India Cement & Construction Materials (vol 1 / issue 15)

india CemWeek A CemWeek Publication

Cement issue 15

november/december 2013

& construction Materials

high hopes for a better future in

myanmar Dr. Ravishankar, UltraTech:

MARKETING & SALES The helping hand in cement prices stabilization

Cement Business & Industry

cbi india 2013

returned to Mumbai to share strategic insights with the industry professionals

News

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Analysis

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Market Coverage

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Interviews

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DEPARTMENTS

FEATURES 3

MARKETING & SALES

9

high hopes for a better future in myanmar

The helping hand in cement prices stabilization

New civilian government that can support development

research and analytics 21

cement volumes

1

EDITORIAL LETTER

2

NUMBERS IN BRIEF

42

ANALYST RECOMMENDATIONS Latest Broker Recommendations

cement 29

MARKET AND COMPETITION

24

coal market update

30

M&A and FINANCE

25

energy price update

33

PROJECTS AND EXPANSIONS

34

VOLUME AND PRICING

35

PEOPLE

36

REGIONAL UPDATE

38

EQUIPMENT HIGHLIGHTS

40

INFRASTRUCTURE & PROJECTS Realty giant Alchemist Township is prepared to make an investment to develop a residential project in Kolkata.

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Cement companies reflect once again on the year’s challenges

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Wrapping up the year in Mumbai

The Indian cement industry prompted with an unexpected decline in October 2013

Cement

Cement Business & Industry (CBI) India 2013 Conference & Exhibition returned to Mumbai to share strategic insights with the industry professionals

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letter from the editor

Wrapping up the year in mumbai With this issue of India Cement & Construction Materials Journal we close 2013, and prepare to receive 2014 with renewed optimism and hope for a bright 2014, full of new possibilities and developments.

To close the year, some of our CW Group executives participated as speakers in the Solid Fuel Summit (SFS) and the 2nd edition of Cement Business & Industry (CBI) India and South East Asia conference, organized by GMI Global in Mumbai, India.

The Solid Fuel Summit, held on October 7th and 8th, followed a roundtable-format and presented participants with a unique networking opportunity and set the framework to share ideas around petcoke, coal, power generation and other energy sources in the Indian cement sector.

The industry faces a challenging outlook for balancing supply and demand of coal and for improving logistics to move imported product out of the ports. Coal price pressures continue to spread and in the absence of a steady supply of the product, some producers are switching to pet-

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coke for savings. National coal suppliers, not able to keep up with local demand, will need to invest in technology and increase production, as the market continues to observe a continuous increase in coal imports in the upcoming years.

On the 9th and 10th of October, we had the opportunity to meet senior executives from India and beyond at CBI and on the sidelines of the meeting, CW Advisory hosted several of the executives in our by invitation-only “CEO & Executive Forum�, focusing on the executive agenda facing the sector. The mood was sullen in India and echoed across market segments and geographies. Upcoming elections seemed to cause more pause for concern than an inflection point, with the opinion swinging from some seeing it as the start of a recovery to others expecting at least another 12-18 months thereafter before any material recover.

Furthermore, this issue of India Cement & Construction Materials is proud to present a featured article written by Mr. E Ravishankar, Senior Manager of the Strategy Division department at UltraTech

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India, who participated as a speaker in the CBI India and South Asia conference.

The article highlights the main issues addressed by Mr. Ravishankar during his presentation, focusing on the importance that the Marketing & Sales department has in the price stabilization in the cement industry in India.

Finally, the third feature of this issue sets Myanmar in a warm light, presenting the economic, construction and cement opportunities the country now has following the establishment of a civilian government after decades of military regime.

The staff at ICCM sends our readers best wishes for the holiday season and a blessed New Year.

Robert Madeira

Publisher and Head of Research

NUMBERS IN BRIEF The Indian cement industry prompted with an unexpected decline in October 2013 Contradicting the already established seasonal cement production growth pattern, October 2013 brought a 2 percent MoM decline, which led cement production to a comparable volume versus October 2012. Preliminary numbers released for November 2013 reveal yet another decrease in dispatches, influenced by sand mining ban in Rajasthan, cyclones in Andhra Pradesh and Odisha, or Assembly elections in some regions. However, in regards to volume, November 2013 was above the outputs registered within the same month of previous years.

Cement Prices (Rs per 50 kg bag) North

400

Central

East

West

South

350

250

200 May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

Source: CW Research

300

Cement prices stabilized in November 2013 registering the lowest difference between the maximum regional value (Rs310 per 50 kg bag in the Eastern region) and the minimum regional value (Rs268 per 50 kg bag in the Eastern region). The largest gap of the period was noted in September, when cement prices shoot up in the Southern area. At that time, Chennai prices witnessed a steep increase of around Rs60 per bag, while Hyderabad, Kochi and Bangalore prices increased by Rs40-60 per bag.

Pan India Cement Volume (Tons) 2013

26,000,000

2009

2010

2011

2012

24,000,000 22,000,000 20,000,000 18,000,000

14,000,000 12,000,000 10,000,000

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

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Oct

Nov

Dec

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16,000,000

2

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Expert Contribution:

Marketing & Sales the helping hand in cement prices stabilization Written by: Dr. E Ravishankar, Senior Manager, Strategy Division, UltraTech Cement

Indian cement industry first half performance of this year is a clear warning sign to buck up, or small firms will have to bow out in due course. Marketing and Sales personnel can be helping hands in raise profitability, if they embrace the spirit of identifying themself as part of the bigger picture.

Open Secret here was a Mason laying bricks in a construction site. He was doing his work with utmost care and measurement, chiseling the brick with precision.

A passerby asked him, ‘Dear, why do you spend so much time in these bricks.

After all it is not even going to be visible after the construction of the building. Get going!

Finish it up fast!’ The Mason answered back, ‘Sir, I am not just laying bricks! I am playing my role of being a part of the temple that is getting built!’ This spirit was the whole secret of his involvement in his work.

If this lesson, of having the spirit to identify oneself as part of the bigger picture, is taken up and applied by marketing and sales (M&S) personnel in the cement industry, it would be a great progress indeed.

Price gap between companies needs improvement India is expected to have lower price realization in September in comparison to June, as the second quarter of the year is monsoon season. It is the drop of the current half year from the levels of last year, and the year on year drop in the last quarter that is nerving.

Big companies to small companies suffered,

albeit by varying degrees. The biggest factor that affected the returns has been the drop in price realization levels.

While demand supply gap has an effect on prices, what can be improved is the price gap that seems to exist between companies. But this has to come from the respective management through earnest efforts.

To understand the situation, a sample of 15 companies was taken. The companies chosen have cement as the main business and are of various sizes from all the zones of the country, in order to make it a representative sample of the industry. The results from the filed interim reports of the companies were taken up for the study.

Selected parameters were chosen to understand how many of the firms were affected and how the average values of the parameters have changed between the end of last year and the end of September quarter, current year.

Factors considered: cost as a % of revenue of raw material, power & fuel, other expenses (which includes freight), and total operational expenses; ratios of ‘interest cover’, ‘debt to Ebitda’, and ‘return on equity (ROE)’ %.

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feature Nearly half of the companies managed to control power & fuel costs, mostly due to drop in international prices of coal, use of petcoke, and use of captive power. We can see in all other parameters that most of the companies are suffering, which ultimately lead to a drop in ROE for all the companies.

Figure 3 gives us the plight of the industry: 60% of the firms have a decrease in revenue and an increase in operational expenditure.

“

In the recently held CBI India & South Asia 2013 organized in October 2013 by GMI Global, the aspect of importance of price was presented.

It was shown that the correlation between price and EBITDA is superior to the increase in volumes and cost control. This is not stating that volumes and cost control are not important, but that price stabilization has the greatest effect on EBITDA. While this can

The review system needs to bring in the aspect of profitability, while considering the effectiveness of performance of M&S division.

Not one could achieve the delight of increase in revenue more than the increase in operational expenditure.

While the raw material cost, as an average (Ref: Fig.2), has not changed, the average of the total expenses taken as a percentage of sales has increased by 6.6%, resulting in reduced operating margins. This has affected the interest cover and debt/Ebitda, which in turn has resulted in drop in ROE for all the companies. This carries with it the repercussion of drop in the share prices, and hence market capitalization and enterprise value.

Cement industry needs price stabilization In the context, companies would do well to stabilize the prices of cement at profitable levels, and also try holding new ideas in sales and marketing operations to improve the profitability.

be a known factor for finance professionals, if the Marketing and Sales (M&S) personnel become aware of this fact, and if the key factors taken in the review system of M&S division ropes in the aspect of pricing and profitable operations, it can do wonders for organizations.

At the minimum, it will at least make sales and marketing officials know the limits of concessions and expenditure that they can indulge in towards the customers, and play the game with in the limits.

The key factors brought in the CBI conference Why any product gets sold: Any product gets sold for two reasons; one of the two or both inclusive. One, it is needed to solve a problem or issue, and two, it gives a feel good factor to the buyer.

The review system needs to bring in the aspect of profitability, while considering the effectiveness of performance of M&S division. When M&S personnel are in the field, they get so focused on these two elements subconsciously; like a football player on the leather sphere, what they do to improve sales may at times be divergent to the company’s profitability interests.

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To overcome this, given the context of the industry, the review system needs to bring in the aspect of profitability, while considering the effectiveness of performance of M&S division. It should not be just the achievement of sales volumes alone that matters.

‘Has it been done in a profitable way?’ needs to be brought in the system.

Four factors presented at the forum

Percentage of companies affected

CO’S AFFECTED

FIG.1

120 100

93

80 60

67

40 20

93

100

87

67

53

0 Raw Material

%

Power & Fuel

Other Exp

Tot Expense

Int. Cover

Debt/Ebi tda

ROE

Importance of revenue per ton of a region

Revenue/ton, factored as a comparison with regional peers, its own company, and industry levels.

Degree of change for the parameters -8.2

Customers are segregated by the way of business type in Indian cement Industry: retailers, wholesalers, small level direct consumers, and big volume direct consumers.

Retailers and wholesalers fall in to the category of ‘Trade’ segment.

Others fall in the category of ‘Non-Trade’ segment. Sales personnel are positioned to cater to these two segments or to the subdivisions within, to rope in sales and collections. There can be good scope for profitable performance, if the customers within these segments are bifurcated according to their profit potential, adding more time, man hours and expenditures focused on the profitable customers.

