India Cement & Construction Materials (vol 1 / issue 20)

india CemWeek A CemWeek Publication

issue 20

SEPTEMBER /OCTOBER 2014

Cement & construction Materials

FEATURE

EVOLUTION OF FLY ASH USAGE IN INDIA Unconventional resources

FEATURE

zuari to further expand EXPANSIONS

FEATURE

Optimum utilization of capacity in the Indian cement industry News

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Analysis

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Market Coverage

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Interviews

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People

india CemWeek

DEPARTMENTS

FEATURES 5 11 15

Evolution of fly ash usage in india

1

EDITORIAL LETTER

ZUARI TO FURTHER EXPAND

3

NUMBERS IN BRIEF

Unconventional Resources

Expansions

Optimum utilization of capacity in the Indian cement industry

42

Cement & construction Materials

www.cemweek.com/india

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India: taking a step further on research and development

rOBERT MADEIRA

India’s cement production grows on higher infrastructure projects increase

cemweek publisher head of cw group research

ANALYST RECOMMENDATIONS

Dr. S. N. Pati SNM Khan Pradeep Kumar

Latest Broker Recommendations

EDITORS-AT-LARGE

research and analytics 21 24 25

cement volumes

29

MARKET AND COMPETITION

coal market update

31

M&A and FINANCE

33

PROJECTS AND EXPANSIONS

35

VOLUME AND PRICING

energy price update

construction & building materials 40

cement

INFRASTRUCTURE & PROJECTS

36

PEOPLE

37

REGIONAL UPDATE

38

EQUIPMENT HIGHLIGHTS

LIVIU DINU project manager

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letter from the editor

INDIA: taking a step further on research and development fter globalization and liberalization of the economy the indigenous R&D and its role has become limited. Various CSIR laboratories, educational institutes, In-house R&D of various cement companies and organizations like National council for cement and building materials (NCB) the premier R&D institute for the Cement Industry in India in general, have done considerable work for the benefit of Cement industry especially in brown field expansion and in adaptation of various advanced technology in pyro processing and size reduction. The R&D expenditure in India as a percentage of Gross Domestic Product (GDP) is a meagre 0.8%. Whereas, most of the developed countries are spending between 1.23% to 3% of their GDP on research and development. There is a need for creating facilities for R&D in cement plant machinery design at national level and evolving appropriate mechanisms for transfer of technologies to the industry whether developed indigenously or imported. There is also a need for creating capabilities for manufacture of cement plant machinery indigenously. However, NCB needs to take up more R&D projects of importance to the industry through close coordination and regular interaction along with a more generous Govt. support in terms of grants, etc.

One of the main objectives of the Cement Manufacturers’ Association (CMA) is to

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create a conducive environment to promote industry, through advice and consultation. It closely works with Government, various Regulators on policy issues, and enhancing efficiency, competitiveness, and growth and development opportunities for Indian cement industry. As a representative organization of cement industry, CMA articulates the genuine, legitimate needs and interests of the cement industry with an objective to protect the consumer interests and to identify newer applications of cement usage.

CMA has been particularly active in the areas of Energy Efficiency, Environment-Friendliness and Sustainability Standards. Towards this end, as already mentioned, CMA partners actively with like-minded and specialized organizations, such as, World Business Council for Sustainable Development (WBCSD) as a ‘Communication Partner’ for Cement Sustainability Initiative (CSI) and with Institute for Industrial Productivity (IIP), Washington, for conducting focused studies for sharing and dissemination of the latest technological information. Besides, CMA’s role is to organize joint Conferences and Workshops to further propagate latest developments, and technologies of cement sector. CMA have been interacting with a large number of international bodies like CEMBUREAU, Brussels; Indonesian Cement Association, Jakarta; AUCBM, Syria; China Building Materials

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Academy, Beijing; Japan Cement Association, Tokyo; Portland Cement Association, USA; Turkish Cement Manufacturers Association, Ankara; etc. for mutual exchange of technical data. It has been a very rewarding experience overall. We have also become the Communication Partner for Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development (WBCSD); and are providing necessary assistance in communicating to various Stakeholders the various initiatives being taken by CSI in their efforts towards attaining sustainability in Cement Industry.

