEMENT: volume and pricing

Reduction in Prices Sought Former lawmaker Naresh Puglia recently appealed to the Maharashtra government concerning cement prices. According to sources, the former MP called for the reduction of cement prices by Rs 50 per 50 kg bag in order to bring parity in the rate. Puglia argues the manufacturing cost of cement for companies such as Ambuja Cement, UltraTech and ACC, which have plants in the area of Chandrapur, currently remains below Rs 2,000 per metric ton. However, the prices for a number of cement products in the retail market are Rs 287 per bag for UltraTech, Rs 285 for ACC, Rs 272 for Manikgarh, and Rs 245 for Murli Cement. He added that the cost in Nagpur for the same is at Rs 300.

Previously, cement prices in Chhattisgarh, as well as Himachal Pradesh, declined by Rs 50 and Rs 25 per bag, respectively. The decline was reportedly made possible after government intervention. Puglia sent a letter to Chief Minister Prithviraj Chavan requesting intervention. BMWeek CemWeek BMWeek BMWeek

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focus Industry Estimate Indian cement demand will continue growing in the succeeding periods, according to one research firm. Expectations of 11 percent YoY growth in February and flat YoY growth in March 2012 (due to higher base) led the industry watcher to place all-India cement consumption growth at 6.5 percent in FY12E against 4.4 percent in FY11 and 10.2 percent in FY10.

Cement demand has picked up mainly due to a low base and an increase in off take from construction activities post-monsoon.

However, demand was subdued between April and October 2011, growing by just 3.5 percent YoY, as consumption from the housing and infrastructure segments remained sluggish because of the rising cost of capital, land acquisition and clearances, and the unavailability of key raw materials like coal.

Cement firms reaped the rewards of higher cement demand post-monsoon in February, posting better numbers across the board.

Demand was improving in rural housing, semi-urban housing and infrastructure segments in the western, northern and most importantly southern regions. Major cement players reported a growth of 12.1 percent YoY in the last month. Cumulative sales for the top four manufacturers improved 8.2 percent to 94 million tons between April 2011 and February 2012.

thanks in part to a low base and an increase in construction activities post- monsoon.

According to the firm’s report, Jaypee outperformed other players with 27 percent YoY growth in dispatches, followed by Shree Cement with 18 percent YoY. UltraTech and ACC reported YoY growth of 11 percent and nine percent, respectively, in dispatches while Ambuja reported 4.3 percent YoY growth. JK Lakshmi and HeidelbergCement reported growth of seven and six percent YoY, respectively.

Consumption to Grow India cement consumption is expected to grow by 6.5 percent in FY12E, according to a report by a major securities firm. Dispatches grew seven percent during April 2011 to January 2012, mainly led by 15 percent YoY growth during November through January 2012. Demand picked up during the period,

On an MM basis, aggregate dispatches increased five percent due to a pick-up in demand post-festival season. Jaypee and JK Cement reported a sequential jump of 13 percent and 11 percent in dispatches, respectively. In January 2011, overall industry dispatches grew 11 percent.

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rasim Industries appoints new managing director. Protestors, conducting a sit down strike in Chandrapur, prove successful in getting the government to reduce cement prices. sion. The company acquired Swedish pulp maker Domsjo, which was acquired last April for US$340 million. In December, Grasim also announced plans to invest US$500 million to build a yarn manufacturing plant in Turkey.

Protesters Prevail Protesters conducted sit down strikes in Chandrapur in a bid to force the government to reduce cement prices. Hundreds of activists of Congress, led by former MP Naresh Puglia, staged a day long sit-in at the old Warora Naka Square to press their demand for reducing the cement price in the state of Chhattisgarh.

Mr K.K. Maheshwari, Managing Director, Grasim Industries Ltd.

New Managing Director The Aditya Birla Group appointed KK Maheshwari as managing director of Grasim Industries. The appointment comes as the cement-to-yarn company prepares to grow its businesses in India and abroad. Prior to assuming the post, Maheshwari served as the company’s director. The position of managing director is new in the company.

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The managing director will assist the chairman in implementing growth plans for the company. Maheshwari has been in the industry for around three decades and has handled leadership positions in the chemical and trading businesses for the conglomerate.

The company has made numerous acquisitions in preparation for its planned expan-

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Puglia demanded a curtailment in the import duty on cement to bring down overall cement prices throughout the country. Chandrapur is the sole center for cement production in the state, housing five major cement industries. These industries collectively produce around 40,000 tons (2 lakh bags) per day.

Puglia had demanded a reduction of Rs 50 per bag. Cement companies in Chhattisgarh were forced by the government to decrease their price by Rs 50 per bag, according to one news report. BMWeek CemWeek BMWeek BMWeek

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cement m&a and finance

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everal cement manufacturers post higher earnings for the third quarter of FY12. Aditya Birla continues expansion locally and abroad, and Jaiprakash finally resolves to spin off its cement plants to the wholly owned Jaypee Cement. Meanwhile, eight cement companies in Meghalaya come under investigation for alleged environmental violations.

Star Cement in order to make it a fully owned overseas subsidiary. The company intends to exercise its option to purchase the local partner’s stake negotiated when they bought majority control of the company from ETA Star Group. The company’s stake in Star Cement is currently at 80 percent. The deal would give UltraTech access to the West Asian market, which until now has been serviced by its plants in Gujarat to save on logistics costs.

Jaypee Cement's Bhilai grinding unit

Expansion Locally and Abroad The Aditya Birla Group, through its UltraTech unit, is reportedly in talks to buy Adhunik MSP Cement's Meghalaya plant for over Rs 700 crores. According to sources, the company plans to buy the 1.5 million ton unit to bolster its presence in the fast-growing but largely untapped northeast market. Due diligence for the unit located at Jaintia Hills has been completed and is now pending no-objection certificates, as mining leases and environmental clearances are prerequisites for any large manufacturing transactions in the region.

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The deal allegedly also hinges on the plans of a multinational company believed to be in talks to buy the unit. While the name of the company could not be ascertained, it has been speculated that Lafarge, which has been trying to make deeper inroads into the region, may be the buyer. Lafarge's plan to set up a 1.1 million ton cement unit at Jaintia Hills is facing some environmental opposition and the firm may want to buy a ready-made unit.

UltraTech Cement is also looking to purchase its partner’s stake in Dubai-based

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Resolution Jaiprakash has resolved to spin off its cement plants to its wholly owned unit Jaypee Cement. The news comes after the company’s equity shareholders and creditors, at a meeting directed by the Supreme Court and held in February, duly approved the Scheme of Arrangement between the company and its wholly owned subsidiary. As previously reported, the group is in negotiations with investors to sell part of its cement business to reduce its debt, which is over US$8 billion, by more than a third.

Investigation Underway The government is set to initiate investigations against eight cement companies

Sales from operations were 20 percent higher at Rs 941.5 crores despite expectations of a seasonal downswing due to the northeast monsoon season and slow construction activity in some parts of southern India.

CEMENT: m&A and finance

quarter, more than double the year-ago quarter’s Rs 21.5 crores.

Sagar Cement announced that its profits increased five-fold to Rs 17.6 crores from Rs 3 crores in the third quarter. Overall, the company’s income increased by 43 percent to Rs 161 crores. The company reports the increase in profits was due to stable cement prices in Andhra Pradesh.

Sagar added that its plant registered utilization levels around 60 percent, producing over 4.46 lakh tons of clinker and 3.80 lakh tons of cement. Production was up 44 percent. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek

over alleged violations of environmental laws. The state government of Meghalaya established a Joint Investigation Committee (JIC) to re-examine findings involving eight cement plants operating in the Jaintia Hills district. The ongoing investigation centers on whether the companies encroached into protected forests while prospecting for raw materials.

HeidelbergCement posted a net loss of Rs 18 million for the quarter ended December 31, 2011, compared to a loss of Rs 54.9 million for the quarter ended December 31, 2010. Total income increased from Rs 1.96 billion for the quarter ended December 31, 2010 to Rs 2.60 billion for the quarter ended December 31, 2011, representing an increase of 32.59 percent.

The JIC will re-verify and redefine forestlands that were used and submit their finding to the state government. There have been calls from residents to ban mining operations in the area to help prevent environmental damage.

ACC and Ambuja reported higher YoY earnings in the December quarter, but this was viewed as rather subdued by some investors. ACC posted a 27.8 percent YoY growth in net sales to Rs 2,502.73 crores for the December quarter. Growth, as expected, was driven by an increase in price realization. Ambuja’s net sales grew 30 percent over the year-ago period to Rs 2,329.1 crores on the back of 11 percent higher sales volume. Realization per ton of cement sold rose 17 percent from the yearago period.