For example, a retailer who is within a short lead distance, who pays promptly, who sells profitable blended product, who maintains sales levels more consistently even in off season, is more profitable than a retailer who sells same level of volumes, but does

FIG.2

ROE

Situations may arise that a region performs better than its peers, but much below the company’s standards or better than its company revenue level, but much below the levels of an Industry peer. In both cases, there is scope for improvement that needs to be explored. If this factor is not taken up as part the system, it will create complacency on the part of the region, and may not get the view point of the need to improve the performance level further.

Importance of Customer Bifurcation

1.02

Debt/Ebitda -2.2

Int. Cover Tot Expense

6.6 6.1

Other Exp Power & Fuel Raw Material -10.0

-5.0

0.5 0.0

0.0

5.0

10.0

*pps- percentage points X- Axis: % points change in the average value of different parameters between 2012-13 year end and at the end of September quarter, 2013-14.

Nature of change in Revenue and total operational expenses 70

FIG.3

60

60 50 40

33

30 20 10

7

0

0 %

A

B

C

D

YoY, September quarter Note: A- Revenue decreased higher than decrease achieved in operational expenses; B- Revenue increased, but less than increase in operational expenses; C- Revenue decreased, but operational expenses increased; D- Revenue increased more than the increase in operational expenses.

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feature not fit these parameters. This sort of bifurcation, taking up appropriate parameters of the customer category, is possible for wholesalers, builders and large volume customers also. Once this is done, the aim should be to focus on these profitable customers and try to increase the percentage of profitable customers within each category.

collection pattern in cement industry helps improve sales on the long run.

Importance of profitable distribution

Once the product is evacuated, the sales person concerned, from the supplier, gets an opportunity to sell again to the trader. A continuous effort can improve sales volumes, if the product met the consumer’s acceptance.

Psychologically, no trader wants to see the stock idle if he had already paid the supplier. This will make him drive sales to the right customer who, in turn, pays the trader promptly.

Lead distance and transportation cost consume quite a lot of share of operational expenditure of cement firms. It varies from 10-30% of the sales revenue.

Professional business management practices

This being the case, M&S division’s performance review of a region can have comparison of these two factors, namely, ‘average lead distance’ and ‘average transportation cost per ton’, against a regional peer, and its own company’s standards. This will help understand the areas of improvement in distribution, and increase market share in profitable areas, not just bring an increase in customers from non-profitable places.

Apart from these four factors, the opportunity of serving customers and improving their loyalty by giving exposure to professional business management practices was highlighted in the CBI Conference.

In India, major portion of the retailers, wholesalers, and small level builders, do not have high educational background, and are not exposed to professional business practices. This makes them often encounter problems that a company can help overcome because customers are likely to be loyal to the company. It serves both the satisfaction of helping a customer and earning his loyalty, which can help protect the counter share.

If this factor is not considered, there is every possibility of bringing in customers from non-profitable areas, when it would have been better to focus on profitable areas, that could have brought the same volumes, but with higher profitability.

Importance of collection

Measuring the factors

All persons know that collection completes the sales. Until then, sales remain just a promise.

Planning and execution does well only when it is measured by performance, and improvement areas taken up, from the measurement, for further development. Thus, after taking up the factors stated above, or possibly additional factors as per the need of a company, one way of measuring is to assign weightage to each factor and give the factor a score in a scale of 1-10; or 1-7; or 1-5. Then multiply the score with the weightage assigned and arrive at a final score by adding up the valuations of all the factors, for a given region.

Knowing the science behind collection and the ability to imagine how useful it is to the company can make the act very spirited and influence the M&S personnel. M&S representatives will do well to know they have hand in two important aspects of ‘working capital cycle (WCC)’. Reduction in WCC depends on reduction in days of collection, inventory, and optimum increase in accounts payable days. M&S plays a leading role in improving collection and reducing inventory. It is strongly believed that improved

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This will give a measure of which areas need to be focused more for the region.

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Example of how to measure factors FACTOR UOM

Weightage

Range

Example Ltd

Basis

%

Score: 1-5

Revenue/t

35%

INR 5500-6200

Potential of the region

4

Bifurcation

25%

20-100%

Number of customers in profitable category

3

Lead Distance

10%

20-80%

Number of customers within profitable distance

3

Transportation cost/t

10%

5-10 %

Relative to peers (or) reduction targets in %

1

Receivable

20%

0-30

Avg days

3

Total

100%

Conclusion summary H1 performance in Indian cement industry is a clear warning sign to buck up, or small firms will have to bow out in due course.

M&S person can be the helping hands in the situation. Among the factors that can help change the status, price commands has the

XYZ

Q1

3.15

highest importance for M&S personnel, by realizing its importance to profitability.

M&S division will do well by bringing in its review system for performance measurement, the factors that bring profitability to the organization, and measure it at regular intervals and make improvements.

Additional steps can be thought up on improving customer loyalty, after making bifurcation by identifying profitable customers in all segments. On the long run, this will help professional functioning of personnel in M&S division if they apply the ‘Open Secret’the spirit of identifying oneself as part of the bigger picture

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feature

High hopes for a better future in

Myanmar

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country that for five decades struggled to survive under a military regime now sees the light at the end of the tunnel. Since 2011, Myanmar functions officially under a civilian government that can offer support for project development, a blossoming economy, more construction investment and an in-house cement sector that can sustain the countries’ cement demand.

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A lightly tread path to development and modernization After years of stagnation and isolation, Myanmar’s economy took off vigorously between 2000 and 2007, increasing by double digits each year. Myanmar’s currency, the kyat, was first floated in April 2012, and since then the currency has fallen dramati-

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Real GDP (Constant nat'l currency, billions)

80 70

10,000

60 8,000

50 40

6,000

30

4,000

20 2,000

10 0

Yearly Approved Amount of FDI on LH (US$ million); Growth rate on RH (%)

cally on the back of increasing imports, a boost in the construction sector, international price fluctuations, and also currency speculation and hoarding of the US dollar.

Additionally, the budget deficit for 2012 was estimated at 5.4 percent of GDP, and the inflation rate has been estimated at 6.5 percent for 2013, increasing from 6.1 percent in 2012. At the present time, the country has made important steps toward peace after the installment of the new gov-

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2017E

2016E

2015E

2014E

2013E

2012

2011

2010

2009

2008

2007

0

SOURCE: CW RESEARCH

In addition, the cement sector can see an improvement in terms of capacity production due to the now available and interested international investors.

Population (million)

12,000

2006

With the new system, Myanmar holds plans for development and modernization that can be fulfilled easily. The country can benefit from the strategic geographic positioning, bordering China and India, and also from its natural resources, being rich in raw materials for cement production that can be found in multiple regions across its geography.

ECONOMY AND POPULATION

2005

Around 63.7 million inhabitants have emerged from international isolation, hoping that the natural resources, international and internal investments in local economy and construction can improve their lifestyle and transform poverty into decency, as Myanmar has the lowest GDP/capita in Southeast Asia.

ernment, with ceasefire deals signed in 2011, 2012 and early 2013 with different ethnic groups, after a long battle with violence spread throughout the country that affected thousands of people.

With next elections scheduled for 2015 and political tensions still present, Myanmar’s best economic course towards development and modernization would be to tread lightly.

total), in order to satisfy unmet demand for real estate.

Triple A Cement Myanmar Elephant Cement

Kyaukse Cement Sin Min Cement

YCDC Cement

Thayet Cement

Crown Cement

Investments channeled towards housing, roads, railways, bridges, power enhancement, and urban development provide a promising future for the construction sector, but only if investments are implemented wisely and on time. Securing the massive investment capital required remains a concern for the industry.

Tiger Head Cement

Dragon Cement

Nay Pyi Taw Cement Max Cement

A new era for the cement industry Myanmar directs part of its efforts to the reconstruction of the outdated and fragmented cement market. As soon as the country turned its attention to the outside world in early 2011, the cement industry crossed into a new era. The enormous potential of the country, coupled with the overwhelming number of cement plant projects submitted for governmental review, offer a glimpse into how the market may grow in the future.

PAAN Cement

SOURCE: CW RESEARCH

Kyangin Cement

The road to development is paved with optimism Myanmar’s road network is underdeveloped due to lack of investment, but the total length of the network has more than doubled since 2001, when it measured below 70,000 km. The Ministry of Construction manages 26.3 percent of Myanmar’s current roads.

Underdeveloped construction sector, but hope exists Even though China, Thailand, Hong Kong, and South Korea started investing in infrastructure and construction projects, the country’s construction segment is not among the top choices of foreign investors.

Myanmar received US$38 million in foreign direct investment up to the end of June 2013.As such, the construction sector

is mostly supported by local companies, and the majority of local investments have been directed toward apartment blocks in Yangon. However, recent signs indicate that Yangon’s single housing sector is picking up steam again. Currently, around 7,000 houses are built annually in Myanmar, and the government intends to expand this number to 50,000 per year for the next two decades (1 million houses in

Intermittent power supply often forces cement companies to operate at around 60 percent of their potential. Even considering the total cement capacity of Myanmar (4.1 million tons in 2012), the country cannot rely fully on its domestic production.

Large quantities of cement are imported into the country, with the vast majority supplied by Thailand. Myanmar is thus a net importer, with insignificant quantities of cement crossing the Burmese borders as exports.

High fragmentation in the cement sector Although it is growing over the long term, the cement industry is defined by high fragmentation, with 13 cement plants and

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Even though cement consumption registered outstanding expansion in its recent history, the country is still faced with cement consumption per capita that places it among the most underdeveloped cement markets of the world.

Cement consumption per capita was estimated to be below 50 kg per inhabitant in the past years. For 2012, cement consumption reached 84 kg per inhabitant, between 2x and 8x lower than its regional peers.

Equilibrium on the cement market After a long wait, the government has finally chosen thirteen companies to create a joint venture for state-owned cement plants.

According to Ministry of Industry, the winning companies are: Shwe Taung Cement Co Ltd, Original Group, Max Myanmar Manufacturing, Asian Cement Public, Ultra Group of Companies, Shwe Khit Aung, Ferrostaal, Mother Industrial, Myint Investment Group, Myanmar Cement & Mineral Production, Global Star, Diadem (Myanmar) and Myanmar Jidong Cement.

The firms will fall under the jurisdiction of the No. 3 Heavy Industries department of the Ministry of Industry.