Robert Madeira

Publisher and Head of Research

Dr S N Pati Former Joint Director, National Council for Cement and Building Materials

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NUMBERS India’s cement production grows on higher infrastructure projects increase The first ten months of the year came with increased production for cement companies in India.

n a year over year comparison, it is easily noticeable that production grew by a larger margin, mostly in the Southern areas where demand rose. Most of the drive for increased production came from the prospects of higher domestic demand on account of new infrastructure and residential projects.

Production of cement in India (YoY % change

20% 16% 12%

OCT-14

SEP-14

AUG-14

JUL-14

JUN-14

MAY-14

APR-14

MAR-14

FEB-14

JAN-14

DEC-13

NOV-13

OCT-13

SEP-13

AUG-13

JUL-13

JUN-13

MAY-13

APR-13

MAR-13

FEB-13

JAN-13

DEC-12

NOV-12

0%

OCT-12

4%

Source: CW Research

8%

The better conditions experienced by the country’s economy and construction sector, as well as the more stable political climate, led to an improvement in margins during the July-September quarter. Most cement major companies revealed in their quarterly reports that they experienced a rise in EBITDA that surpassed 30 percent when compared to the year ago corresponding quarter.

Changes in EBITDA July-September 2014 quarter v. July September 2013 quarter 70% 46.10%

50%

0%

3

32%

32.60%

34.50%

ACC

UltraTech Cement

Shree Cement

SEPTEMBER / OCTOBER 2014

Ambuja Cement

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JK Cement

52%

India Cements

Source: CW Research

58.30%

CW Research

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feature

Unconventional resources

Evolution of

fly ash usage in India Though fly ash usage as a resource material has been growing with every year, its expected usability has yet to be reached. The Government is confident that usage of fly ash will continue to grow, showing its support for companies which incorporated the material into their manufacturing processes.

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feature arge quantities are yearly generated in India because of the coal’s high ash content. The average ash content in Indian coal is 35-38 percent, a rather big percent when compared with imported coal’s ash content of 10-15%. Given that coal remains the most used resource in generating energy, and that coal is expected to remain a major source of energy at least for the foreseeable future, fly ash generation is expected to further grow. Development and applications of technologies have converted fly ash from being a “waste material” to being a “resource material”, fly ash now being is used in manufacturing cement, in agriculture, in making bricks and tiles and in filling mines and low lying areas. The usage of fly ash as a resource material has significantly reduced annual carbon dioxide generation, not to mention that it reduced consumption of a number of mineral resources, including limestone, that it generated employment across the country and that it helped India’s economy.

India’s limestone reserves are fast depleting and use of fly ash reduces the demand for limestone. A ton of clinker requires a ton of coal - Kumar saidery

ACC and Lafarge India were amongst the first Indian cement manufacturers to create fly ash based cement. According to ACC, there are notable advantages to fly ash cement. First of all, concrete made out of fly ash cement gets stronger over the years, thus preventing moisture from reacting with calcium hydroxide and causing the concrete to crack. Secondly, this type of cement produces less heat of hydration and has better resistance to attacks of aggressive water. Lastly, fly ash cement is recommended for works where soil conditions and the environment cause problems to constructions made with ordinary cement.

Vimal Kumar, Adviser at the Centre for Fly Ash Research and Management (C-Farm), says that using fly ash in manufacturing cement leads to a significant reduction in carbon dioxide generation.

Producing one ton of cement generates a ton of carbon dioxide, but 50 million tons of fly ash can replace an equal quantity of clinker made from limestone, leading to a reduction of 50 tons of carbon dioxide.

“India’s limestone reserves are fast deplet-

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ing and use of fly ash reduces the demand for limestone. A ton of clinker requires a ton of coal,” Kumar said.

Fly ash usage in numbers According to Chandler Mohan, Director of Fly Ash Unit in the Department of Science and Technology (DTS), 1 million tons of fly ash were used in 1994, whereas 120 million tons were used in 2013. By

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2017, Mohan expects usage to climb to 350 million tons, whilst 2022 is expected to come with a usage of 500 million tons. Last year’s total production of fly ash reached 220 million tons, meaning that 63.63 percent of the total fly ash was used, the rest remaining inside thermal plants or having been discarded in open places.