Earning Reports JK Cements turned in numbers that beat estimates last quarter, raising expectations for the cement maker. JK Cement's Q3 FY12 PAT at Rs 435 million was significantly higher than estimates of Rs 204 million, primarily due to steep improvement in the margins on grey cement. EBITDA increased 120.3 percent YoY (100% QoQ) to Rs 1.2 billion, and the EBITDA margin improved 795bps YoY to 19.4 percent.

India Cements saw its profits more than double in 3Q FY12 on stronger demand and an accounting change. It posted a net profit of Rs 56.3 crores for the December

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focus Trinetra Cement Issues Shares The Board of Directors of Trinetra Cement at its meeting held on February 06, 2012, allotted 605,000,000—nine percent Non-Convertible Non-Cumulative Redeemable Preference Shares of Rs 100 each fully paid-up, at par, amounting to Rs 605 crores in favor of the holding company, India Cements, on a private placement basis.

Consequently, the Paid-up Share Capital of the company climbed from Rs 14.48 crores to Rs 619.48 crores.

Majority Sought The Shriram Group will execute a Special Purpose Vehicle (SPV) to acquire a majority in Sree Jayajothi Cements. The SPV will be floated by other Shriram Group companies for 68 percent of Sree. Earlier reports had indicated that the Shriram Group was planning to enter the cement industry by acquiring a majority stake in Sree Jayajothi Cements by converting its dues into equity.

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cement projects and expansions 5

p

1 rojects and expansions

everal cement manufacturers gear up for further expansion. Additionally, new entrants such as UPCL and Jaiprakash Power Ventures foray into the cement market with new endeavors.

Andhra Cement Company (ACC) The ACC plant at Dachepalli is set to reopen in June after the Jaypee Group agreed to pay the remaining 75 percent of its employees wage dues. The company is prepared to sign an agreement settling its labor dispute with the unions in April.

The plant has been shuttered since 2010 following a lockout declaration by the facility’s previous owner, the Goenka Group. The facility was acquired by Jaypee last year for Rs 300 crores, and the company intends to invest a further Rs 400 crores to upgrade the plant. The facility currently has a 1.5 million ton capacity. Before the lockout, the Goenka Group had initiated plans to upgrade the plant capacity to 3.5 lakh metric tons and secured a loan of Rs 400 crores to finance it.

Other ACC plans in the works include the establishment of a 2.8 million tons clinker production unit at Jamul in the Durg district of Chhattisgarh. Though the company did not disclose the exact investment in the plant, industry sources put the figure at around Rs 800 crores. The plant is expected to be commissioned in three years.

28 MARCH/APRIL 2012

M.A.M.R. Muthiah, Managing Director, Chettinad Cement, C. Sudhakar, President (Operations and Projects) and M.C. Kini, President (Business Development)

Chettinad’s Expansion Plans Chettinad Cement will commission a 2.5mtpa cement plant in North Karnataka this year and has finalized plans to expand into Andhra Pradesh. The Karnataka unit will mark the company’s geographical expansion outside Tamil Nadu and will give it

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market reach into Maharashtra, where it plans to put up a grinding unit with about 1.5 mtpa.

The company also has plans to expand its 11.5 mtpa production capacity by about 15 million tons, with 7.5 mtpa each in Karna-

COMPANY/LOCATION

COMMENTS

Birla Corporation/ West Bengal

Plans underway for a 1.2 mtpa brownfield expansion project at the Chittorgarh district in Rajasthan and a 7 lakh ton per annum expansion at Durgapur in West Bengal.

Concsast/ Arunachal

Wants to build a 1.2 mm ton cement plant in Aruchanal. The company, which recently acquired a majority stake in a 0.5 mtpa cement plant at Jamshedpur (Jharkhand), is also looking to invest Rs 3 billion to expand the capacity of the plant to 1.2 mtpa by the end of 2012.

Estimated investment: Rs 8 billion .

Chettinad Cement/

Dalmia Cement will start expansion activities in Karnataka and Meghalaya soon. It will set up two plants in Belgaum and Gulbarga. This will have an initial capacity of about 2.5 mtpy for cement plants.

North Karnataka & Maharashtra

Plans to commission a 2.5 mtpa cement plant in North Karnataka in 2012, and intends to establish a 1.5 mtpa grinding unit in Maharashtra.

Jaypee Cement/ Andhra Pradesh

The company’s Rs 2,500-crores cement plant near Jaggayyapeta in Andhra Pradesh will be activated in the next month. The plant has a production capacity of five million tons a year. The company also plans to invest Rs 300 to Rs 400 crores to ramp up capacity of its cement plant in Krishna district.

Ultratech/ Bihar

New grinding plant in Bihar operational within 21 months.

Estimated cost: Rs 326.10 crores.

ACC/ Chhattisgarh

A 2.8 million tons clinker production unit at Jamul in the Durg district of Chhattisgarh.

Plant is expected to be commissioned in three years.

Estimated investment: Rs 800 crores.

Jaiprakash Power/ Madhya Pradesh

Plans to set up cement grinding units at Nigrie and Bina to utilize fly ash generated by its thermal power plants situated nearby. Estimated investment: Rs 3,500 crores.

Ambuja Cements/ Rajasthan

Setting up a 2.2 mm ton clinker unit at Nagaur in Rajasthan, a bulk cement terminal at Mangalore, and a brownfield expansion project at its Sankrail grinding unit in West Bengal.

taka and in Andhra Pradesh, where it plans to launch its operations with an acquisition of a 1.5 mtpa unit in addition to its Greenfield cement plant. These expansions will occur by 2015.

To date, Chettinad Cement has three units in Tamil Nadu at Karur, Dindigul and Ariyalur, which are supported with captive thermal power capacity of 105 MW. An additional 30 MW is also coming on line at the Dindigul plant.

New Grinding Unit UltraTech has secured approval from the Bihar government to build a grinding plant in the area. It will be built at an estimated cost of Rs 326.10 crores. The proposed cement-grinding unit will come up within the next 21 months. The unit will draw raw materials like gypsum from Paradip, fly ash from NTPC at Barh, and clinker from Rawan Cement Works at Chattisgarh.

Blending Unit Proposed UPCL is proposing to set up a separate cement-blending unit at its plant in the Udupi district to address fly ash problems which could potentially pose an environmental threat to surrounding agricultural fields and houses. The Minister for Environment and Ecology, J Krishna Palemar, confirmed that fly ash generated from UPCL was being transported to ACC for making cement. In the near future, a separate cement-blending unit will be established near its power plant (UPCL).

Birla Ramps Up Birla Corporation intends to ramp up spending in the next two years to expand its installed capacity. The company wants to spend Rs 1,500 to 1,600 crores to enhance its cement manufacturing and handling capacity and to hike captive power generation capacity to support the expanded output.

focus New Grinding Plant for Mangalam Cement Mangalam Cement is installing a new grinding plant in Aligarh near New Delhi in Uttar Pradesh. The plant is to be a combigrinding system consisting of a Polycom high-pressure grinding roll with two 1,060 KW drive units, a Sepol-PC high-efficiency separator, and a 3.6 m x 8.0 m ball mill with a drive power of 1,300 kW. The grinding plant will have a rated cement output of 150 tph.

CEMENT: projects and expansions

Cement Projects/Expansion Table

Cochin Port bids out cement bagging plant project The Cochin Port Trust (CPT) has invited tenders to build a cement bagging plant with a capacity of ten lakh tons. The port already has an existing bagging plant, owned by Ambuja Cement, with a capacity of three lakh tons. Another bagging plant with a capacity of two lakh tons will also be built by UltraTech Cement. The port will lease six acres of land for a period of 30 years near the Q5 berth at Ernkaulam Wharf to set up the new plant. The berth has a draft of ten meters and will have rail tracks passing very close to it. The new plant will become operational in two years and will help facilitate cement exports.

The bagging plant will pump cement from ships docked at port to silos in the plant.

From there it would be pumped into individual bags and delivered to markets in Kerala as well as the neighboring states of Karnataka and Tamil Nadu.

It is currently implementing a 1.2 mtpa brownfield expansion project at Chittorgarh district in Rajasthan, which is expected to be commissioned by the end of this financial year, along with a seven lakh ton per annum expansion at its cement facility at Durgapur in West Bengal.

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cement equipment

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ement equipment

ntensiv-Filter to build new bag filter system for Lebanese-based Ciment de Sibline. Sacci uses Malvern Instrument's Insitec on-line laser diffraction particle size analyzer at its Tavernola site.

Cachapuz Bilanciai Group reveals new SLV Cement Bags Counting Module.