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YEARLY APPROVED FOREIGN DIRECT INVESTMENTS Yearly Approved Amount of FDI (US$ million)

YoY Growth 7000%

25,000

6000% 20,000

5000% 4000%

15,000

3000% 10,000

2000% 1000%

5,000

0% 0

-1000% FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

GDP on LH-axis (real national currency, bn); Population on RH-axis (mm)

FY2012

SOURCE: CW RESEARCH

a 2013E average cement capacity per plant of below 0.35 million tons.

The Myanmar Investment Commission has approved the construction of nine cement plants that the Ministry of Industry expects to produce 10.53 million tons of cement per year. The 15 existing factories can produce 4.02 million tons of cement per year.

market in Myanmar, in the country report available online. In addition, the report also contains the forecast through 2017 that offers cement stakeholders the most important analytics, including cement consumption and cement capacity expansions planned or underway.

Myanmar report CW Group Research has recently released an in-depth and data-oriented analysis of the economy, construction and cement

The Myanmar report spreads out to 60 pages, and is available online, in PDF format.

For more details, access the official website: research.cwgrp.com

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event CONFERENCE HIGHLIGHTS

Cement Business & Industry (CBI) India

Conference & Exhibition

returned to Mumbai to share strategic insights with the industry professionals

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Ajit Raj Ostwal, Assistant Vice President, Ultratech Cement | Aparna Sharma, Lafarge Country Head Human Resources | Claudia Stefanoiu, CW Group , Senior Analyst | Dr. E. Ravishankar, Ultratech Cement , Senior Manager - Strategy Div | Gaurav Bajaj, RNB Cement ,Joint Managing Director | Dr. Jayant Bapat, Independent Professional | Joe Phelan, WBCSD - India, Director | K.N. Rao, ACC Limited, Director (Energy & Environment) | Krishna Srivastava, Zuari Cement, Head of Innovation | L.R. Manjunatha, RMC India, Sr Manager & Head Marketing pan India | Laura Goldner, CW Group, Senior Analyst | Mukund A. Toke, DPTS Enterprises, Owner | Nitin Bhasin, Ambit Capital, Infrastructure Analyst | Pukraj Sethiya, PwC India, Manager, Mining | Rajesh Sarada, Reliance Cement, Assistant Vice President | Robert Madeira, CW Group, Managing Director & Head of Research | Dr. S.N. Pati, NCB, Senior Scientist and Former Joint Director | Shardul Kulkarni, Tata Strategic Management Group, Principal Energy | Shushul Maheswari, RNCOS Business Consultancy, Chief Executive | Sushil Anand, IFC, Senior Investment Officer | Ulhas Parlikar, ACC Limited, Director - Geocycles Business | Enayatullah Alamyar, Legal Advisor, Ministry of Mines and Petroleum | Johannes Hartenstein, Project Manager Research & Development, Magnesita Europe | Michael Kirmse, Sales Manager, Claudius Peters | Shushul Maheswari, Chief Executive, RNCOS | Zamir Attai, Director for Mineral Sector Development, Ministry of Mines and Petroleum | Kaushik Guha Roy, Head of Sales, Amrit Cement Industries Ltd | Ambareesh Dixit, Director-Business Development, HGH | Dr BAPAT, Independent Consultant | Pukraj Sethiya, PwC, Manager-Mining

CBI India & South Asia Conference returned to

influential equipment manufacturing companies

Mumbai on October 9 -10 2013, bringing the latest

for the cement and related industries. The annu-

in business and technical trends to the region. Over

al event took place at the prestigious Hilton Inter-

100 delegates registered for the meeting, includ-

national Airport Hotel in Mumbai, India, where the

ing an exceptional selection of renowned speak-

delegates and sponsors enjoyed two days of inten-

ers and top corporate sponsors from the most

sive interactive sessions and a premium exhibition.

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feature

he conference was introduced by Ms. Beatrice Ene, Client Development & Marketing Director of GMI Global, a leader in networking and insight-oriented industry conferences and international meeting management support services. “I am proud to be back in India for the second edition of the Cement Business and Industry conference.

Last year’s meeting was a big success and I am happy to see many of you joining again.

India is a country of incredible opportunities and challenges and we are looking forward to expanding CBI events in India in 2014 and welcoming an even a larger and more diverse group of executives.”

The delegates attending the main two-day conference represented organizations from the global and Indian cement and related industries. The mix of senior-level executives included general managers, vice presidents, business heads and other industry leaders with wide-ranging backgrounds, as well as technical directors, engineers, analysts and associates.

Business & Finance Highlights Mr. Sushil Anand, Senior Investment Officer, International Finance Corporation – IFC – (Private Sector arm of World Bank Group) and Mr. Robert Madeira, Managing Director & Head of Research at CW Group, opened the sessions with presentations around global context and shifting economic strength and macro challenges in the global cement industry.

Speakers brought diversity of topics and perspectives such as cement volume forecast and pricing trends, presented by Claudia Stefanoiu, Senior Analyst CW Group, and the cement industry in Afghanistan, opportunity and analysis introduced by Mr. Mohammad Zamir Attai, Director of Mineral Sector Development, Afghan Ministry of Mines.

Additional subjects included challenges and opportunities for the Indian cement

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market, focus on Indian regions, economic forecasts, environmental performance and fuel usage, raw material and mining practices in cement and innovation.

Bharat Sharma, Addnl. General Manager (Strategy & Business Development) at Shree Cement, introduced “Indian Cement Industry: Trends, Opportunities and Challenges”. He underscored housing remains the major segment capturing cement consumption in India and accelerating urbanization, easy credit availability, tax benefits and population growth are the main demand drives in the country. Mr. Sharma expects cement demand to increase 7-8% annually over next 5 years.

Gaurav Bajaj, Joint Managing Director, RNB Cements, focused on the “Clinker & Cement Market in NE India”. Mr. Bajaj concluded that the north east cement and clinker market is fully saturated and there is no scope for any further capacity addition, until and unless the economy revives and the infrastructure projects and hydro projects open up.

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Other highlights from the conference included an analysis on the infrastructure sector and its impact in the cement industry introduced by Rajesh Sarada, Assistant Vice President Reliance Cement. In his presentation “Indian Cement Sector Outlook” Mr. Sarada explained the significant potential for growth in cement demand in India and how infrastructure will emerge as one of the largest consumers of cement.

He also added that growth in cement production will lead to increase in the demand of various resources required for producing and distributing cement and proactive measures will be needed to ensure availability of key resources.

“Solid fuel use in the cement sector” was the subject discussed by Laura Goldner, Senior Analyst – Energy, CW Group, while Joe Phelan, Director World Business Sustainability Cement Development (WBCSD) and a valued partner for the event, explained to the audience the different activities in which WBCSD/CSI is involved in India and the outlines of the India cement roadmap.

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One of the most interesting topics covered during the day was addressed by Mr. Krishna Srivastava, Whole Time Director, Zuari Cement (Italcementi Group). In his “Innovative Building Solutions” presentation, Mr. Krishna Srivastava showed the astonished audiences Italcementi’s transparent cement “i.light” that was especially developed by the company to build the Italian Pavilion at the 2010 World Expo in Shanghai. His presentation was complemented by a work of art at the exhibitions and fairs the group participates in, thanks to their latest innovative technology.

gy and coal issues facing the cement sector”.

The newest technologies and trends were exposed in the presentations held by Johannes Hartenstein, Project Manager Research & Development at Magnesita, who spoke about the innovations of “Modern Doloma Magnesia Refractories Performance and Benefits”, Michael Kirmse, Sales Manager Clinker Cooler, Claudius Peters, who showed the latest on “ETA Cooler” and Ambareesh Dixit, Director - Business Development (India Region), HGH Systemes Infrarouges who introduced the “Kiln process temperature control through infrared”.

A very special session was dedicated to Ready Mix and Fly Ash, with presentations leaded by L.R. Manjunatha, Senior Manager & Functional Head-Marketing, RMC Readymix (India), Prism Cement Limited & Secretary -ICI-KBC and Shardul Kulkarni, Principal Energy, Tata Strategic Management Group, who approached the subject of “Sustainable fly ash in cement”.

“Increasing efficiency and decreasing electrical consumption” was an issue explained

by Mukund A. Toke, Owner, DPTS Enterprises. Mr. Toke showed the audience areas of improvement in the use of alternative fuels, the installation of waste heat recovery systems and the implementation of high level of automation.

Technical & Engineering Highlights The latest technologies, trends and innovations in engineering were dedicated a special section in CBI India 2013.

Dr. S.N. Pati, former Joint Director (Environmental Management), National Council for Cement, made two very thoughtful presentations: “Life Cycle Assessment (LCA) of cement sector” and “Environmental issues for cement industry”. He focused in key issues like resource productivity, climate protection, emission reduction, ecological stewardship, community wellbeing and global welfare, generating vivid discussions among the participants.

A special section dedicated to fuels, counted with the participation of Ulhas Parlikar, Director - Geocycle Business, ACC Ltd. (“Alternative fuels & raw materials co-processing”) and by Dr. Jayant Bapat, Independent Consultant (“Petcoke as fuel for cement production: benefits and challenges”). Mr. Pukhraj Sethiya, Manager, Mining, PwC India gave a powerful presentation on “Ener-

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The session held by Ajit Ostwal, Head of Mining, UltraTech Cement, “Raw material and mining aspect in cement” offered the audience key concepts around prospects, investigation and study of raw materials deposits, technology, transport, processing and equipment.

“Global cement equipment forecast” presented by Claudia Stefanoiu, Senior Analyst, CW Group showed how Indian-based companies continued to invest in 2011 and 2012 after the economic slowdown.

The percentage share in CAPEX of Indian-based companies vs. global companies increased from around 10 percent in 2008 to more than 25 percent in 2012. According to Mrs. Stefanoiu, global cement players expect to limit as much as possible CAPEX in future years.

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Special roundtable session for CEO’s and executives In parallel with the India & South Asia 2013 Conference, the CW Group hosted an exclusive and special roundtable, the CEO & Executive Forum.

The event featured CEO panel discussions from global cement industry leaders: Zuari Cement, Reliance Cement, Sanghi Cement, Amrit Cement, Murli Cement, IFC and the special attendance of Mr. Jean Michel Allard, Retired deputy CEO and Director of the Board of France-based Vicat. The panels were moderated by Mr. Robert Madeira, Managing Director & Head of research.