In 2013, 47 percent of the used fly ash was used by the cement industry, a per-

200 180 160 140 120 100 80 60 40 20 0

2015

2020

2025

2030

1% 5%

Filling up mines Filling up low lying areas 47%

9%

Cement substitutes Roads and enbankments Other

10%

Bricks and tiles 12%

Agriculture and forestry

The leading industry making use of fly ash was the cement one, using 47 percent of the total fly ash which was not wasted. Significant amounts were used in filling up mines and low lying areas.

Source: Fly Ash Unit in the Department of Science and Technology (DTS)

Cement

9%

2040

2045

2050

Researchers at Fly Ash Unit in the Department of Science and Technology expect the Indian cement industry to continue being the highest user of fly ash. With limestone resources becoming increasingly limited, the researchers anticipate that fly ash will be incorporated into the cement manufacturing processes of more cement plants

Fly-ash usage in 2013

7%

2035

Source: Fly Ash Unit in the Department of Science and Technology (DTS)

According to the data released by DTS in 2013, about 14 million tons of fly ash was used for filling up mines, 12 million tons for filling up low-lying areas, 11 million tons for road embankments and 8 million tons for bund rising. Usage of fly ash in manufacturing bricks and tiles remained subdued, only 6 million tons of fly ash

Expected Fly-ash absorption in Indian cement industry

Million tons per annum

cent comparable to the figures of the previous year. Since total usage was far higher this year when likened with the usage registered the previous year, the percent is encouraging for the future use of fly ash in manufacturing cement. Only 36 million tons of fly ash were used in 2011, a figure which pales in comparison to the 120 million tons of fly ash used in 2013.

According to studies conducted by DTS, fly ash absorption in the cement industry will notably climb in the next decades. By 2015, the amount of fly ash used by cement companies is expected to reach 53 million tons, whilst 177 million tons of fly ash are thought to be absorbed by the cement industry in 2050.

Limestone shortage, irresponsible mining and the environmental problems fly ash poses when disposed as waste are high on the agendas of several ministries in the government.

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feature

Karnataka is currently utilizing only 52 percent of fly ash being produced in its territory as compared to the national average of 75 percent. We have to reach 100 percent utilisation Minister of Energy D.K. Shivakamur of Karnataka were being used for this purpose. Only 1 million tons were used in agriculture and forestry.

Government encourages fly ash use India’s central and local governments are trying to encourage the use of fly ash in different industries and for different purposes. Limestone shortage, irresponsible mining and the environmental problems fly ash poses when disposed as waste are high on the agendas of several ministries in the government.

Recently, Minister of Energy D.K. Shivakamur of Karnataka assured that his government would do its best to use all the fly ash generated in Raichur Thermal Power Station (RTPS). RTPS gener-

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ates about 1.5 milion tons of fly ash per annum, 20 percent of which is wet bottom ash left into the ash bund. “Karnataka is currently utilizing only 52 per cent of fly ash being produced in its territory as compared to the national average of 75 per cent. We have to reach 100 percent utilisation,” the Minister said. He hopes that the thermal power plant would consider earning more from selling ash to industries that use it instead of letting the fly ash became waste.

In August, the Madras High Court upheld a 2011 central government notification which prevented power generating agencies from imposing charges for supply of fly ash to brick manufacturing companies.

The High Court acted after Tamil Nadu

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Fly Ash Bricks and Blocks Manufacturers Association appealed a single judge order of June 2013 which permitted the collection of tax for supply of fly ash. The decision given by the Madras High Court clearly stipulated that power generating agencies are prohibited from collecting service charge for fly ash from brick manufacturers, giving an encouraging nod to industries in Bangalore which make use of fly ash.

According to Business Standard, Environment Minister Prakash Javadekar has observed multiple violations by mining companies. These companies enhanced production without previously obtaining environmental clearance and did not obtain environmental clearance during

the renewal of mining leases. Complaints on over 238 mining projects were filled all over the country, the high number urging the Minister to further promote utilization of fly ash instead of mining for other resources, especially limestone. The Minister mentioned that the Government’s strategy encouraging using fly ash as a resource material started in 1999 and it will continue to be a priority.