Intensiv-Filter Receives Order from Ciment de Sibline Ciment de Sibline, the third largest clinker and cement manufacturer in Lebanon, producing 12,000 tons of cement annually, has placed an order for a new bag filter system. Intensiv-Filter received the order for the turnkey supply, including complete engineering, supply of mechanical and electrical equipment, assembly, commissioning, final inspection, and approval of the plant.

For energy savings and utilization of grate cooler waste gases for raw materials drying, Ciment de Sibline decided to replace the existing two separate dedusting systems—a multicyclone on the cooler exit and an ESP for mill and preheater kiln gases—with a new common bag filter. The new bag filter will dedust the kiln/raw mill gases and the clinker cooler excess air.

The filter, part of the ProJet mega series, will be arranged as a double-row filter. After disassembly of the old ESP by Intensiv-Filter, the new filter will be installed on the existing footprint of the old ESP. The volume flow amounts to maximum 310.000 m³/h a.c. at a dust load of 33 g/m³ n.c.

30 MARCH/APRIL 2012

To reliably clean the raw gas at a maximum operating temperature of 200 degrees Celsius, the ProJet mega bag filter is equipped with filter bags made from fiberglass fabric with PTFE membranes. The bag length measures 8m. The patented cleaning control system, JetBus controller, along with the pressure-controlled cleaning system ECO will ensure an energy-efficient opera-

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tion and constantly optimized dust removal. Cleaning will be executed in the semioffline mode with low-pressure technology.

Real-time Particle Sizing Enables Higher Quality Cement with Less Manual Input Cement producer Sacci is using an Insitec on-line laser diffraction particle size ana-

lyzer from Malvern Instruments at its site in Tavernola, Italy, for process control of the cement mill to enhance product quality and reduce the time that operators spend on process control. The use of real-time particle size data to automate the milling circuit that produces finished cement has liberated operators to focus on higher value work. At the same time, it has significantly improved product consistency.

“Before we installed the Insitec we relied on off-line particle size data to control the milling circuit,” observed Alessandro Mazzucċo, Plant Quality Manager. “The quality of the data was fine but the frequency of measurement, every two hours, wasn’t really high enough. Quite large changes were made after each measurement and so our product was not as consistent as we would have liked.”

At the plant, particle size data are used to automatically vary the speed of the classifier used to separate the milled cement into a fine product stream and a coarser recycle. In the past, this control loop was driven by data measured in the laboratory using a Malvern Instruments Mastersizer 2000 laser diffraction particle size analyzer. Now, the data come from the on-line Insitec system.

The Insitec is installed on the elevator conveyor that carries finished product to the storage silo. It automatically samples the cement via a two-stage sampling system, which ensures a representative cut of the very large process flow. A full particle size

FLSmidth has achieved authority approval of its first acquisition in China. Together with a minority shareholder, FLSmidth has started a company to market and sell air pollution control products to the Chinese cement industry.

This local company is groundbreaking for FLSmidth as it combines a local presence and relations with global technologies and resources.

It will make FLSmidth, overnight, a powerful player in the multibillion-dollar Chinese market for environmental control technologies.

The founder company, Chinese Sino Environment Engineering Development Company (SEPEC), continues as a minority shareholder and brings a large reference base and contact network from the cement industry in China both on the corporate and plant levels.

After a couple of years with organic growth in China, FLSmidth has now, through the acquisition, embarked upon the second stage of its China strategy to become a local player with local cost levels.

"FLSmidth and SEPEC are the perfect fit. FLSmidth's strong technological platform cou-

distribution is produced every five seconds, but rolling average data are used for process control.

This continuous data stream gives much finer control of the classifier, which is now varied within far tighter limits compared with using off-line measurement, leading to a more consistent product. Automating sampling, analysis and control has saved considerable operator time—time that is now being used to further other production goals.

New SLV Cement Bags Counting Module Disclosed Cachapuz Bilanciai Group has revealed the new SLV Cement Bags Counting Mod-

pled with SEPEC's strong organization, reputation and customer base in China will enable us to develop air pollution control products, which are uniquely designed together with the Chinese customer and fit his specific requirements," Group CEO Jørgen Huno Rasmussen comments.

CEMENT: cement equipment

FLSmidth to tap China’s air pollution control equipment market

The local company will market FLSmidth's highly efficient air pollution control products and thereby help Chinese cement manufacturers to fulfill the new and stricter emission standards imposed on the industry. As the majority shareholder, FLSmidth will retain the IP rights to the technology. The Chinese market accounts for half of the total world market for air pollution control equipment.

"With China's increased focus on environmental aspects as stated in the 12th five year plan, the timing of FLSmidth's local expansion is just right," says CEO of FLSmidth China, Anders Bech.

In the future, the plan is also to sell applications into the attractive and very similar markets for biomass fired boilers and waste incineration plants in China.

ule, which improves the bags’ loading and counting processes in cement plants. This new module, which relies on a proprietary algorithm to ensure an automatic and accurate counting, even in case of abnormal situations, can be applied in both truck and wagon loading machines and can be seamlessly integrated with an ERP. The module is composed of one SLV Cement Bags Counting Kiosk (to be installed in each loading line) which is RFID activated, controls the speed and counting sensors, and uses alert lights and information panels to inform the operators about the status of the loading and counting processes.

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CONSTRUCTION materials

I

nfrastructure & projects PIL receives order to rehabilitate and upgrade NH-23 section. Chennai Monorail Projects draws worldwide interest. Hindustan Construction Company completes main boring work on water tunnel.

NEW PROJECTS Gammon to upgrade NH-23 Section Gammon Infrastructure Projects (GPIL) received an order worth Rs 778.15 crore for the rehabilitation and upgrading of the Birmitrapur to Barkote section of NH-23 in Orissa by the NHAI. The company will upgrade 336.815 km of road under the NHDP IV on design, build, finance, operate and transfer (DBFOT) and on a BOT (toll) basis. Out of the Rs 778.15 crore, the company will receive a grant of Rs 311 crore for the project, which has a concession period of 23 years including a construction period of 2.5 years.

Four-laning of Solapur-Bijapur The government approved plans to fourlane the road from Solapur in Maharashtra to Bijapur in Karnatak (NH-13). The estimated cost for the construction of 110.542 km of road is around Rs 1,091.89 crore that includes Rs 89.41 crore towards the cost of land acquisition, rehabilitation, resettlement, and pre-construction. The project will be rendered under the NHDP Phase III basis in BOT (toll) mode of delivery and is part of the government’s infrastructural development plan in the country.

32 MARCH/APRIL 2012

Strong Response for Chennai Monorail Project The Chennai Monorail Project evoked a great response from developers around the world, with eight reputable firms expressing interest in developing the Rs 8,500 crore ambitious monorail projects. The eight bidders included Malaysian Scomi, Japan’s Hitachi, and Spain’s Kafe. The revised 57 km long Phase-I Chennai Monorail Project, when completed, will provide connectivity to the city’s bustling western and southern suburbs of Chennai.

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Bids for Trans-Harbor Link The Mumbai Metropolitan Regional Development Authority (MMRDA) received six proposals to pre-qualify for the construction of the Mumbai trans-harbor link worth Rs 8,800 crore. The six bidders are a consortia of 18 companies formed for submitting bids. The trans-harbor link will include a 16.5 km bridge across Mumbai harbor and a 5.5 km long viaduct to the Sewri and Nhawa area in South Mumbai.

The link will be the longest sea bridge in the country.

Widening NH-8 in Rajasthan Cleared The Cabinet Committee on Infrastructure (CCI) cleared the investment proposal of the four-laning and two-laning of certain stretches in the Gomati ChaurahaUdaipur section of NH-8 in Rajasthan.

The project is estimated to cost Rs 1,114.27 crore and is a part of the NHDP’s Phase II. The roads will cover the districts of Rajsamand and Udaipur in Rajasthan and when completed will expedite the improvement of infrastructure in the state, reducing the time and cost of travel for traffic moving between Gomati Chauraha and Udaipur in Rajasthan. update on PROJECTS Monorail Line in Chennai Axed The state government dropped one of the four proposed monorail lines to be built in Chennai. The corridor from Vandalur to Puzhal via Avadi (54 km) stretch was axed, as it runs through an undeveloped area with no pre-existing traffic. The revised 57 km long Phase-I is estimated to cost Rs 8,500 crore and is projected to include a network of three elevated corridors: Poonamallee to Kathipara via Porur (18km), Poonamallee to Vadapalani via Valasarawakkam (16km), and Vandalur to Velachery by way of Tambaram East (23 km). The project, when completed, will provide connectivity to the city’s bustling western and southern suburbs of Chennai.