Closing highlights CBI India & South Asia 2013 sessions benefited from the great presence, input and sponsorship of top industry companies: Magnesita, Loesche, Claudius Peters, Promac Engineering Industries Limited, Mondi, HGH. The cocktail offered by Amrit offered the delegates an extended networking opportunity and allowed the ideas and insights to flow among the participants in a less formal set up.

CemWeek once again provided key support and program guidance to CBI India 2013; also, World Business Council for Sustainable Development – Cement Sustainability Initiative was a very important supporter for the event.

The event was promoted by the main media partners in the region: India Cement & Construction Material Journal, Industrial Angles, AlitInform, Construction Sphere, Coal Insights and India Coal.

GMI Global is looking ahead and is excited to begin planning for the next CBI India & South Asia Conference. Follow www.gmiforum.com for news on what will surely be the most exciting annual cement business and industry event in India.

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CEMENT MARKETS

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CEMENT VOLUMES As 2013 is drawing to a close, cement companies reflect once again on the year’s challenges The burden experienced by cement producers operating in most of the European cement markets has been somewhat reduced toward the end of the year, even if cement demand for countries like Cyprus, Spain or Poland remained in the double digits red area.

Poland has the prospect of ending 2013 at below 10 percent negative growth, after preliminary January to November volumes for the year showed an YTD cement demand decline of 9.6 percent. However, Polish cement companies have been recently prompted with the decision of the Polish Court of Competition and Consumer Protection that held the initial OCCP (Office of Competition and Consumer Protection) decision to fine cement cartel members. Indications of price fixing cartel between 1998 and 2006 determined the court to impose a total amount of fines of PLN339 million. OCCP concluded that the fined companies included Lafarge, Górażdże, Grupa Ożarów, Cemex, Dyckerhoff, Cementownia Warta and Cementownia Odra.

Spain has yet to hit its bottom

Jan-Oct 2013/Jan-Oct 2012 Cement Production Growth Rate (%) 15% 10% 5%

Source: CW Research

-20%

Cyprus

Poland

Korea, Republic of

-15%

Japan

Belarus

Vietnam

Peru

Saudi Arabia

Thailand

-10%

China

-5%

Argentina

0%

Recent projections revealed that Spain has yet to hit its bottom . The Spanish cement market should reach only 11 million tons in cement consumption for 2013, registering a drastic drop of 80 percent when compared to its peak volume of 2007 (56 million tons).

The 20 percent decline of 2013 will be further deepened by another 7-8 percent estimated for 2014. As the market returns at least 50 years in time, Spanish cement makers are also crippled by increasing production costs. The uncertainty generated by the energy reform led to another disappointing trend. After increasing by 34 percent in the first semester of the year, cement exports declined by 3.5 percent in the last three months of the year when compared to 2012, highlighting a decline in the company’s competitiveness.

To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748.

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Jan-Oct 2013/Jan-Oct 2012 Cement Demand Growth Rate (%) 20% 10% Cyprus

Poland

Morocco

France

Germany

Pakistan

Indonesia

Japan

Peru

-40%

Source: CW Research

-30%

Korea, Republic of

-20%

Thailand

-10%

Ecuador

0%

The slowdown in self-construction, authorizations issued to promoters and new infrastructure projects led the Moroccan cement market to a decline of around 9 percent for the first 10 months of the year (12.3 million tons in volume). Morocco is expected to end 2013 only 4-5 percent below 2012.

One of the major surprises of the year came from China, which expanded faster than initially projected. The growth rate for the first 10 months of the year settled at above 9 percent for cement production, level estimated to be maintained in the last months of the year, as well. The strong growth of 2013 will be partially softened next year when cement demand is expected to increase by 6.5 percent and cement production by 4 percent. The South-Eastern region will register the lowest growth rate at only 1-2 percent, but there are no major risks foreseen for demand and supply.

After a booming start of year, Saudi Arabia faced a cement sales dip of 17 percent in November 2013 versus the corresponding month of 2012. The growth trend continues to be influenced by the departure of at least one million expatriates, which stalled most of the construction projects. As such, cement sales decreased to 3.65 million tons in November 2013 from 4.4 million tons in November 2012. This was the second major drop of the year after the slump of 19 percent in July 2013. The workers are not expected to be able to return to work in the next few weeks, situation that will most likely lead to another significant drop in December 2013.

Saudi Arabia faced a cement sales dip of 17 percent in November 2013

Latin America’s major cement markets, along with Asian cement markets pushed forward with another strong month. Countries like Argentina, Ecuador, Peru, Thailand, Japan, and Indonesia are expected to close 2013 at above 5 percent in growth rate. As for the United States, cement consumption is projected to reach 80 million tons in 2013, a moderate 4.5 increase over 2012. For 2014 the enhancement of the growth trajectory should be sustained by the pent-up demand of residential construction activities.

To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748.

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MARKET DATA SNAPSHOT

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Cement Production (million tons)

Cement Consumption (million tons)

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

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Cement Production MoM (%)

Cement Consumption MoM (%)

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TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

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Cement Imports (million tons)

Cement Exports (million tons)

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TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

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Cement Exports MoM (%)

Cement Imports MoM (%)

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TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

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MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

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CEMENT ENERGY MARKETS

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CEMENT ENERGY MARKETS Coal Market Update Output from Australia and South Africa remain strong October total coal trading volume recovered almost one million tons from September following higher output from Australia and South Africa. Year-to-date volume is now up 8 percent versus 2012 leaded by Indonesia and Australia, up 17 percent and 10 percent respectively.

In Australia, volume delivered from Port Waratah Coal Services Limited (PWCS), located in the Port of Newcastle, increased 12 percent versus September, while South Africa’s coal output from Richards Bay Coal Terminal (RBCT) raised 31 percent to 7.3 million tons.

Most of the additional volume exported by South Africa was dispatched to South Asian countries. In Russia’s shipments remained flat in October versus the previous month.

Year-to-date U.S. coal exports are 8% lower than the same period last year as a consequence of continuing economic weakness in Europe, lower demand in Asian markets and falling trading prices. The U.S. Energy Information Administration expects exports to total 105 million tons in 2013, down about 6 million tons from 2012. Locally, coal consumption has risen mainly as a result of higher coal usage in the electric sector, after natural gas prices started to recover. Consumption is estimated to increase 4.4% over 2012.

Annual Colombian coal exports won’t meet the expectations set by the government at the beginning of 2013. January to October volume is already down 9 percent from last year.

Coal operations have been affected by the recurrent strikes in several mines in the country and this year production is not even expected to reach 2012 levels.

Coal Global Trading (million tons)

Coal Global Trading (million tons) 120

Indonesia

Australia

Russia

South Africa

Colombia

US

Rest

100 80 40 0

SEP-10 OCT-10 NOV-10 DEC-10 JAN-11 FEB-11 MAR-11 APR-11 MAY-11 JUN-11 JUL-11 AUG-11 SEP-11 OCT-11 NOV-11 DEC-11 JAN-12 FEB-12 MAR-12 APR-12 MAY-12 JUN-12 JUL-12 AUG-12 SEP-12 OCT-12 NOV-12 DEC-12 JAN-13 FEB-13 MAR-13 APR-13 MAY-13 JUN-13 JUL-13 AUG-13 SEP-13

20

Source: customs data

60

To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748.

Source: customs data

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Energy Prices Update Coal Coal trading prices recovered in most export hubs in October and the average for the top 5 exporters is now at US$79 per ton, up 4 percent from September. This is the first positive growth of the coal price since January 2013.

In Indonesia, the average Harga Batubara Acuan (HBA) price closed at US$76.6 per ton in October, only 0.4 percent down from the previous month. Price is now at its lowest level since December 2009.

China’s Bohai-rim Steam Coal Price Index (BSPI), which covers six major coal shipping ports in China, reached 537 yuan ($US87.6) per ton, 1 percent over September 2013.

Local prices in China seem to have started recovering but still remain at their lowest since 2009.

Australia’s Newcastle coal export price is up 2 percent from September but still down 3 percent versus a year ago. South Africa’s Richards Bay raised 8 USD in October and is now at US$81 per ton but price the year-to-date average remains 16 percent below last year’s average. Colombia’s coal, down 17 percent versus 2012, has suffered the biggest drop in price across all export markets.

Steam Coal FOB Average Prices (US$/ton) Steam Coal FOB Average Prices (US$/ton) US exported

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

140 130

120 110 100 90 80

70

OCT-13

AUG-13

JUN-13

APR-13

FEB-13

DEC-12

OCT-12

AUG-12

JUN-12

APR-12

FEB-12

DEC-11

OCT-11

AUG-11

JUN-11

APR-11

FEB-11

DEC-10

OCT-10

AUG-10

JUN-10

APR-10

FEB-10

DEC-09

50

OCT-09

60

Sources: EIA, Colombia Ministry of Mines and Energy, IMF, Indonesia Ministry of Energy and Mineral Resouces

To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748.

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Sources: : EIA, Colombia Ministry of Mines and Energy, IMF, Indonesia Ministry of Energy and Mineral Resouces

150

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US Petcoke Export Price (US$/ton) rolling 12-month average 140 120 100 80 60

SEP-13

AUG-13

JUL-13

JUN-13

MAY-13

APR-13

MAR-13

FEB-13

JAN-13

DEC-12

NOV-12

OCT-12

SEP-12

AUG-12

JUL-12

JUN-12

MAY-12

APR-12

MAR-12

FEB-12

JAN-12

DEC-11

NOV-11

OCT-11

0

SEP-11

20

Source: customs data

40

Petcoke The average price of U.S. uncalcined petcoke for export markets declined for the second consecutive month in September to reach US$71.6 per ton and is now 12 percent below September 2012. Year-to-date price has declined 5 percent versus last year.

Delivered prices to most markets remain low compared to a year ago. Mexico is down 6 percent, Brazil 8 percent, Turkey 4 percent and Italy 5 percent.

In terms of volume, U.S. petcoke exports volume reached 2.5 million tons in September 2013, down 4 percent versus August. Declines in shipments to India and Italy were offset by higher sales to Mexico, Brazil and Turkey.

To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748.

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Natural Gas Japan’s Liquefied natural gas (LNG) import price recovered 3 percent in October, after falling 3 percent and 4 percent in July and August, respectively (price remained flat in September). At US$16 per MMBtu, Japan remains one of the countries in the world with the highest landed price for LNG. However the price is still below the peak of US$18 per MMBtu recorded in July 2012. Japan is reportedly in negotiations with different sources looking forward to loosen its oil-indexed gas contracts.