Industries further use fly ash Encouraging news come from Vidarbha, where the Harmony Autoclaved Aerated Concrete (ACC) block made from fly ash at Vedishidh Products has recently been launched . Invited to inaugurate the manufacturing firm of the fly ash product, Minister of Transport and Rural Development Nitin Gadkari said that these blocks are environmentally friendly and that the manufacturers should also consider making products useful for low-cost housing projects. Speaking at the event, CEO of Biltech Manish Tiwari, a company which introduced a similar product in 1992, said that fly ash bricks are a cheaper and a better alternative to clay bricks since they are thermal proof, light weight and earthquake resistant.

Cement manufacturer Dalmia Bharat announced that the company’s Ariyalur plant makes efficient utilization from

waste. Fly ash, slag and gypsum are all used in order to conserve limestone resources. In spite of the unconventional material used in cement manufacturing, the company regularly engages in R&D work in order to preserve the quality of cement. Another cement manufacturer, Birla Corp, a company which saw significant increase in profits the quarter ended in June, plans on investing in three grinding and blending units which are close to fly ash generations. The strategy of the company is to focus on expansion and modernization while using unconventional materials for manufacturing cement and cement products.

the necessary incentive towards making use of fly ash in the cement industry to a larger extent. Several cement manufacturers have proven that incorporating fly ash in production does not necessarily compromise the quality of the final product, so there are further reasons to believe that fly ash usage will increase in the future years.

In Chandrapur large cement industries use up most of the fly ash from Chandrapur’s super thermal power plant in order to make PPC cement, leaving little fly ash resources to small scale industries.

State-run Singareni Collieries Company (SCCL) plans to extend the rail infrastructure facilities at its mining areas. Apart from supplying coal to customers through the railways, SCCL plans to use the railway in order to assure reverse transport of fly ash to industries which could use it in manufacturing cement or blocks.

Fly ash is still not being used as much as the Indian government had hoped, but limestone shortage is thought to provide

Encouraging news come from Vidarbha, where the Harmony Autoclaved Aerated Concrete (ACC) block made from fly ash at Vedishidh Products has recently been launched INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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FEATURE

Expansions

Zuari to further

e pand Zuari Cement continues to solidify its presence on the Southern Indian cement market, works at its newest cement plant in the region having already begun.

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FEATURE

In 2001, Italcementi Group made its first step in entering the Indian cement market through the Zuari joint venture. The southern part of the country, where the cement industry was then growing vertiginously, made for an attractive investment site for the Italian cement producer. One year later, Zuari Cement took over Sri Vishnu, located in Sitapuram, northern Andhra Pradesh, a location which coincides with the third consumption center in the South of the country.

Zuari cement became a 100 percent subsidiary of Italcementi Group in 2006, the Italian investor now having complete control over the Indian cement manufacturer.

The next move of the Italian cement giant was to strengthen its presence in India by means of a second production line in Yerrangunlanta and by setting up a grinding unit at Chennai. The latter unit’s capacity reaches one million tons per year and uses clinker from the Yerranguntla plant.

More so, in 2011 the company reached

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Source: italcementigroup.com

hough now one of the leading cement producers in South India, Zuari Cement began its operations with a modest capacity of 0.5 million tons in 1995 at the Yerranguntla plant in the south Andhra Pradesh. For six years, Zuari Cement’s operations were limited to this plant, but the situation changed when Italcementi, the fifth largest producer of cement globally, entered a joint venture with the Indian-based company.

another important milestone by acquiring Gulbarga Cement, a manufacturer which at the time was in the process of developing a Greenfield cement plant in Gulbarga, Karnataka, as well as a power plant.

The main pull for purchasing the company was the fact that it owned a limestone mining lease for 969 hectares of land.