Ahmedabad Metro Secures Aid The Gujarat state government allocated Rs 500 crore to the metro rail project in

continued from page 29

Over the next two years, expansion efforts will also include setting up a coal washery at its Satna unit in Madhya Pradesh, a 50 MW captive power plant at Chittorgarh, and a 35 MW project at Satna.

Ambuja Expansion Funded Internally Ambuja Cements plans to spend Rs 1,800 crores through internally generated funds to expand its production capacity. The company will set up a 2.2 mtpa clinker unit at Nagaur in Rajasthan. The feasibility study for the project is completed and environmental clearance has been obtained, according to the company’s annual report.

Ahmedabad. The Rs 15,000 crore metro rail project is proposed to cover a 45 km route in the first phase and would connect APMC Vasna to Akshardham via Ashram Road. Once completed, the metro will have an estimated 17-lakh commuters daily. The state government is also planning to connect the metro rail to the airport and Hyderabad. The project was first conceptualized by the Gujarat government in 2005 and was approved in 2006. completed projects

Construction materials: infrastructure & projects

Vascon Launches Residential Project Vascon Engineers launched a residential project called Nature Springs (a Green Township project) in the picturesque Talegaon in Pune. The 59-acre residential project is a joint venture between the Weikfield Group and Vascon. The residential project will offer two and three bedroom apartments, connected villas and luxurious independent villas. The cost for construction of the residential project is yet to be announced.

Additionally, the company proposes to set up a new bulk cement terminal at Mangalore. The terminal will be operational by September. A new brownfield expansion project to enhance capacity at its Sankrail grinding unit in West Bengal has also been initiated.

The company was allotted a coal block in Maharashtra by the Ministry of Coal for captive use as part of a joint venture in which Ambuja holds a 27.27 percent stake.

Ambuja is in the process of obtaining statutory clearances, such as a mining lease, and environmental and forest clearances.

The coal project is estimated to cost Rs 350 crores, and Ambuja Cements will invest Rs 95 crores.

Maroshi-Ruparel Water Tunnel The Hindustan Construction Company completed the main boring work at Mumbai’s Maroshi-Ruparel Water Tunnel Pro- Foray into Cement ject, awarded to the company by the Bri- Jaiprakash Power Ventures plans to raise Rs hanmumbai Municipal Corporation in 3,500 crores to fund its foray into cement 2007 at Rs 415 crore. The 12.2 km long manufacturing. Funds will be used to meet and 4 km wide underground tunnel con- the company's ongoing projects and/or the necting the city’s water distribution hub at projects of its joint venture and subsidiMaroshi to Matunga was completed. How- ary companies. The company’s board also ever, the tunnel will not be operational approved the set up of cement grinding until September 2013, as engineers have to units at Nigrie and Bina to optimally uticomplete cementing work and construct lize fly ash to be generated by its thermal around five to six shafts. When operation- power plants situated in those areas. BMWeek BMWeek al, the tunnel will provide more than half BMWeek of Mumbai’s homes with a better and consistent water supply. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek

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construction materials

E

quipment updates

aterpillar to launch 64 new products in 2012. XCMG introduces another generation of its XCT30 truck crane at Intermat 2012, and the Huayin Group displays its new models of Doosan loaders.

Terex Finlay to Exhibit at Intermat Terex Finlay will display several of its new pieces of equipment at the Intermat 2012 exhibition to be held in Paris, France in April. Pieces to be exhibited include the recently launched Terex Finlay 863 heavyduty forward facing screener and the Terex Finlay I-110RS impact crusher.

The new Terex Finlay 863 is a highly versatile and adaptable machine engineered and built for working in quarrying, mining, construction and demolition debris, topsoil, recycling, sand, gravel, coal and aggregate applications where site space is at a premium.

The aggressive forward facing inclined modular configuration screen box has a 2755mm x 1200mm (9’ x 4’) top deck and a 2755mm x 1200mm (9’ x 4’) bottom deck. A high performance 1000mm (40’) 4-ply belt feeder, with hydraulic gearbox drive, is fitted to the machine as standard and has proven performance and versatility in demanding and varied working environments. The hopper has a 5m³ (6.54yd³) capacity as standard. The machine is also equipped with three hydraulically folding discharge conveyors, allowing for maximum stockpiling capacity and associat-

34 MARCH/APRIL 2012

ed benefits of rapid set up and tear down times.

The Terex Finlay I-110RS horizontal impact crusher is designed to offer operators and contractors both excellent reduction and high consistency of product shape for performance in recycling and quarrying applications. These tracked impact crushers provide the versatility of a crushing and screening plant in one machine.

The unit features a 1000mm x 1000mm (40” x 40”) hydrostatic drive impact chamber with variable speed offering. The

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advanced electronic control system monitors and controls the speed of the rotor and regulates the heavy-duty vibrating feeder (VGF) with integrated pre-screen to maintain a consistent feed of material into the impact chamber while maintaining optimal crushing conditions.

Startup time for the Terex Finlay I-110RS is minimal, with the machine ready for crushing in less than five minutes. The heavy-duty crawler tracks and optional radio remote control unit make on site mobility easy.

Holcim currently expects that construction market of India has the capacity to be the third largest market in the world.

The company currently expects market to more than double come 2020. In a recent presentation done by the company earlier this year, the sector is expected to replace Japan as the third largest come the said year. It is expected to be below China and the US. The company’s presentation also stated that emerging markets are expected to outweigh mature markets. In 2010, the global construction market of India accounted for about 5 percent of the $7.2 trillion global construction market. It is currently worth $360 billion. However, the country is expected to capture a market share of 7 percent at $840 billion of the expected $12 trillion global market.

construction materials: EQUIPMENT UPDATES

Indian construction market in leading position by 2020

Caterpillar to launch 64 new products in 2012. XCMG introduces another generation of its XCT30 truck crane at Intermat 2012, and ‘Building Better China’ program. The other loaders, utilizing Korean technology, are the Huayin Group displays its new models of Doosan loaders.

Caterpillar New Products Launch Construction equipment manufacturing giant Caterpillar is set to launch 64 new construction equipment products in 2012.

Some of the new products include the E-series excavators for the European market. It also unveiled five new compact-radius mini hydraulic excavators: the 303.5E CR, 305E CR, 304E CR, 305.5E CR, and the 308E CR SB. All feature new engines that meet the EU Stage IIIB emission regulations.

XCT30 Truck Crane Chinese construction equipment manufacturer XCMG is introducing the fourthgeneration 30-ton capacity truck crane XCT30 at Intermat 2012. The crane features advanced design concepts in its structure, a wide operating range, and powerful lift performance. It has a three-axle carrier, a five-section telescopic boom with twelve cross sections, and boasts a self-developed

hydraulic and electric system to raise the operating performance of the crane.

Excavators with FPT power Chinese construction equipment manufacturer Jianglu showcased a number of excavators, including the CN150 model with FPT N45 engine. The new Jianglu excavator unveiled at the 2012 Spring Excavator Products Fair in Anshun, Guizhou, weighs 14 tons and features a standard bucket of 0.62m. The power adopts the FPT N45 4-cylinder in line engine of Tier 3 emission regulations. The newly showcased excavator received a positive response from customers.

Doosan China Showcases Products The Huayin Group displayed four models of loaders of Doosan loaders: DL 303Gold, DL 305 Advanced, DL 505 Advanced, and the DL 503 Gold. The DL 503/303 Gold loaders are designed in support of the

designed to provide low noise, oil temperature, oil consumption, high reliability, efficiency, and comfort.

Bobcat Launches Light Line As part of its 2012 lineup, US-based Bobcat launched light construction products such as air compressors, generators, pressure washers, and compaction equipment including upright rammers and plate compactors. The products are powered by fuelefficient Honda engines and are designed to provide reliable performance for cleanup operations and jobsite development.

Yuchai’s Hydraulic Excavator Chinese equipment manufacturer Yuchai’s new electric hydraulic excavator developed by the Yuchai Heavy Industry and Sichuan Bangli Heavy Machinery succeeded in passing a trial run. The hydraulic excavator CED 2200-7 weighs 220 tons and has a standard bucket capacity of 11 cum. It can be equipped with convertible shovel and other working tools. BMWeek CemWeek CW Group

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CONSTRUCTION

Going Green Gaining Momentum

tion and a more efficient use of resources such as energy and water, they may also be healthier for the people who work and live in them, as research has linked a reduction in sick time and improved productivity to better office conditions such as lighting and air quality. In addition to the health and environmental benefits offered by green buildings, enthusiasts also point to the positive economic aspects, such as job creation in a variety of new areas including manufacturing, design, certification, maintenance, installation and in the innovation and sales of new products.

These benefits may provide insight into why India has seen a growth of approximately 50 percent in the green building market over the last two to three years.