European natural gas price slightly recovered and reached US$11.4 per MMBtu in October in anticipation of cold weather. Price has remained over US$11 per MMBtu since September 2011. Early forecasts indicate that countries in Western Europe will experience a colder than average temperatures and markets like United Kingdom have already seen effect in natural gas local prices. Last month “Big 6” raised natural gas and electricity prices by 8-11%.

In the U.S. Henry Hub natural gas spot prices averaged $3.68 per MMBtu in October, 2 percent up from September’s price. Price has started to rise in September in anticipation of winter heating demand. EIA expects the Henry Hub price to reach $3.68 per MMBtu in 2013 and $3.84 per MMBtu in 2014.

Natural Gas Prices (US$/MMBtu)

Natural Gas Prices (US$/MMBtu)

US

20

Europe

Japan LNG

18 16

14 12 10 8

4 2

Sources: EIA, World Bank

To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748.

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OCT-13

FEB-13

JUN-12

OCT-11

FEB-11

JUN-10

OCT-09

FEB-09

JUN-08

OCT-07

FEB-07

JUN-06

OCT-05

FEB-05

JUN-04

OCT-03

FEB-03

JUN-02

OCT-01

FEB-01

JUN-00

OCT-99

FEB-99

JUN-98

OCT-97

0

Source: EIA, World Bank

6

Coal - Exports (million tons)

MARKET DATA SNAPSHOT

CW Research & Analytics

Petcoke - US Exports (million tons - Sep)

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

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Coal Exports MoM (%) US petcoke exports prices MoM (%)

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Coal - Imports (million tons)

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE

Petcoke - US export prices (USD/ton - Sep)

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE

Coal - Global export prices (USD/ton)

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION. WWW.CEMWEEK.COM/SUBSCRIBE Coal export prices MoM (%)

Natural Gas Prices (US$/mmBtu)

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Natural Gas prices MoM (%)

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TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

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Source: CW Group analysis estimates

LM: latest month (October except where other specified); MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748.

Source: CW Group analysis estimates LM: latest month (October except where not speciямБed); MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

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cement market and competition

M

arket and competition

ogistics optimization and portfolio balancing are among Indian cement companies’ favorite strategies

Malabar Cements invests in logistics hub Public sector Malabar Cements intends to build a Rs160 crore logistics hub at Cochin Port. The hub will be implemented on a seven acre land leased by the company.

Malabar Cements represents the largest cement producer of Kerala with an annual cement capacity of 4.2 lakh tons.

The logistics hub will be supplied from abroad either from an acquired cement plant or a partnering producer. In order to optimize its investment, Malabar Cements has requested the State Government for a three-year tax holiday.

Following the investment, the company intends to expand its Kerala market share from the current 10 percent to 25 percent in the future. Malabar Cements has also completed the Rs50 crore modernization process at its Walayar cement plant. Given the expected limestone crisis, Malabar Cements decided to import clinker from government companies located in other states, while preserving its 10 million tons limestone deposit. Cost optimization is further enhanced through the utilization of fly ash, sourced from government-owned thermal plants.

29 NOVEMBER/DECEMBER 2013

UltraTech builds terminal at Mumbai Port UltraTech is also looking into reducing logistics costs and has decided to build a Rs100 crore terminal at Mumbai Port.

The terminal’s main objective is to facilitate cement transport from the company’s Gujarat cement plants into Mumbai.

The only bidder for the terminal, UltraTech will receive a 2.5 ha area under a 30-year lease contract. The upfront payment is set at Rs35 crore. In return, UltraTech will benefit from a guaranteed traffic flow at the 1.25 million tons facility.

Mumbai Port expects to gain Rs170 crore from UltraTech over the next 30 years in the form of marine and loading charges.

UltraTech currently owns a bulk terminal in Mumbai and a jetty in the state.

Lafarge looking to balance its portfolio Lafarge expects the Indian cement market to recover from the current slowdown.

Even though the industry expanded less than the 8 percent initially estimated, the company believes in the future growth trend of the market. For this year, Lafarge expects the growth to settle at 2-3 percent, but not all segments are impacted similarly. Thus, the company focuses on the iden-

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tification of the resilient segments in order to tap on their growth.

The new Land Acquisition Bill is considered as one of the impacting factors that will render land acquisition more difficult and expensive. Martin Kriegner, CEO of Lafarge India, highlights the consolidation trend as newer players are looking into exiting the market due to underlining difficulties.

ACC embarks on transport safety program ACC intends to issue smart cards comprising personal details and medical history to its 12,000 truck drivers. ACC handles 36 million tons of goods annually, including 12 million tons of raw materials, at 17 plants located in 15 remote locations.

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m&a and finance

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&a and finance

1

he two-step consolidation of Ambuja Cement with Holcim India has been approved, and this process will involve Holcim India transferring over 50 percent of its stake in ACC to Ambuja. In other news, India Cements says its operations yielded a net loss of Rs 22.53 crore for the second quarter, which ended September 30, 2013. Furthermore, despite moderate growth in dispatches and substantial savings in fuel costs, Indian cement companies, as a group, saw their profits sink in the July-September period.

A two-step consolidation of Ambuja Cement with Holcim India has been approved In India, a two-step Rs 14,500-crore consolidation of Ambuja Cement with Holcim India has been approved by shareholders and by capital market regulator SEBI. Swiss building materials major Holcim owns majority stakes in two leading Indian cement makers, ACC and Ambuja Cements. The amalgamation process will

involve Holcim India transferring over 50 percent of its stake in ACC to Ambuja, which will pay Rs 3,500 crore for a 24-percent stake and will issue shares for the remaining portion of the company. Holcim’s stake in Ambuja will rise to 61.39 percent, from a little over 50 percent. The FIPB has agreed to the amalgamation. The consolidation is expected to bring a synergy effect of Rs 900 crore per year from logistics and the supply chain.

Holcim may have won minority shareholder support Holcim may have won minority shareholder support for its India restructuring plans, on strong backing from foreign institutional investors (FIIs), who control a little over 30 percent of its subsidiary, Ambuja Cements. Opposition comes from domestic institutional investors, including LIC, the largest institutional shareholder (with a 6.1-percent stake).

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m&a and finance The state-owned insurance companies that likely voted against the restructuring plan own 8.95 percent of the company.

The state-run reinsurer General Insurance Corporation of India and four other general insurers have expressed their intention to vote against the Rs 3,500-crore Ambuja-

Holcim deal. Meanwhile, the biggest institutional holder, Life Insurance Corporation, which holds a 6.1-percent stake in Ambuja Cements, remains undecided.

India Cements reports losses for the second quarter In other India news, India Cements says its operations yielded a net loss of Rs 22.53 crore for the second quarter, which ended September 30, 2013. The firm had reported a net profit of Rs 49.08 crore during the corresponding quarter of the previous year. For the half-year ending September 30, 2013, the net loss of the company stood at Rs 5.71 crore, versus Rs 111.15 crore registered during the same period of the previous year. Meanwhile, for the year ending March 31, 2013, the net profits of the company stood at Rs 163.55 crore. Total income from operations in the second quarter of this year declined to Rs 1,093.78 crore from Rs 1,125.68 crore during the same period of the previous year.

Indian cement companies saw their profits sink in the July-September Despite moderate growth in dispatches and substantial savings in fuel costs, Indian cement companies, as a group, saw their profits sink in the July-September period, due mainly to a sharp drop in cement prices and higher freight expenses. The allIndia average dispatches growth was 3.5 percent in the July-September quarter. On the cost front, companies posted savings on coal costs with thermal coal prices in the international market touching a multiyear low of $78 per ton, down 11 percent from last year.

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focus UltraTech Cement predicts demand growth of around 5 percent in FY2014 India’s largest cement producer, UltraTech Cement, reported a 52-percent decline in net profit for Q3 2013. UltraTech Cement predicts demand growth of around 5 percent in FY2014, although long-term growth is likely to be over 8 percent.

UltraTech reported a net profit of 2.6 billion rupees (US$42 million) for Q3, with net sales falling 4 percent to 45 billion rupees. In September, UltraTech announced the 38 billion-rupee purchase of a cement plant in Gujarat from Jaiprakash Associates. With this purchase, UltraTech’s cement capacity will increase to 59 million tons.

Grasim Industries reported a fall in consolidated net profit India’s Grasim Industries reported a 27-percent fall in consolidated net profit, to Rs 450 crore. Grasim obtains about 70 percent of its consolidated revenue from the cement business.

Its revenues in the September quarter reached Rs 6,849 crore, compared with Rs 6,615 crore in the same period of the previous year, for a rise of 3.5 per cent.

In the standalone business, the company increased the volume of viscose staple fiber (VSF), with production rising by 15 percent year-on-year.

Shree Cement net profits declined by 25 percent India’s Shree Cement’s net profits for the quarter ending in September declined by 25 percent, year-over-year. Net profits for the quarter this year came in at Rs 172 crore, compared with Rs 228 crore a year ago. Shree Cement reported a marginal decline of 4 percent in net sales, totaling Rs 1,248 crore, compared with Rs 1,296 crore in the same period last year. The cement producer’s total expenditures increased by 11 percent

to Rs 1,112 crore compared with Rs 1,000 crore a year ago.

Ambuja Cements reported a Q3 2013 loss, with its net profit falling 45.4 percent to Rs 166 crore and a 7.4-percent decline in net sales, year-over-year, to Rs 2005 crore for the quarter. Operating EBITDA declined 48.7 percent, year-over-year, to Rs 268 crore in Q3 2013. Cement and clinker sales by volume increased 2.1 percent over Q3 2012 to 4.89 million tons in Q3 2013.

ACC has reported a 51-percent drop in net profits Meanwhile, India-based ACC has reported a 51-percent drop in net profits, to Rs 118.90 crore, for Q3 2013. ACC’s net sales in the July-September quarter were Rs 2,508.65 crore, compared to Rs 2,542.37 crore for the same period last year, a fall of 1.3 percent. The operating EBITDA in the third quarter declined to Rs 268.56 crore against Rs 466.07 crore in the same period last year.

India-based Ramco Cements, formerly Madras Cements, has reported an 86-percent decline in its Q3 2013 net profit,

to Rs 18.27 crore from Rs 132.89 in the same period a year ago. Ramco’s net sales declined 8 percent year-over-year, to Rs 920.71 from Rs 1,005.69. Ramco’s expenditures rose by 15 percent, to Rs 787.02 crore, compared with Rs 685.53 crore in Q3 2012.