With two manufacturing units at Sitapuram and a grinding center at Chennai, Zuari Cement’s steady growth led to a total capacity of 6 million tons per year in India, the company controlling 5 percent of the southern cement market, but Zuari made it clear ever since the acquisition

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In 2001, Italcementi Group made its first step in entering the Indian cement market through the Zuari joint venture. The southern part of the country, where the cement industry was then growing vertiginously, made for an attractive investment site for the Italian cement producer of Gulbarga Cement that their capacity will experience significant growth in the future.

Scheduled expansions In 2013, Zuari announced its intentions to build a grinding unit in Maharashtra, Solapur, a unit meant to increase the company’s annual production by 1 million tons per year. The unit is expected to become operational by the second quarter of 2015.

Earlier this year, despite the general unfavorable market conditions in India, Zuari cement’s whole-time direc-

Mr.Nabil Francis, MD Zuari Cement at foundation stone laying ceremony

tor, Krishna Srivastava, confirmed that the company will push through with its expansion plans in Solapur and that, furthermore, it will set up a terminal in Kochi and an integrated cement plant in Gulbarga. The total investment was announced to reach Rs. 2,500 crore.

Source: Zuari Press Release

Social involvement It is worth mentioning that Zuari Cement has made important steps in helping the communities surrounding its cement facilities. The company launched the skill development program called “Prazna” in August this year with the aim of enabling the youth in the said communities to support themselves and their families. The Prazna program is the first leg of Zuari’s strategy to make the community around its production facilities independent.

The unit’s location was strategically chosen on the Gulbarga-Bangalore highway in order to make catering the increasing demand in the northern part of Karnataka and for the adjoining state of Maharashtra easier and more cost effective.

In March this year, the company started construction at the cement packing terminal in Kochi. The terminal is the single largest port based cement packing terminal in Kochi, having a capacity of 1 million tons per year, its completion being expected for the third quarter for 2015.

Works for the new plant have already been inaugurated at the end of September with a foundation stone laying ceremony attended by Nabil Francis, Zuari Cement’s Managing Director, Ramesh Suryanarayana, Business Development Director and local employees of the new Gulbarga Cement.

New plant As such, Zuari has started its expansion plans in the Karnataka state, keeping its capacity-focus in the southern region of India . The company has announced a 3.23 million tons of cement per annum production capacity for the new plant, as well as the fact that the new plant will produce 2 million tons of clinker and will be able to double its capacity in the future, keeping pace with the growing demand in the area.

According to representatives of the company, the completion of this project will bring about significant additional capacity to the company, Zuari having high chances of reaching a total capacity of 10 million tons per year . Such a capacity would propel the company among the largest cement manufacturers in the south of the country, meaning that Zuari would be able to solidify its presence in other Indian markets.

In its initial phase, the program is to help 40 young men and women from villages near the Zuari Cement Sitapuram unit receive skill training for function jobs, such as tailoring, sewing, motor winding and maintenance, consumer appliance repairs and computer skills. According to Regional director Roberto Calleiri, the program’s goal is to help improve the economy of the village community.

Zuari Cement is a name brand much cherished in India, whose efforts both in securing a larger market share and becoming more involved in community life have not gone unnoticed, clearly pointing that the company is looking to invest in sustainable, long-term growth.

According to representatives of the company, the completion of this project will bring about significant additional capacity to the company, Zuari having high chances of reaching a total capacity of 10 million tons per year

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feature

Optimum utilization of capacity in the Indian cement industry

by Er. Ashis Kumar Chakraborty

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Domestic demand plays a major role in the fast growth of cement industry in India. In fact the domestic demand of cement has surpassed the economic growth rate of India.

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feature

Preambles The “Cement Industry” occupies an important place in both building industrial base of a country and for providing an infrastructure for the development of the national economy.

India, being the second largest cement producer in the world after China with a total capacity of 151.2 Million Tons (MT), has got a huge cement industry.

The cement industry in India is dominated by around 20 companies, which account for almost 70% of total cement production in India.

Industry Background The history of the cement industry in India dates back to the 1889 when a Kolkata-based company started manufacturing cement from Argillaceous.

But the industry started getting the organized shape in the 1904, when the cement based on sea-shell as a source of lime stone, was first manufactured in Madras.

In 1914, three cement units were established, one each at Porbandar (Kathiawar), Kanti (M.P) and Bundi (Rajasthan).