The market has increased over that time from US$4 to $5 billion to around US$10 billion annually. Furthermore, industry analysts suggest that growth will likely be even more aggressive in the green building market in India over the next four to five years.

Green building is a vital part of India’s construction sector. It is estimated that by 2015, the once niche market will be worth more than US$50 billion. With around 1,550 registered buildings and 210 certified buildings contributing to over one-billion square feet of green footprint across the nation, “going green” is garnering increased attention.

The green building sector in India just keeps growing. Industry analysts report that the nation’s green building sector will likely be worth more than US$50 billion by 2015. This would easily overtake the growth of India’s current overall construction sector, which contributes ten percent of the country’s GDP, as reported by the Indian Green Building Council. This level of continued growth could easily establish

36 MARCH/APRIL 2012

India as the sole world leader in both green buildings and construction.

The green building concept continues to gain momentum in cities and towns across India because of the increased efficiency, reduction in waste and the optimal use of energy supported by these practices. Proponents claim that not only do green buildings contribute to less pollu-

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National shortages of water and power, along with a large dependence on fossil fuel imports, are incredibly significant factors which have centered the nation’s focus on more environmentally friendly practices. Estimates suggest that green construction can provide cost savings of 20 to 30 percent and fresh water savings of 30 to 50 percent. These factors have led India’s government and supporting industries like cement to become more open and enthusiastic to learning and incorporating green practices to optimize energy use.

The most recent real-estate boom coupled with an ever-growing population brought the need for more eco-building to the forefront, where it is likely to remain. As one expert recently pointed out, it is almost impossible for even the most efficient government to supply energy and water to 1.3 billion people and to manage the waste generated by them at little or no cost. Ecobuilding, therefore, offers a cost-effective alternative that cannot be ignored. BMWeek BMWeek BMWeek

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case study The view from Turkey:

Improving Performance with LMmaster Founded in 1966, Turkish-based Nuh Cimento Sanayi successfully produces in-house quarry cement for the local market and for export. To further expand its position in the international cement market, Nuh Cimento Sanayi decided to increase plant efficiency. To achieve its goal, the company invested in the Loesche automation solution LMmaster.

Nuh Cimento Sanayi, which uses conventional control technology and an efficient mill to produce cement, decided to expand its market by increasing the throughput of its Herek plant’s mill while reducing energy use. In November 2010, the company turned to global-provider Loesche to optimize the existing Loesche grinding mills.

38 MARCH/APRIL 2012

Mission: Optimize a Good System The challenge for Loesche engineers was to optimize an already good system by increasing performance to a technically achievable high end. The solution came in the form of the LMmaster.

The LMmaster is the “standalone” realtime process optimization solution for

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optimal operation of the Loesche grinding systems. The focus of LMmaster is on efficient performance, i.e., increasing mill throughput, ensuring product consistency and increasing plant availability.

Unlike other products in the marketplace, LMmaster does not require any additional engineering work after the implementation of the solution.

A Model Predictive Control (MPC) like LMmaster is based on a specific mathematical model for imaging of dynamic processes with multiple interacting variables. With the model-based control, all PID-controllers are contained in one model to consider the process as a whole with the respective influences of each variable.

LMmaster calculates the future state of the system and uses these values to define the new operating points of each controller.

To achieve the new calculations, the current actual values, the disturbances, and historical data are taken into account. This model calculates the new set points for the PLC, and this happens continuously and in real time to avoid any delays using the LMmaster.

Through consideration of future values, the early stabilization counteracts the effect of the process. There is continuous optimization of the operating point for the respective control of the process. The optimal operating point and the associated stabilization have a smoother operation, thus resulting in consistent production quality and lower specific energy consumption.

Additionally, the throughput of the system increases.

The application at Nuh Cimento Sanayi in Hereke was implemented successfully and significantly improved the specific energy consumption with increasing throughput.

The plant’s operation is more stable and smoother thanks to the higher availability of the grinding system and a reduced variation in product quality.

Due to the Nuh Cimento-owned power plant on site, the reduction of the specific energy consumption is combined with reduced CO2 emissions. Key benefits of the optimization include a(n): • Increase in capacity of 5.8% (29.4 t/h) • Reduction in specific power consumption of 4.95% (0.78 kWh/t) • Improved consistency in operations • Reduced mill vibration by 17.25% (1.04 mm/s) • LMmaster controller utilization greater than 90% • Sustainable relief of the operator The use of LMmaster on a separate industrial PC with its own software platform

further ensures there is no security threat to the installed control system. Another safety aspect is the “switch back” option that allows the operator to smoothly switch to the original PLC/DCS mode. However, the switch back option has never been used.

The LMmaster was online within three months after the kick-off, and the return on investment (ROI) has been swift. Thanks to good performance, the ROI is less than 12 months. “We are looking forward to installing LMmaster also in other Loesche Mills in our plant,” confirms Ismail Dogan.

Loesche implemented a turnkey solution without any further operational expenditures and a ROI of under one year. Furthermore, the short implementation timeframe of two to three months was possible without any shutdowns or interruptions of the grinding system. Thus, LMmaster delivered significant sustainable improvements to the Loesche mill at Hereke for Nuh Cimento Sanayi. BMWeek CemWeek CW Group BMWeek BMWeek

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Positive Results Achieved Engineers applied the LMmaster solution to the raw material mill RM3, a vertical roller mill LM 63.4 with a capacity of 505 t/h and a specific power consumption of the main drives (mill motor, mill fan and classifier) of 15.8 kWh/t. The results have been positive.

Ismail Dogan, Clinker Production Engineer at Nuh Cimento Sanayi, sees the benefits: “LMmaster is taking over the grinding process and leaves more time for our operators to concentrate on other processes.” Through the use of LMmaster, all expectations of Nuh Cimento are satisfied and even exceeded.

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profile

HeidelbergCement India:

Moving Ahead Despite Cost Challenges The March rail freight increases have added to the pressures for HeidelbergCement India (HCIL) to manage margins, but they have not dissuaded the firm from its 15:15 plan. The company intends to become a 15 mtpa producer by 2015, keeping pace with its rapid expansion since it blossomed in India in 2006.

ble, according to HCIL Chief Executive and Managing Director Ashish Guha. The company is planning to set up a one mtpa grinding unit at its Damoh location and add a 1.9 mtpa grinding unit to its operations in Jhansi. Additionally, the firm will put in place a conveyer belt system to move limestone directly from the mines to a clinker station unit. “When the full thing is through we will develop up to six mtpa of capacity of which five mtpa will be in central India,” Guha said in March of 2012.

Background HCIL is part of the global HeidelbergCement AG organization, based out of the Netherlands and Germany. Indian affiliated operations began in March 2006, starting with a 50:50 joint venture in the Indorama grinding plant near Mumbai. This entry step was a part of the firm’s longterm plan to become a dynamic and costeffective player in the expanding Indian markets, and was quickly followed by the acquisition of majority stakes in Mysore Cements in late 2006. Mysore officially

40 MARCH/APRIL 2012

became HCIL in April 2008 following the merger with Indorama.

Currently, the company has a strong presence in the central, west, and southern markets. It operates two cement plants and three grinding operations for a total production capacity of 3.1 mtpa as of the end of 2011.

Expansion Efforts Within first half of 2012, existing production capacity is scaled up to nearly dou-

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The work will be fully commissioned and underway by first half of 2012, depending on the length of the initial commissioning period. HCIL expects the expansions will be fully online by the end of 2012 or early 2013.

The firm is already planning that its extra capacity will be almost fully utilized as soon as it is online. Current HCIL capacity utilization rates in central India stand at 95 percent, with rates in the west and south standing at 90 and 75 percent, respectively.

Guha does not expect any major changes in capacity utilization rates going forward for the next few years, even with the new capacity coming online primarily in the central Indian marketplace.

Balancing Act Controlling costs and margins throughout this expansion process will be critical for the long-term success of the firm and its subsequent inorganic expansions under the 15:15 plan. Projected 2012 price hikes for cement bags of Rs 14 to 15 per bag nationwide have prompted complaints against the cement industry throughout India, but all producers have been affected by increased costs for raw materials that simply cannot be absorbed any longer.

INSTALLED CAPACITY (mm tons per year)

16

8

0

CY2011

CY2013E

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Over the last few years, HCIL has struggled with passing on the full measure of cost increases to its customers, causing its margins to fall sharply. Gained synergies and reduced limestone freight costs are expected to offset the costs of the 2012 expansion projects, but the trend is currently negative, with the company reporting margins of 23 percent in 2009, a sharp drop to 13.5 percent in 2010, and margins of only 7.5 percent in 2011.