JK Lakshmi Cement reported profit results for the second quarter India-based JK Lakshmi Cement reported a second quarter net profit that plunged 80 percent year-on-year to Rs 10.3 crore.

Revenue from operations declined to Rs 449 crore during the third quarter, from Rs 491.4 crore in the same quarter of the previous year. EBITDA fell by more than 50 percent, year-over-year, to Rs 56 crore from Rs 113 crore, and the EBITDA margin fell to 12.5 percent from 23 percent last year.

Heidelberg Cement India has reported a Rs 28.35-crore loss for the July-September quarter. In the same period of 2012, the company clocked an Rs 7.5-crore net profit. Total Heidelberg Cement India expenses rose to Rs 314.43 crore in Q3 2013 from Rs 242.87 crore a year previously.

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cement projects and expansions 5

p

1 rojects and expansions

espite the slowdown of the Indian cement industry, cement companies continue to focus on expansionary efforts, although at a slower rate

Shree Cement expanding away from North India Shree Cement intends to double cement capacity, while also expanding its reach away from the company’s traditional market, North India. In order to achieve this goal, Shree Cement showed interest into setting up two cement facilities in Chhattisgarh.

Shree Cement evolved considerably in the last decade. In 2002, the company’s owners were struggling to run the twomill cement plant in Rajasthan’s Beawar district. At that time, Shree Cement borrowed funds at 19 percent to push through with its expansion.

One of the successful decisions that the company took back then was to switch to petroleum coke, which was 40 percent cheaper.

Nowadays, Shree Cement is able to produce 13.5 million tons from eight units and the intent is to increase the capacity to 25 million tons through the construction of two new cement plants in Chhattisgarh, expected to be commissioned in 2015.

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Builders Association of India to produce its own cement Booming cement prices and the effects of an allegedly cement carter led the Builder’s Association of India (BAI) to the conclusion that it should acquire or build its own cement plant. According to the association’s current plans, a 1.5 million tons cement plant will be commissioned at Kondangal, in Mahabubnagar district in the exchange of an investment of Rs 700 crore.

All the permissions for the plant have already been obtained. Half of the investment will be pledged by member companies of BAI, while the remaining 50 percent will be secured through loans.

Locals call for revival of mini cement plant Nagaland locals lobby for the revamping of their mini cement plant in Weziho. The cement plant was operational between September 1992 and June 2003 when it was closed for expansion and modernization. The expansion has been reportedly finalized in May 2008, but the cement plant remained closed up to this date.

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focus Zuari Cement to build grinding unit

Zuari Cement is setting up a cement grinding unit in the Solapur District in the western state of Maharashtra, specifically at Auj (Aherwadi) and Shingadgaon villages, South Solapur Taluk.

The ground breaking ceremony of the new cement plant was held on October 30, 2013. The grinding centre is expected to be operational by the second quarter of 2015 and will have a production capacity of 1 million tons of cement per year.

The cement facility has the potential to double its cement capacity if the regional cement consumption will permit the expansion. Maharashtra is one of the largest cement consumption areas in the country.

Zuari Cement has a total cement production capacity of 6.2 million tons in India, which includes two integrated cement units at Sitapuram and Yerraguntla and one grinding unit at Chennai.

volume & pricing

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cement

olume and pricing

he peak consumption period has started in India, but demand remains poor with 100 million tons of capacity (30 percent) lying idle.

All-India cement prices declined 4.5 percent The peak consumption period has started in India, but demand remains poor with 100 million tons of capacity (30 percent) lying idle. All-India cement prices declined 4.5 percent versus prices in the same period of 2012 (Rs 282 per 50-kg bag versus Rs 295).

Estimates had pegged cement demand growth at 7-8 percent Although estimates had pegged cement demand growth at 7-8 percent, the market is currently growing at only at 3-4 percent, while prices are declining nationwide. In October, prices fell Rs 5 in the north to Rs 252. The decline was sharper in the south, where prices slipped from Rs 318 to Rs 298.

In the east, cement prices plummeted from Rs 340 to Rs 315 in October. The west registered a soft rise to Rs 287, up Rs 2. Mumbai also received a boost of Rs 10 to Rs 310.

South India saw a sharp rise in prices Sluggish demand in India is likely to continue for some time. Production discipline is necessary to keep prices stable in the months to come. Prices have been volatile. The Chennai market witnessed

a steep increase of around Rs 60 a bag in September. South India as a whole saw a sharp rise in prices, with Hyderabad, Kochi, and Bangalore witnessing increases of Rs 40-60 a bag. Poor market conditions then led to a partial rollback of prices by Rs 10-15 a bag. Current prices in the Kerala market stand at Rs 360 for a 50-kg bag, while in Hyderabad they are slightly lower, at Rs 290-295.

The cement industry’s demand growth is likely to remain tepid The cement industry’s demand growth is likely to remain tepid during FY14, with probable revival in demand after the general elections of May 14.

The industry is expected to log demand growth of 8 percent in CY15, with utilization persisting at current levels in the near future and likely improving in FY16 and beyond. Depleting limestone reserves remains a key concern for Indian cement players.

Some of the players are acquiring limestone reserves outside of India, with the port-based Indian cement industry capacity expected to reach 450 million tons per year by FY19.

Cement prices rose sharply during October 2013 across India Cement prices rose sharply during October 2013 across India and remained largely stable in November 2013. The performance of the cement sector was expected to be weak in Q2FY14, due to a sharp fall in cement prices, coupled with decline in dispatches due to the monsoon. Due to declines in petcoke and imported coal prices, companies have shifted toward higher usage of petcoke and imported coal, resulting in lower power and fuel costs per ton for most players.

Cement demand fell 6.6 percent in 2QFY14 Across India, cement demand fell 6.6 percent, quarter-on-quarter in 2QFY14.

Aggregate utilization was down to 65 percent, a drop of 6 percent quarter-on-quarter and 3 percent year-on-year, with the lowest utilization belonging to Tier II players at 60 percent (a drop of 4 percent quarter-on-quarter). Unusual cost push inflation in various aspects of the industry led to the fall in profitability, with the impact severe on ISM, as EBITDA per ton turned negative for seven companies. Ten of the 23 companies posted net losses and six posted cash losses.

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cement people

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Binani Cement appoints new MD Jotirmoy Ghose has been appointed Managing Director of Binani Cement, part of the Braj Binani Group. Mr. Jotirmoy Ghose is renowned for his project management and market expansion acumen.

The new Managing Director holds an extended expertise in M&A, execution of Greenfield projects and market development initiatives in diverse markets, including Kenya, Nigeria, UK, Kazakhstan, Australia, India and UAE. Mr. Jotirmoy Ghose’s experience in the cement and building materials industry spans to around 15 years.

His last assignment was as Operations VP with Arkan Building Materials, UAE.

UltraTech Cement expands Board UltraTech Cement intends to raise Board count from 12 to 15, considering the company’s current size of business and future growth plans.

For this purpose, the company will have to change the existing Article 5 of Association of the company.

ACC extends top executive’s contract ACC’s chief executive and managing director, Kuldip Kaura, has received a oneyear extension of his managerial contract.

Mr. Kuldip Kaura has been re-appointed at the Board of Directors meeting held on December 4, 2013. The extension is effective from January 1, 2014.

On a separate note, UltraTech announced a new Additional Director (Independent) on the Board with effect from December 3, 2013. Mr. Arun Adhikari is an alumni of the Indian Institute of Technology, Kampur and the Indian Institute of Management, Calcutta.

Kaura holds a degree in mechanical engineering. He has served at senior levels in various companies, including Vedanta Resources as chief executive and managing director at ABB. Kaura joined ACC in August 2010 as its CEO and managing director.

focus Holcim revamps India and West Asia senior management

Indian Subcontinent, including India, Sri Lanka and Bangladesh.

Onne Van Der Weijde, the current India head, will continue the collaboration with the group as Area Manager for the country and member of senior management of Holcim.

Javier de Benito will remain Area Manager for Africa Middle East and report directly to Mr. Terver. Furthermore, Ian Thackwray, will assume the East Asia, South East Asia, Oceania and Holcim Trading, while Daniel Back, currently CEO of Holcim Romania, will be appointed Area Manager for South East Asia and member of senior management.

All changes will be effective as of January 1, 2014.

Bernard Terver took over the position of head of Indian Subcontinent and West Asia for Holcim, the global cement producer.

Mr. Bernard Terver will also assume responsibility for Africa Middle East as well as the

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regional

news

Axle load limits for truck transportation imposed by Pakistani authorities are severely cu Multiple regional expansionary actions are announced by cement companies operating in

pakisTan’s CemenT sales affeCTed by loGisTiCs limiTaTions Pakistani cement companies dispatched 2.888 million tons of cement in May 2013, more than 7.5 percent below April 2013.

Apart from the slower pace of construction activities, the decline was also perceived as the direct consequence of strict application of the axle load limits imposed by the national highway and motorway authorities. The axle load rule had been lax for years, allowing trucks to be loaded domestic market with 0.39 million tons of cement, with their exports nearing 0.22 with extra quantities.

The stricter appli- the mong India surrounding regions, Pakistan is the one seeing most activity.

The country’s million tons. cation impacts not only the availability of cement producer association is going through troubled times because of cement pricing policy transportation, but also the logistics costs and energy costs, while Bangladesh imports bymonths river route from During the first 11 of the current incurred. sees the first arrival of clinker Star Cement and five of the seven stock exchange listed companies go for bigger profits. fiscal year, Pakistani cement companies Northern cement units dispatched around sold more than 30.5 million tons, around 2.29 million tons of cement in May 2013, one million tons above the correspond24.3 percent of which were sent by sea to ing period of the last fiscal year. Cement gradually to a slowdown in Pakistan crippled by the lowest dispatches droppedmostly to a five-year low in declining exports notched 7.7due million tons this fiscal external markets, to Afghanistan, the pace of new development projects utilization rate in five years October 2013 with the volume at while around 2.7 percent were settling dispatched year versus more than 7.8 million tonsinin the withdrawal of Pakistan cement sales rose only marginonly 2.65 million tons (4.2 percent below last fiscalThe yearexpected for the first 11 months. to India.

The southern units provided the the country.