By the year 1924, there came into existence ten cement factories in India with an installed capacity of 5.6 lakh tones, but the actual production of cement being half of the installed capacity.

In the year 1937, Dalmia-Jain group entered the cement field. In the year 1939, the number of cement units in India rose to 21.

The first ‘Public Sector Cement Unit’ was established in the year 1938, in the name of Mysore Iron and Steel Works’ at Bhadravati.

Cement Production and Growth Domestic demand plays a major role in the fast growth of cement industry in India. In fact the domestic demand of cement has surpassed the economic growth rate of India.

For popularizing the use of indigenous cement, the ‘Concrete Association of India’ (CAI) was formed in the year 1927.

The cement consumption is expected to rise more than 22% by 2009-10 from 200708. In cement consumption, the state of Maharashtra leads the table with 12.18% consumption, followed by Uttar Pradesh.

In the year 1930, the Cement Marketing Company of India (CMI) was formed to promote the sale and distribution of cement at the regulated prices.

In terms of cement production, Andhra Pradesh leads the list with 14.72% of production, while Rajasthan remains at second position.

The turning point in the Indian Cement Company was the amalgamation of eleven cement companies to form the ‘Associated Cement Companies Limited’ (ACC) in the tear 1936.

The production of cement in India grew at a rate of 9.1% during 2006-07 against the total production of 147.8 MT in the previous fiscal year.

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The turning point in the Indian Cement Company was the amalgamation of eleven cement companies to form the ‘Associated Cement Companies Limited’ (ACC) in the tear 1936.

Importance of Cement Industry to Indian Economy

Usually, Portland cements are divided into the following seven classes:

• Basic ingredient in construction work.

• Generation of employment.

• Contribution to national exchequer.

• Contribution to Indian railway revenues.

• Helpful in the development of other industries.

• Enhancement in the national income.

• Huge export potentialities and quick marketability

• Ordinary Portland cement • Moderate Heat Portland cement • Rapid Hardening Cement • Low Heat Portland cement • Sulphate Resisting Cement • Oil Well Cement • White Cement

Classification of Cement The cement as we know and use it today, was invented or prepared in the year 1824,

by Mr. Joseph Aspdin of England and gave it the name ‘Portland Cement.’

• Hydraulic Limes • Natural Cements • Portland Cements What is Portland Cements?

Portland cements are made of grinding a mixture of limestone and clay matter, burning the mixture at a very high temperature, cooling the resultant product; called ‘Clinker’, and then grinding the same to an impalpable power.

The Concept of Capacity Utilization and its Measurement: The ‘Utilization of Capacity means the extent to which the capacity has been utilized for production of a particular product or service. Actually, it is a ratio which is usually expressed as a percentage of actual production to the ‘Capacity’.

Portland cements are made of grinding a mixture of limestone and clay matter, burning the mixture at a very high temperature, cooling the resultant product; called ‘Clinker’, and then grinding the same to an impalpable power.

The general concept of the capacity utilization. Maybe expressed mathematically as under.

Capacity Utilization = (Actual Production)/(Installed capacity) x 100 The Concept of Capacity The term ‘Capacity’ originates immediately after a project report for an enterprise or an industrial unit is formulated or finalized.

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The term capacity is not used only in a single or double meaning, but there are plethoras of terms related directly to the term ‘Capacity’.

U=P/IC x 100 • U = Stands for Percentage Utilization • P = Stands for Actual Annual Production • IC = Stands for Annual Installed Capacity

It is used in a number of way’s such as, • Installed Capacity.

• Licensed Capacity.

• Attainable Capacity.

• Designed capacity.

• Rated Capacity.

• Available Capacity.

The Optimum Capacity: Its Concept and Determinations ‘Optimum Capacity’ has a different meaning from the installed capacity. The Installed Capacity reveals the level of production of a particular plant in the long run mentioning a maximum technical limit beyond which production cannot be increased.