Expectations For 2012, the firm plans to actively address its recent negative margin and profitability trends. A central point of that strategy is to do more to share cost increases with clients. Management acknowledges that it is a sticky situation considering the firm’s history of not passing on price hikes, but that practice cannot be allowed to continue, if HCIL truly wants to turn around the decline in its margins. However, despite a higher consumer cost in the market, Guha expects his firm to see double digit demand growth thanks to the present emphasis nationally on roads and infrastructure projects.

This expectation is not out of line considering recent growth and volume numbers for HCIL. Though the end of FY2011 was tough financially because of sharp price increases for raw materials, the firm saw volume growth for the year of nine percent for a total volume sold of 2.92 mtpa. With the new capacity expansions, the room will be there for the volume to grow sub-

stantially as the firm maintains its current capacity utilization rates.

The added sales volume and usages rates are expected by analysts to reverse the negative margin and profitability trends that have plagued HCIL and other Central India players for the last three years. As a

result, while 2012 numbers are expected to be only marginally positive over 2011’s figures, 2013 predictions for HCIL are sharply higher for EBITDA, net sales and overall growth. There is no doubt that higher costs of production could impact this, but the overall forward momentum for HCIL is undeniably strong. BMWeek CemWeek CW Group

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update

Technical India round table Mr. P.C. Abraham from Loesche India

At the end of February, the first Round Table in India was conducted by the Indian subsidiary of the Germany equipment vendor, Loesche. The technical event centered around the use of Loesche mills in cement production.

After a welcome from Dr. Thomas Loesche, participants were led through a program covering different aspects of cement production. Companies such as Vicat, Holcim, and MCL contributed to the program with presentations focused on the practical experiences within their cement plants.

Presentations Abounded Presentations that included companies such as ACL, Bharathi Cements, and Madras Cement discussed the utilization of various types of Loesche technology in cement manufacturing.

Additionally, the General Sales Manager from Loesche Mills Shanghai, China, offered insight into the Loesche workshop in China with the possibility to produce Loesche equipment. The Indian audience appreciated this as an interesting opportunity to be considered in the future.

New Equipment Showcased Loesche showcased its mobile, containerized coal grinding plant CGPmobile (Coal Grinding Plant), which reduces energy costs for thermal processes by up to 60 percent. The new CGPmobile plant grinds coal into coal dust, which can then be used to power

42 MARCH/APRIL 2012

thermal plants much more efficiently than gas or oil. The coal dust can be burned and used in asphalt mixing plants, in the cement industry, for drying processes and for decentralized power generation in order to generate process heat or steam.

Coal dust reduces energy costs drastically, particularly in countries where there is a big difference in price between coal on one hand, and gas or oil on the other. Here, these plants pay for themselves in less than two years.

GMI Forum – a good follow-up In a similar vein, the India Cement & Construction Materials magazine is backing the GMI Forum organized “Cement Business & Investment (CBI) India 2012” event in Mumbai on October 10-11, 2012. This event will not only pick up on some of the current technical themes, but also expand on these in a business and technical dual-track event that will bring global and Indian experts together for a must-attend event.

Contact the organizers at sales@gmiforum.com to inquire about participation, or visit their site for more information: www.gmiforum.com. BMWeek CemWeek CW Group Coal Week

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regional news nace oil has increased in line with the rise in gas outages, which has further increased the cost of goods sold. Producers did, however, experience a measure of relief in 2011 following a reduction of taxes and duties on cement.

Finally, Pakistani cement exports declined rapidly during the first eight months from July 2011 to February 2012 of the current fiscal year. Exports during this time declined 5.57 percent, dropping to 5.62 million tons from 5.95 million tons during the corresponding period of last year.

Still, exports to India showed an increase.

The APCMA blamed the industry’s lackluster growth on the government’s failure to develop essential infrastructure. The country’s soaring cement costs have also increased the manufacturer’s production costs.

Myanmar Indonesia's Semen Gresik plans to build

akistani cement manufacturers regret the latest round of capacity expansion undertaken, as manufacturing has stagnated over the last four years. In Myanmar, Indonesia’s Semen Gresik plans to build a 2.5 mtpa cement plant, while Bangladesh’s Lafarge Surma plans changes to its Supercrete flagship brand.

Pakistan Pakistani cement makers say they now regret adding capacity over the past few years, claiming most has gone unused because of weak demand. The All Pakistan Cement Manufacturers Association (APCMA) reports that manufacturing has remained stagnant at 69 percent of installed capacity over the last four years.

“This is the reason that the non-performing loans of this capital-intensive industry have exceeded 22 percent and are still rising. During the first eight months of this fiscal year, the industry dispatched 20.5 million tons of cement, recording a nominal rise of 3.48 percent against 19.74 million tons dispatched in the same period last year,” APCMA said.

44 MARCH/APRIL 2012

Capacities were increased when the economy was booming. Most of the expansion took place in the northern region of the country. Unfortunately, market potential in this region of Pakistan has proven to be limited, with the only export market being Afghanistan.

Meanwhile, cement prices continue to rise. The average price of a 5 kg bag of cement, as seen in July last year, was Rs 303. Since then, the price has increased to Rs 425 and, in some areas, Rs 470. Previously, cement manufacturers said that the rise in the price of cement was attributed to the increase in the price of raw materials utilized in the production of the building material. Additionally, the reliance on fur-

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a 2.5 mtpa cement plant in Myanmar as it moves to expand its presence into other South East Asian locations. Myanmar is viewed as having significant potential because the local industry has only been able to fulfill half of domestic cement

Bangladesh

demand. It is estimated that the country still needs an estimated six to ten million tons of cement each year.

Cemex inaugurates river port with state-of-the-art unloading system

The company’s plan is still in the initial calculation stages. Investment for the plant construction is estimated to reach US$150 to $200 for each ton produced.

Bangladesh Lafarge Surma, the French company's unit in Bangladesh and a JV with Spain's Cementos Molins, plans changes to its flagship brand, as announced at a March press conference. Lafarge Surma has been producing and marketing cement since 2006 under the brand name of Supercrete.

“Lafarge Surma Cement will take a lead in fulfilling dreams to innovate and design the best products and apply the best practices in production,” Michael Andrew Cowell, managing director of Lafarge Surma Cement said.

Sri Lanka Holcim's Sri Lanka-based unit reports it has started using agricultural waste to reduce production costs by at least 30 percent. Chairman Manilal Fernando reports the company is using rice husks, straw, agri-waste, and other garbage material to generate power.

Holcim is also doing research to save more energy by way of using building material waste to generate energy. “However, due to energy saving we have been able to keep the prices stable,” states Fernando.

Cemex Bangladesh's new port & fly ash uploading system inauguration (L-R): Edwin Hufemia, Managing Director of Cemex Bangladesh; Joaquin Estrada, President Cemex Asia; Dr. Dipu Moni, Minister for Foreign Affairs; Hon. Nasim Osman, Member of Parliament; and Luis Hernandez, Cemex Executive Vice President for Organization and Human Resources

Cemex in Bangladesh recently inaugurated a state-of-the-art fly ash unloading system at the company’s newly constructed river port in Narayangaj city located 40 minutes from capital city Dhaka. The US$1.8 million investment will upgrade Cemex's operations in the country and strengthen the company´s commitment to sustainable development and environmental protection.

Fly-ash is a combustion residue that can be Nepal used as a non-clinker cementitious mateNarayani Cement introduced the rial. The fly ash unloading system will Bajrashakti brand of cement in March. minimize the dust emissions created durThe company suggests that the cement will ing unloading, an improvement from the work best for large-scale construction like previous manual fly ash materials handling roads, tunnels and buildings, and is suit- process. The new system is in line with able for Nepal’s market. Narayani Cement the Bangladeshi government’s initiatives indicated that Bajrashakti cement is pro- towards air and water protection. duced using high quality raw materials in a factory equipped with state-of-the-art “Our sustainability model ensures that we Coal Week German technology. BMWeek CemWeek CW Groupconcentrate our efforts and resources on BMWeek BMWeek

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the issues of highest relevance to our business and greatest concern to our stakeholders, and our commitment to sustainability in Bangladesh, in the Asian region, and globally ensures that we meet the needs of the current generation, without compromising the future ones,” says Cemex Asia Regional President Joaquin Estrada.

Cemex in Bangladesh’s president, Edwin Hufemia, further highlighted the fly ash system inauguration as an important echelon in Cemex's commitment to sustainability. He added that the company is incorporating sustainable practices into all of Cemex's daily operations and decision making processes worldwide. The managing director concluded that both the fly ash system and the port are of crucial importance as the company is measuring greenhouse gas emissions of Cemex products worldwide and finding ways to reduce them through its Carbon Footprint Tool.