NATO forces scheduled for next year adds ally in the first five months of the current October 2012 and 10.15 percent below to the sense of uncertainty inside Pakifiscal year restricted by declining exports September 2013). stan’s main exporting market. and economic slowdown internally. Total 38 MaY / JUNe 2013 BMWeek CW Group Coal Week CemWeek INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE cement sales for the five-month period Capacity utilization for the time frame has CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group This Coal year Week has been tough for Pakistani reached 13.167 million tons versus 13.127 been estimated at 70.8 percent, the lowest in the last five years.

On the negative cement companies. Higher taxes, transmillion tons sold in the corresponding side, cement exports to Afghanistan are portation costs and input costs are cutting period of the previous fiscal year. Cement into the industry’s profits. The softened GDP growth rate of Pakistan backed by currency depreciation and a reduction in public spending led to a lower than expected domestic cement consumption.

R

egional news

Cement prices rise in Pakistan Until relaxation measures are implemented, the cement industry continues to face price increases. A rise of 4 percent (Rs20 per 50 kg bag) was registered during the first five months of FY2013-14 with further increases expected for future months.

A well-deserved relief may come if the cement sector is excluded from MRP and included under a normal tax regime, which could lead to price reductions of at least Rs10 per 50 kg bag. If the government further eliminates the excise duty

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In th lizati back 2007 are e ate a push boos

pakis Their Attoc Kara that lion f Iraq. lion in Hu

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regional news on cement of Rs500 per ton, an additional price cut of Rs25 may be possible.

Despite declining demand, Pakistani cement companies report improved margins On national level, the sector earnings improved by 14 percent on a yearly basis due to the expansion in margins and decline in financial costs. Sales revenues rose by 7 percent, while COGS increased only by 6 percent given lower coal prices (17 percent decline).

Lucky Cement reported 26 percent increase in its Q1 profit, but its performance still remained low due to weak seasonal sales for the July-September period.

Maple Leaf posted solid growth in topline and improved gross margins in the first quarter of FY2014 with sales revenue settling at PKR 4,192 million (10 percent increase YoY). Decline in finance cost, increase in other income, backed by higher cement prices and lower coal prices led to the positive outcome.

On another hand, DG Khan reported lower earnings for the period with Q1 FY2014 earnings falling to Rs1.1 billion (26 percent decline YoY). The higher effective tax rate that rose to 31 percent versus 5 percent last year severely affected the company’s results. Profit Before Taxation rose by 2 percent, while the company’s top line remained static as higher retention prices were diluted by lower volumes.

Lafarge Pakistan knew an even sharper decline for its after-tax profit (86 percent), down to Rs39 million from Rs269 million in the same period of the previous year. Lafarge Pakistan expressed interest in entering the Tajik cement market after visiting several facilities and construction sites in the country.

Government spending boosts cement producers’ profits in Bangladesh Listed cement companies reported 20.38 percent higher profits for the first three quarters of 2013. Five out of the seven listed companies registered profit hikes,

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while two companies experienced losses. An increase in the number of construction projects located both in urban and rural areas fueled the demand. Governmental infrastructure spending also boosted cement consumption. More than 50 percent of the domestically produced cement is destined for construction projects in rural and sub-urban areas.

The cement sector increased by over 13.5 percent in CAGR over the last 10 years, while the growth rate since 2005 settled at 9.7 percent. Cement consumption per capita is still low compared to global standards – 83 kg per inhabitant.

focus Bestway Cement to merge with Mustehkam Cement On November 26, 2013, the Board of Bestway Cement announced that Mustehkam Cement will merge with Bestway Cement. Shareholders of Mustehkam Cement, others than Bestway Cement, will receive shares of Bestway at a swap ratio of 0.66 shares of Bestway Cement for any share of Mustehkam Cement. Bestway’s cement capacity is expected to exceed 6 million tons of cement following the merger.

Lafarge Surma taps on domestic clinker sales Lafarge Surma Cement earns around US$50 – US$60 million per year from selling clinker to other cement companies. The company gains not only from the clinker sales, but is also saving on the foreign currency side. Bangladesh has no proven limestone reserves and thus the company brings limestone to its Chhatak cement plant in Bangladesh through a 17 km long belt conveyor from the quarry located in the state of Meghalaya, India.

Sri Lanka Tokyo Cement on a rise The company registered 160 percent increase in its profits for the six months to September 2013 (1.2 billion rupees in total). The company’s revenues were flat in the September quarter, but cost of sales fell 7 percent. Sri Lanka Tokyo Cement operates grinding units with imported clinker and also packs and sells imported bulk cement.

Chaudhary Group starts cement production in Nepal Nepal’s leading business conglomerate announced that it has started production at CG Cement with the target to cater central and western markets within the country. Cement capacity equals 1,600 tons per day with 250 tons OPC and 1,350 tons PPC. OPC will be launched

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on the market in the end of 2013, while PPC will reach the Nepalese markets from early 2014. The cement plant required a total investment of Rs1.5 billion. Even though in an initial stage, CG Cement will buy clinker from Nepali producers, the company intends to start extracting limestone from its Palpa mine within a couple of years. The limestone reserve at Palpa is estimated at 300 million tons of limestone.

orders & equipment highlights

O

rders & equipment

MVW Lechtenberg & Partner signs agreement in India Computational Fluid Dynamics (CFD) represents a computer aided solution technique to describe and simulate flowrelated physical phenomena (fluid flow, heat transfer, combustion etc.).

The exclusive Cooperation Agreement will enable MVW Lechtenberg & Partner and Tridiagonal Solutions to combine their activities in the worldwide cement and lime industry to utilize CFD models to develop, design and troubleshoot combustion processes. Various cement, lime and power plant applications that can be analyzed using CFD include kilns and boilers; flue gas cleaning systems such as electrostatic precipitators, bag filters; bypass systems; NOx reduction systems (selective non-catalytic reduction (SNCR));heat recovery steam generators and related equipment.

Dirk Lechtenberg, managing director and founder of MVW Lechtenberg & Partner explains that with “recent advances in understanding of combustion, multi-phase turbulent reacting flows and computational resources, it is now possible to develop and to use computational models to simulate performance of cement & lime Plant equipment’s“.

Göltas Cimento ordered a Loesche Vertical Roller Mill In order to increase the cement grinding capacity on site, Göltas Cimento and Loesche signed a contract in July 2013, for the supply of a third Loesche Vertical Roller Mill.

The chosen Loesche Vertical Roller Mill – Type LM 56.3+3 - will be producing at least three different cement types, from a standard OPC cement to various types of composite cements.

Production rates of up to 230 tph are foreseen.

The new Loesche Compact Plant Design eliminates the necessity for a large and expensive mill building, leading to massive savings in required plant plot, in cost for structural steel works and civil works as well as in erection time.

Fives signed new contract with Lafarge Republic In Philippines, Lafarge awarded Fives FCB with a contract for the supply of a new cement grinding plant for its Teresa plant. The unique and proven Horomill technology implemented in this grinding plant has been selected for its performances in terms of flexibility, energy savings and combined drying of additives.

The new Horomill grinding plant will enable Lafarge Republic to increase cement production at its Teresa facility by 850,000 tons per year in 2015.

The contract includes a raw material feeding, a cement grinding workshop fitted with Fives FCB equipment, a Fives Pillard vertical hot gas generator (12 MW) for the pouzzolana (25% moisture) drying, a cement silo of 5,000 tons capacity, the cement transport system to the new silo and to the existing silos and packing plant and the control system and the electrical sub-station dedicated to this new grinding plant.

Logistics improvements to lower costs of ACC ACC Ltd, part of Switzerland-based Holcim Group, plans to cut logistics costs by Rs 150 crore a year.

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orders & equipment At present, the company’s transportation costs alone represent 33 percent of sales realization. ACC is focused on adopting modern technology and utilizing assets more efficiently to cut logistics costs and improve margins, said Tushar Rameshchandra Dave, Vice-President (Central Logistics).

Moreover, the focus on logistics was emphasized even more after the Government decided to reduce fuel subsidies, leading to a boom in diesel and petrol prices. “With raw material prices remaining high, the only way we can protect our margins and market share is by improving our efficiency.

Logistics stands out as it accounts for the lion’s share of the cost,” added Dave.

The majority of shipments (60 percent) are performed by trucks that can carry 12-22 tons of cement. Around 10,000 to 12,000 trucks are on the road each day. A logistics excellence program was

39 NOVEMBER/DECEMBER 2013

implemented at three cement plants Tikaria in Uttar Pradesh, Damodhar in West Bengal and Thondebhayi in Karnataka.

Cargotec to deliver a Siwertell 5 000 S in the Black Sea port UK company TAD Enterprises Ltd has signed a contract with Cargotec for the delivery of a Siwertell 5 000 S mobile unloader for cement-handling operations in the Black Sea port of Yeysk, south of Rostov, in Russia. Delivery is planned for February 2014 from Cargotec’s production plant in Bjuv, Sweden.

“The new Siwertell unit will offer the company a flexible, low cost cement handling operation,” says Jörgen Ojeda, Siwertell Sales Director. A major impact on the client’s decision was along with reliability, the fact that Siwertell mobile unloaders offer flexibility and high capacity bulk handling combined with low operational and maintenance costs.

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The diesel-powered, trailer-based Siwertell 5 000 S system will be used to load trucks alongside the berth for further transportation by road. It will be fitted with a double-bellows system for handling cement continuously at a rated capacity of 300t/h. The unit will also have a dust filter system to ensure a low environmental impact. Siwertell ship unloaders and loaders are based on unique screw conveyor technology, in combination with belt conveyors and aero slides, and can handle virtually any dry bulk cargo, such as coal, cement, fertiliser, agribulk, clinker, sulphur and grain.

Siwertell plant and terminal design, ship unloaders, ship loaders, mobile ship unloaders, mechanical and pneumatic conveying systems and storage solutions are all designed to ensure environmentally-friendly and efficient cargo operations.

Infrastructure & projects

I

nfrastructure & projects

ealty giant Alchemist Township is prepared to make an investment to develop a residential project in Kolkata. Furthermore, in a quest to develop the region’s infrastructure, the Himachal Pradesh government has proposed to restore roads constructed during the British-era, and is aiming to redevelop the Hindustan-Tibet Road.

NEW PROJECTS L&T Construction to develop Odisha Road The L&T Infrastructure Development Projects (L&T IDPL) has bagged orders worth Rs 1,293 crore, to develop the 161.73 km stretch on the SambalpurRourkela road in Odisha. Currently, the road has two lanes and the company will widen it to four lanes along with other facilities such as flyovers, underpasses and bridges.