Measurement of Capacity Utilization Extent, to which the capacity has been utilized, is measured according to a formula based on the annual installed capacity and on the annual production of the plant. For the measurement of capacity utilization, the following formula is usually made use of:

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‘Optimum Capacity’ is the maximum production which is subject to some constraints. It is always less than the installed capacity. In a simple sense, optimum capacity is the attainment of the best possible or the maximum possible, after making reasonable allowances for proximate

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constraints which cannot be avoided altogether.

An optimum output is that beyond which a larger output is not possible using the same inputs.

Impact of Under-utilization of Capacity in Cement Industry To find out the impact of the under-utilization of capacity, it is to be presumed that in the long-run optimum capacity would be closer to the installed capacity.

Studying the problem with this aim in view, we find that the capacity utilization would be below the optimum capacity.

It is always advisable to find out the impact of the under-utilization of capacity (a) at the plant level; (b) at the inter-industry lev-

el; (c) at the national level.

Under-utilization of capacity does not merely affect the industry, but adversely affects the economy as a whole and its evileffects are still more concerning and detrimental when the concerned industry is the basic and key industry of the country, such as the Iron and Steel Industry or the Cement Industry upon which depends the all-round development of the economy.

Suggestions for Optimum Utilization of Capacity in Cement Industry 1. The licensed capacity of the cement industry should not be enhanced any more.

2. An enhancement in the installed capacity alone is not going to deliver goods.

Installed capacity should be enhanced only up to a limited extent.

3. The optimum level of capacity is expect-

ed to be achieved at 90 percent realization of its installed capacity and the National Planning Commission has approved of this concept for all practical purposes.

4.The percentage of levy-cement may be reduced by the Government with a view to providing an added incentive to the industry for increasing the productivity.

5. The individual cement units are permitted to establish their own mini power stations to meet their requirement of power supply.

6. Priority of the first order that adequate and timely coal supplies be maintained to the industry to ensure the progress uninterrupted.

7. The sick and unviable cement units of the industry be taken over by the Government and merged with those units that are running on sound economic lines.

Er. Ashis Kumar Chakraborty is a Mechanical Engineer completed Environment Management System (EI & EA) at IIT 窶適anpur & Certified Trainer on TQM from Juran Institute USA. He had specialization trainings at USA, Japan, France, UK, Austria etc. and also associated with McKenzie Inc. USA as Tandem Manager. He is Advisor - Group Corporate Affairs & Chief HRM & Business Excellence for Murli Cement.

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CEMENT MARKETS

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CEMENT VOLUMES In Spain cement demand in the first 9 months of 2014 reached 8.1 million tons, in line with the same period of 2013

United States cement demand continues to increase as the construction sector remains in the path of recovery from the crisis, mainly driven by growth in the resurgent homebuilding sector. However new housing dropped 14.4 percent below the July levels, but rate still remained 8 percent over the same month of last year. Single-family housing starts fell 2.4 percent from July and building permits decreased 5.6 percent but increased 5.3 from last year. Despite the deceleration shown in August builders remain confident on the recovery of the sector in the medium term.

In Spain cement demand in the first 9 months of 2014 reached 8.1 million tons, in line with the same period of 2013, however September deliveries totaled 1 million tons, 12 percent up from August and 4 percent when compared with the same month of last year. Spain’s cement industry has struggled to reach the level of the pre-crisis years, following an intense deceleration in public spending in infrastructure and housing development.

Cement consumption in France continues to contract. The construction sector reached this year its lowest level in more than 15 years and is estimated it hasn’t reached bottom yet. Housing starts and building permits fell in October 0.3 percent and 0.4 percent respectively. Cement consumption slightly rose 2 percent from September, but the demand is 11 percent down from the same month of last year. The year-to-date drop has now reached 5 percent. While the Government has been implementing measures in order to stimulate the sector, implementation has been slow and the full effects are still yet to be seen.

Russia’s macroeconomic outlook is starting to worsen following the weakening of the ruble and the fall in oil prices. While the housing sector has remained relatively stable the cost of housing since the beginning of the year has increased by approximately 10% and the government has

Sep 2014 Year-on-Year Cement Production Growth Rate (%) 8.0% 6.0% 4.0%

-6.0%

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Vietnam

Argentina

China

Japan

India

Russia

Saudi Arabia

-4.0%

Colombia

0.0%

-2.0%

Source: CW Research

2.0%

CW Research CEMENT MARKETS

launched many initiatives aimed at reducing the prices in order to boost demand. Cement production still in a solid path, production in September recovered 4 percent from September of last year and the year-to-date growth is now at 5 percent. Work related to the 2018 FIFA World Cup and improvements in road network will remain main drivers in infrastructure in the construction market.