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analyst recommendations ACC Emkay Global has given a ‘Hold’ rating to ACC, keeping the price target as Rs 1320 against a current market price (CMP) of Rs 1389. The company posted higher realizations, buoyed by a pickup in cement demand as well as a hike in cement prices.

However, higher operational costs, including freight charges, curtailed margins. Furthermore, coal prices are expected to revise upwards shortly, which will again impact the margins. (Feb 11) The post-monsoon hike and increased cement prices led to higher sales and realizations. While sales picked up six percent YoY and realizations went up by 21 percent YoY, EBITDA/ton improved 77 percent YoY. ICICIdirect has recommended a ‘Hold’ for ACC with a price target of Rs 1337 against a CMP of Rs 1389. (Feb 10) ambuja cement With the operating performance of Ambuja Cement falling below expectations because of higher costs, Motilal Oswal Securities has given a ‘Neutral’ rating to the company, keeping the price target at Rs 180 against a CMP of Rs 178. (Feb 13) While cement realizations for the company improved 22.8 percent YoY, it remained lower than expected. Moreover, volumes failed to impress, with only five percent YoY growth. Increased freight and other operational costs also offset the savings in power and fuel costs, playing havoc with bottom line figures. While a hike in cement prices and volume growth is likely to improve margins, the current stock price takes into account these factors. As such, Emkay Global Financial Services has given a ‘Reduce’ rating for Ambuja Cement with a price target of Rs 165 against a CMP of Rs 172. ( Feb 11) While net sales met estimates, EBITDA figures fell below expectation because of rising operational costs, although a price hike in the post-monsoon construction boom

46 MARCH/APRIL 2012

helped sustain it at Rs 799/ton against the Rs 972/ton predicted. ICICIdirect has recommended a ‘Hold’ for Ambuja Cement with a price target set at Rs 162 against a CMP of Rs 178. (Feb 10) birla corporation A limestone mining ban at its Chanderia unit continued to affect cement volumes and added to the cost as clinker replaced limestone. Though cement realizations increased due to an increase in prices, EBITDA/ton fell owing to the higher input cost. As such, ICICIdirect held with a ‘Hold’ for Birla Corporation with a price target of Rs 242 against a CMP of Rs 254.

(Feb 2) With an expected rise in demand and lower competition from new players in the key Central, West and East markets, Networth Stock Broking is predicting an increase in cement volumes in these regions. Expansion projects, as well as a thermal power plant project, are also in the pipeline. Net-

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worth has endorsed Birla Corporation with a ‘Buy’ rating, keeping the price target at Rs 311 against a CMP of Rs 265. (Feb 3) HeidelbergCement india SPA Securities held firm with its ‘Buy’ rating for HeidelbergCement India as the company posted strong revenue growth (36% YoY and 25% QoQ) on the basis of strong sales figures. The company also managed 97 percent capacity utilization against an average 74 percent in the cement sector. As demand picks up and prices revise upwards, the prospects for the company look good in the Central and Western regions, where construction activities are set to increase. Its future expansion plans and its partnership with a global leading brand are also factors in its favor. The price target has been set at Rs 61 against a CMP of Rs 38. (Feb 16) As construction activities revive postmonsoon, HeidelbergCement India recorded strong volume growth. Though

riding on higher cement prices, realizations improved by 18 percent YoY and nine percent QoQ, higher costs affected profit margins. With these positives in mind, ICICIdirect has put the price target at Rs 51 against a CMP of Rs 37 and have endorsed its earlier ‘Buy’ rating. (Feb 15) India Cements PINC Research has given the green light for India Cements with a ‘Buy’ rating on the basis that the company has managed to post profits during a lean period, as production discipline and high cement prices in the South helped it through a lull in cement demand. Furthermore, the company has commissioned a 50MW CPP in Tamil Nadu and plans another one in Andhra Pradesh, which is expected to offset power costs. Its investment in coal mines in Indonesia will further boost bottom line figures; however, that is not expected until the next financial year. The price target is Rs 114, while the CMP is Rs 102. (Mar 16)

Higher cement prices, better cement volumes and improved cement realizations are positive factors for India Cements.

However, higher costs in the form of greater reliance on imported coal due to a disrupted supply of domestic coal (on account of the Telangana agitation), higher power and fuel costs, and a depreciation of the rupee resulted in a QoQ EBITDA decline of three percent (though it gained 53% YoY). Going forward, cost pressures are expected to ease with the commissioning of a 50 MW power plant, regulated coal supply and a favorable rupee movement. Emkay Global Financial Services is maintaining its ‘Hold’ rating with Rs 101 as a price target with a CMP of Rs 94. (Feb 8) Though net sales matched expectations, profitability surpassed expectations. However, EBITDA missed the target owing to low income from other sectors such as IPL, where the company has a stake. While raw material costs went down by 17 percent QoQ, power and fuel costs increased by 7.8 percent QoQ. Furthermore, depreciation of the rupee resulted in an exchange loss of

Rs 137.7 million on foreign currency borrowings. As such, Nomura is maintaining a ‘Neutral’ rating for India Cements with a price target of Rs 80. (Feb 7) jk cement With a construction revival, increased demand has led to higher realizations, offsetting cost pressures and resulting in an increase in margins for JK Cement. As such, ICICIdirect has maintained its ‘Buy’ rating. The target price has been kept at Rs 161 while CMP is Rs 137. (Feb 13) jk lakshmi Growth in volumes and realizations led to improved Q3 results for JK Lakshmi that overshadowed a 19 percent rise in costs.

The company also recently announced a buy back policy on its 13.9 million shares starting March 2012 until February 2013, which has further boosted shareholder confidence. Improvements on the demand and pricing front helped the company earn

ratings changes Date

Broker

Company

Rating

Target Price

11-Feb-12

Emkay Global Financial Services

ACC

Hold

1320.00

Current Market Price 1389.00

10-Feb-12

ICICIdirect

ACC

Hold

1337.00

1389.00

13-Feb-12

Motilal Oswal Securities

Ambuja Cements

Neutral

180.00

178.00 172.00

11-Feb-12

Emkay Global Financial Services

Ambuja Cements

Reduce

165.00

10-Feb-12

ICICIdirect

Ambuja Cements

Hold

162.00

178.00

3-Feb-12

Networth Stock Broking

Birla Corp

Buy

311.00

264.00

2-Feb-12

ICICIdirect

Birla Corp

Hold

242.00

254.00

16-Feb-12

SPA Securities

Heidelberg

Buy

61.00

38.00

15-Feb-12

ICICIdirect

Heidelberg

Buy

51.00

37.00

16-Mar-12

PINC Research

India Cements

Buy

114.00

102.00

8-Feb-12

Emkay Global Financial Services

India Cements

Hold

101.00

94.00

7-Feb-12

Nomura

India Cements

Neutral

80.00

13-Feb-12

ICICIdirect

JK Cement

Buy

161.00

137.00

23-Feb-12

Marwadi Shares & Finance (MSFL)

JK Lakshmi Cement

Buy

75.00

62.00

21-Feb-12

Angel Broking

JK Lakshmi Cement

Buy

79.00

9-Feb-12

ICICIdirect

JK Lakshmi Cement

Buy

74.00

65.00

22-Mar-12

GEPL

Madras Cement

Buy

191.10

142.00

6-Feb-12

Emkay Global Financial Services

Madras Cement

Hold

138.00

129.00

11-Feb-12

SPA Securities

Mangalam Cement

Buy

219.00

138.00

10-Feb-12

ICICIdirect

Mangalam Cement

Hold

151.00

140.00

22-Mar-12

GEPL

UltraTech

Neutral

1595.00

1,499.60

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analyst recommendation strong revenues and a cash surplus of Rs 5000 million and convinced Marwadi Shares & Finance (MSFL) to give it a ‘Buy’ rating, keeping the price target at Rs 75 against a CMP of Rs 62. (Feb 23) While remaining neutral on the cement sector in general, Angel Broking has upheld its ‘Buy’ rating on JK Lakshmi because of the company’s attractive valuations. The price target has been set as Rs 79. (Feb 21) With improved cement sales following a demand surge and increased realizations on account of higher prices, ICICIdirect has endorsed JK Lakshmi Cement, giving it a ‘Buy’ rating with a price target of R74 while CMP is Rs 65. (Feb 9) madras cement With production discipline still reigning high in the South and an uptick in demand witnessed in the region, GEPL has endorsed Madras Cement with a ‘Buy’ rating. The price target has been pegged at Rs 191.10 against a Rs 142 CMP. (Mar 22) With better than expected cement realizations, demand upswing, lower raw material costs, and effective cost management keeping power and fuel costs in line, Emkay Global Financial Services has maintained its ‘Hold’ rating for Madras Cement with a price target of Rs 138 against a CMP of Rs 129. (Feb 6)

continued from page 31

mangalam cement Mangalam Cement gets a ‘Buy’ rating from SPA Securities as growth in volumes and an increase in realizations in the postmonsoon hype led to a revenue hike of 56 percent YoY. The company further plans to reign in costs by favoring pet coke. Capacity expansion is also in the pipeline, which will help the company consolidate its market base, leading to still higher volumes.