The road will be developed under the public-private-partnership model on a buildoperate-transfer (BOT) basis for a concession period of 22 years, including the construction period of three years.

The construction arm of the company also secured orders worth Rs 445 crore from Hospital Services Consultancy Corporation for construction of super specialty-

cum-new ward at Safdarjung Hospital in New Delhi.

Cabinet approves major road project in Gujarat The Union Cabinet approved the development of a national highway between Gadu and Dwarka in Gujarat. The project involves construction of a 209.89 km of highway, out of which 119.7 km will be four-laned and 90.19 km will be two-laned with paved shoulders. The estimated cost of the project is expected to be around Rs 1,756.36 crore, including the cost of land acquisition, resettlement and rehabilitation and other pre-construction activities.

Once complete, the highway will ease the traffic plying between Gadu and Dwarka.

IL&FS secures new road projects in two states In a recent bid, IL&FS secured two road projects involving a whopping investment

of Rs 4,450 crore. The mega infrastructure builder secured two projects from the NHAI. The two projects involve development and operation of six laning of Barwa Adda Panagarh Section of NH-2 stretch located in the Jharkhand state connecting it with West Bengal in the eastern region, whereas the other involves four laning of Khed-Sinnar section of NH-50 in Maharashtra.

The company has already inked the concession agreement of 20 years and will develop the projects on a toll basis.

Alchemist to invest in realty in Kolkata Realty giant Alchemist Township is prepared to make an investment of Rs 600 crore to develop a residential project in Kolkata. The realty major has already bought 20 acre land in Kolkata from a local builder and a 2 million sq ft of prime residential land from Highland Group at

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infrastructure & projects Kolkata Riverside. The residential project will be developed on the banks of the Hooghly River.

Himachal government to redevelop Hindustan-Tibet road In a quest to develop the region’s infrastructure, the Himachal Pradesh government has proposed to restore roads constructed during the British-era, and is aiming to redevelop the Hindustan-Tibet Road.

The road will be linked to Rampur and will be broadened to enable the mobility of buses. The project is going to be a part of the government’s recent initiative to enhance the traffic mobility in Kinnaur district of the state.

The airport project cost, originally envisaged at Rs 4,766 crore in 1998 for handling 40 million passengers annually, has gone up to Rs 14,573 crore. Once complete, the airport will easily handle more than 60 million passengers per year.

Godrej Properties to build 10 new projects Godrej Properties, the real estate arm of Godrej, is set to invest Rs 9,000 crore to build 15 new projects across the country in India. Out of the 15 new projects, five projects have been launched this year. The company has already invested Rs 1,000 crore on its biggest ever project called Godrej Garden City, which is a joint venture between Godrej Properties and Shri Siddhi Developers in Ahmedabad.

UPDATE ON PROJECTS Decks cleared for Navi Mumbai Airport The Central government agreed to the Maharashtra State government’s offer of 22.5 percent developed land for every hectare of land acquired to the project affected persons (PAPs), removing major hurdle that delayed the Rs 14,573 crore Navi Mumbai air project. The decision has paved way for the City and Industrial Development Corporation (Cidco), the nodal agency for the project, to invite requests for qualification (RFQs).

Construction begins on Swargate Flyover Work on the proposed Rs 158 crore Swargate flyover has started. The Maharashtra State Road Development Corporation (MSRDC) undertook the excavation work. Once complete, the flyover will connect the Shankarset Road to Satara Road and is expected to smooth traffic on this route. The work on the flyover was blocked due to some initial hurdles but has now resumed on schedule. The flyover will also reduce traffic burden in Swargate area.

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analyst recommendations ULTRATECH CEMENT Emkay Global Financial Services has recommended an “ACCUMULATE” rating for UltraTech Cement with a target price of Rs 2,000 upgrading it from the current price of Rs 1,965. The recommendation is based on the company’s added capacity of 4.8 mtpa in the growing eastern region and acquired 5 mtpa Gujarat plant from Jaypee. Furthermore, the analyst estimates the company to benefit from the recent sharp hike in cement prices. Meanwhile, Firstcall Research has recommended a ‘HOLD’ rating on the company’s stock with a target price of Rs 2,150 upgrading it from the current price of Rs 1,955 as it believes that the company’s long term fundamentals and growth prospects will help it add more capacities in the coming years.

SHREE CEMENT Emkay Global Financial Services has upgraded its rating to “ACCUMULATE” from “HOLD” for Shree Cements with a target price of Rs 4,700 upgrading it from the current price of Rs 4,395. The recommendation builds on the analyst’s estimation that the company seeks to remove its capacity constraints by adding 2 mtpa at its location at Ras by June 2014. The company experienced a sharp decline in cement prices led by early and heavy monsoon, but is expected to register an increase in its margins following the increase in cement prices. On a similar note, Prabhudas Lilladher has recommended a “BUY” rating for Shree Cements with a target price of Rs 4,850 upgrading it from the current price of Rs 4,430. acc Prabhudas Lilladher has maintained “REDUCE” rating for ACC with a target price of Rs 1,025 reducing it from the current price of Rs 1,113. Emkay Global Financial Services has also maintained “REDUCE” rating for the company with a target price of Rs 1,100 downgrading it from a CMP of Rs 1,152. The lower ratings reflect the company’s high cost structure that led to a lower than expected operating performance. In addition, the com-

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pany’s high cost structure amidst weak pricing power is expected to strain profitability in the coming months.

INDIA CEMENTS Centrum Equity Research has downgraded to “SELL” from “HOLD” for India Cements with a target price of Rs 40, lowering it from the CMP of Rs 53. The rating follows the company’s down revision in earnings estimate due to high energy costs and other expenses. On the other hand, ICICI Securities has maintained “HOLD” rating for India Cements with a target price of Rs 51. The recommendation is explained by the company’s Q2FY14 results, which were in line with expectations on the revenue front. Moreover, the analyst expects that the company’s future realization and margins will improve given better pricing environment. Emkay Global Financial Services has also maintained its “HOLD” rating for the company with a target price of Rs 52, upgrading it slightly from the current market price of Rs 51.

JAIPRAKASH ASSOCIATES IndiaNivesh has maintained “BUY” rating for Jaiprakash Associates with a target price of Rs 66 keeping it unchanged from its current price. The recommendation builds on the company’s strong performance across Construction and Real Estate segment, which led to an increase in net income. Apart from posting strong net income, the company also benefited from the higher revenue booking from International Hydro projects despite the prolonged monsoon season.

JK CEMENT Motilal Oswal has maintained “BUY” rating for JK Cement with a target price of Rs 215, upgrading it from current market price of Rs 189. The recommendation reveals the healthy growth in the company’s white cement volumes. White cements (including putty) grew to 0.2 million tons, an increase of 23 percent YoY and 12 percent QoQ. However, the company registered a decline in profitability because of the sharp fall in realization.

RATINGS CHAnGES

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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

GLOBAL

1 India clears restructuring of Holcim’s Ambuja stake

1 Sinoma to build new plant in Nigeria

2 Dalmia looking to expand presence in India

2 VAS wins CEMEX contract

3 India: UltraTech reports declining profit

3 Angola: Improved logistics leads to lower cement prices

4 HeidelbergCement India turns in loss

4 US: Lafarge gives update on Ravena plant upgrade

5 Holcim reshuffles India team

5 Titan cites long term debt, cost reduction plan

6 Malabar Cements to build logistics hub in India

6 Egypt cement sales, production tumble

7 India: Builders intend to have their own plant

7 Egypt: NCC’s cement exports hit by road closure

8 India: Analyst expects lower Ultratech Cement earnings

8 Holcim, Cemex deal to go through EU probe

9 UltraTech mulls expanding board

9 Cemex posts disappointing Q3 numbers

10 India: Jaypee workers ask for government mediation

10 Kenya: EAPCC power may shift to Lafarge

11 India: Zuari Cement builds grinding unit

11 Saudi cement makers report weaker Q3 profits

12 Zuari Cement to build new plant in India’s Maharashtra

12 Egypt: Minister thumbs down coal use for cement plants

13 India: ACC has reported lower profits

13 China to curtail overcapacity in cement industry

14 Holcim merger gets Ambuja green light

14 Global Water Tool for cement industry launched

15 Indian cement demand to remain sluggish in FY2014

15 Lafarge makes changes to Africa team

16 India’s Binani Cement has new MD

16 Cemex to build cement plant in Colombia

17 Reliance Cement is handed allotment letter for plant at Purulia’s Raghunathpur

17 Spain: Cemex plant in Alcanar to resume operations

18 India: Madras Cement CSR funds for Engineer College contested

18 KHD bags fresh contract in Turkey

19 India: Pollution Board orders closure of India Cements unit

19 Oman Cement to expand cement plant

20 Ambuja’s ACC purchase may hit snag

20 Asia Cement posts large profit

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CW GROUP MEETING AGENDA The CW Group will be hosting and participating in a number of webinars and conferences. We invite you to join us on-line or in person at the events to discuss our views of the industry.

Conferences where the CW Group will be presenting CBI Brazil &LatAm 2014 Cement & Lime Conference

February 5-6, Hilton Morumbi 2014 Sao Paulo, Brazil

WPP – World Paper & Pulp Industrial and Business Conference

April 2-3, 2014

Golden Tulip Paulista Plaza Sao Paulo, Brazil

AshTrade Europe 2014 - Fly Ash Industry Conference

May 2014

Dusseldorf, Germany

Cement Business & Industry (CBI) Africa 2014

June 12-13, 2014

Hyatt Regency Johannesburg, South Africa

CW Research & Analytics Webinars:

CW Group presents its 2014 outlook on global cement markets

February 27, 2014 at 2pm GMT

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Conference & Exhibition

CEMENT BUSINESS & INDUSTRY June 12-13, 2014 • Hyatt Regency Johannesburg, South Africa

AFRICA

CBI Africa 2014 brings together over 100 stakeholders from African and international cement producers, equipment vendors, strategy and M&A, financial, sales and marketing and trading as well as delegates from the technical and operations, engineering, environmental, logistics, maintenance, production & operations side.

This conference will gather industry experts and market participants to discuss the major topics, including: Market perspective, forecast and competitive outlook Alternative fuels, new business models Environmental performance management Finance and capital markets Efficiency, innovation, new developments Technology, operations and best practices Fuel prices and outlook

Register on-line at www.gmiforum.com or email sales@gmiforum.com.

You may also call us in the US at +1-203-516-7424

GMI

GLOBAL