The price target has been set at Rs 219 from a CMP of Rs 138. (Feb 11) Mangalam Cement has earned a ‘Hold’ rating from ICICIdirect, as EBITDA improved to Rs 779 per ton driven by higher realizations and low cost pressures, which benefited greatly by the use of efficient fuel. Raw material expenses were also reigned in by controlling the use of limestone. With the current market price at Rs 140, the price target has been set as Rs 151. (Feb 10)

Conveyor Symposium Addresses Safety & Productivity The “Conveyor Safety and Productivity Symposium” in Antalya, Turkey, hosted

by Martin Engineering Turkey, introduced strategies and innovations for improving safety practices while enhancing profitability. More than 40 management and supervisory personnel attended the event, representing a wide range of industries, including aggregates/cement, mining, coal/power, steel production and dry bulk handlers.

The symposium featured content selected specifically to address current issues facing local industries. The keynote address, entitled “Safety and Total Ownership Cost Management,” was delivered by Dr. Halefsan Sumen, a respected journalist and professor at Istanbul Technical University, which is one of the world’s oldest technical universities dedicated to engineering sciences.

ultratech cement

Following Dr. Sumen was former PresiGEPL has given a ‘Neutral’ rating to dent of the Conveyor Equipment ManuUltraTech Cement and set the price target facturers Association (CEMA) Todd Swinas Rs 1595 against a CMP of Rs 1499.60, as derman, holder of 140 product licenses in the company’s merger with Grasim Indus- a dozen different countries, who spoke on tries Samridhi Cement has not only given “Safety by Design.” Throughout the presit a Pan-India presence but has also pushed entation, Swinderman emphasized that it into the largest cement company posi- design is the single most effective methtion. Additionally, the company is seeking od of safety improvement, outperforming to reduce its power costs by increasing reli- even guards and controls. ance on its captive power plant. (Mar 22) BMWeek CemWeek CW Group Coal Week CemWeek CW Group Coal Week BMWeek Also featured as speaker was trainer and CemWeek BMWeek CWaGroup Coal Week field expert Michael Tenzer of Martin Engineering, who drew on 23 years of experience to create his presentation, “Innovations,” which highlighted recent technical developments that have led to proven solutions for common industry problems. Several of the presenters touched on standardizing maintenance procedures to further reduce the risk of injury from working on and around conveyors. Attendees were also treated to scale model displays and demonstration equipment, helping presenters illustrate representative applications and clarify details from their talks. BMWeek BMWeek BMWeek

48 MARCH/APRIL 2012

CW Group Coal Week CemWeek BMWeek INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group Coal Week

www.cwgrp.com T: +1-702-430-1748 F: +1-928-832-4762 848 N. Rainbow Blvd. Box #1658 Las Vegas NV 89107 USA We know the cement industry well. Let us guide you. For more information please contact us at inquiries@cwgrp.com or on +1-702-430-17 48

stock performance Stock performance of leading cement companies As a regular service to our readers, we will provide here a listing of the latest in stock performance, keeping you up to date with the latest in stock trends. Additional company stock performance information is available on our website: www.cemweek.com/india.

Performance in the past 90 days Company

Start Date

Start Price

End Date

End Price

Difference

% Change

CCL INTER

Nov 3, 2011

18.05

31-Jan-12

28.45

10.40

57.62

CCL INTER

30-Dec-11

15.7

29-Mar-12

41.7

26

165.61

PANYAM CEMEN

30-Dec-11

37.15

29-Mar-12

67.6

30.45

81.97

JK LAKSHMI

30-Dec-11

37.1

29-Mar-12

65.75

28.65

77.22

MANGALAM CEM

30-Dec-11

80.6

29-Mar-12

138.15

57.55

71.4

INDIA CEMENT

30-Dec-11

65.95

29-Mar-12

111.95

46

69.75

MADRAS CEM

30-Dec-11

102.45

29-Mar-12

155.95

53.5

52.22

N C L IND

30-Dec-11

32

29-Mar-12

47.95

15.95

49.84

JK CEMENT

30-Dec-11

100.05

29-Mar-12

148.75

48.7

48.68

HEIDEL CEM

30-Dec-11

25.35

29-Mar-12

36.9

11.55

45.56

SHREE CEMENT

30-Dec-11

2167.4

29-Mar-12

3077.4

910

41.99

KCP LTD

30-Dec-11

23.7

29-Mar-12

32.55

8.85

37.34

PRISM CEMENT

30-Dec-11

37.55

29-Mar-12

49.75

12.2

32.49

DECAN CEMENT

30-Dec-11

129

29-Mar-12

168

39

30.23

RAIN COMMODI

30-Dec-11

29.3

29-Mar-12

38.15

8.85

30.2

ULTRATECH CM

30-Dec-11

1160.45

29-Mar-12

1492.3

331.85

28.6

KALYANPUR CE

28-Sep-11

24.35

27-Mar-12

30.5

6.15

25.26

KAKATIYA CEM

30-Dec-11

61.35

29-Mar-12

76.25

14.9

24.29

ACC LTD

30-Dec-11

1136.35

29-Mar-12

1321.55

185.2

16.3

OCL INDIA L

30-Dec-11

86.05

29-Mar-12

98.9

12.85

14.93

SAGAR CEM.

30-Dec-11

145.55

29-Mar-12

160.8

15.25

10.48

AMBUJA CEME

30-Dec-11

155.4

29-Mar-12

166.5

11.1

7.14

BIRLA CORPOR

30-Dec-11

269.65

29-Mar-12

286.15

16.5

6.12

CHETTINAD CEM

30-Dec-11

521.35

29-Mar-12

532

10.65

2.04

KEERTHI

28-Dec-11

34.3

26-Mar-12

29.5

-4.8

-13.99

50 MARCH/APRIL 2012

CW Group Coal Week CemWeek BMWeek INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group Coal Week

Most popular on CemWeek.com The most-read stories on CemWeek over the past two months reflect the industry's mixed outlook. The India column shows the 20 most popular stories from CemWeek featuring India-related coverage, and the Global column shows the global events that gathered the most attention worldwide during the period. Visit CemWeek.com to access the full stories.

India

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

ACC looking to build new cement plant Ambuja to continue expand capacity Indian cement demand set to increase Indian cement prices set to increase India uncovers three illegal cement operations India cement prices seen stabilizing Cement prices rise in India Holcim's India units post strong Q3 numbers India: Grasim appoints new executive Shriram acquires majority stake in Sree Jayajothi India cement demand seen higher in FY12 India set to investigate cement companies Jaypee Cement forays into Hyderabad Jaiprakash to spin off cement units subsidiary India cement makers turn in strong February Report: UltraTech looking to buy Adhunik plant in Meghalaya Indian cement makers announce price hikes India cement makers ask government for concessions Ultratech secures approval for grinding plant India's ACC unveils expansion plans until 2015 Indian cement prices go up on bottlenecks Jaiprakash dipatches leap Pakistan looks to ship excess cement to India Jaypee says new Andhra Pradesh unit to start up next month India: Binani signs pact with Rajasthan

global

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Pacasmayo taps JP Morgan for ADR program CW Group: Global cement demand to reach 4bn tons by 2013 Egypt: MP calls for nationalization of Cemex unit Spanish demand slides to levels not seen since 1960s FCC weighs options for Giant Cement Jidong secures project in South Africa Italcementi confirms sales drop in 2011 Lafarge, Italcementi see Egypt as 'problematic' 14 new cement plants planned for Egypt New cement company established in Kuwait Lafarge plans bigger savings in 2013 Egyptian gov't moves to prevent monopoly in cement sector Lafarge lays off 460 workers New plant for Mozambique Holcim open to divestments Indocement looks to sustain momentum this year Indonesia: Chinese firm looking to build plant New plant to be built in Algeria Report: Camargo, Votorantim press on in Cimpor talks Argos not ruling out acquisitions this year Workers' union protests sale of Ameriyah Cement Spanish cement crisis to continue Cementos Avellaneda launches plant in Argentina Portuguese bank stands in way of Cimpor take-over Saudi: New cement plant to be built in Medina

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

CemWeek BMWeek MARCH/APRIL 2012 CW51Group CemWeek CW Group BMWeek CemWeek BMWeek CW Group

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RESEARCH

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Current and outlook for cement volumes

Tracking new cement plants and expansions

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