Sep 2014 Year-on-Year Cement Demand Growth Rate (%) 15.0% 10.0%

Source: CW Research

5.0%

France

Germany

Spain

Indonesia

Saudi Arabia

-10.0%

Peru

-5.0%

Pakistan

0.0%

Colombia cement demand picked up again in September as a result of continued economic growth.

Production volume climbed 1 percent from August and 7 percent from the same month of last year while yearly increase stands at 11 percent.

Domestic cement production in Argentina recovered in September and surged 2 percent compared to the previous month but year-on-year production is already down 4 percent. Construction activity in the country is still below last year’s as a result of lower activity in road construction, housing development and other infrastructure. The only sector showing some signs of recovery is oil and related industries.

In China, September cement output remained at the same level of 2013; however the volume in the first nine months is up 4 percent from last year. Construction activity remains weak as a result of slower economic activity. September housing prices fell for the fifth consecutive month amid a reduction in sales and still oversupplied market. Prices declined in almost all main cities in the country. Despite the falling prices and sales, investment in real estate continues to growth.

Cement consumption in France continues to contract

After a month over month decline of 26 percent in July due to the Lebaran holiday and delays of some projects caused by political uncertainties in the market, cement demand in Indonesia recovered 22 percent in August and 21 percent in September. Still the industry in facing a challenging year, and growth has slowed down from the levels observed in 2013.

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Volume variation analysis for selected countries that are major consumers, producer, importers and exporters of cement. This is a selection of notable markets. Additional detail is available from CW Research as well as on-line at http://www.cemweek.com to the market data section.

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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Cement Exports MoM (%)

Cement Imports MoM (%)

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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 Volumes registered an important improvement in Australia September global coal trading volumes significantly increased almost 20 percent from previous month, with higher volumes from Australian ports.

Colombian coal deliveries declined almost 9 percent in September after slightly dropping 3 percent in August. When comparing with the same month of the previous year, the volumes were 3 percent lower, reaching to 8.1 million tons. The monthly average for JanuarySeptember period improved from 6.1 million tons in 2013 to 7.2 million tons this year. The production target for 2014 has been recently raised to 95 million tons, but industry sources have suggested it can easily be reached if no disruptions will hamper production.

South African coal deliveries in September reached to 7.0 million tons, 14.6 percent higher than August and only 4 percent more compared to September 2013. The Richards Bay Coal Terminal shipped 50.3 million tons of fuel in the first nine months of this year versus 49.9 million tons in 2013. Terminal’s officials announced RBCT is on track to ship 72 million tons in 2014, less than the 73 million tons originally planned. For the next year, they plan to increase to 75 million tons.

RBCT on track to ship 72 million tons in 2014

China just announced the limit on coal consumption growth for 2020 which will be 16 percent higher than the 2013 level. The plan was released by The State Council a week after the country declared it will stop de carbon dioxide emissions growth by 2030 at the latest.

Indonesia’s coal exports raised 8.6 percent In September after the severe drop of 7 percent in the previous month. The implementation of the new regulation forcing Indonesian thermal and metallurgical coal exporters to secure an export license before they export, effective from October 1, is expected to affect the overseas shipments with a 30 million tons drop in total exports by the end of 2014. The fall in October is predicted to be between 15 and 20 percent from September. In their battle with the price slump, Indonesian coal miners increase the output as continuing to bring down the costs.

Coal Global Trading (million tons) Indonesia

120

Australia

Russia

South Africa

Colombia

US

Rest

80 60 40 20 Sep-14

Jul-14

Aug-14

Jun-14

Apr-14

May-14

Feb-14

Mar-14

Dec-13

Jan-14

Oct-13

Nov-13

Sep-13

Jul-13

Aug-13

Jun-13

Apr-13

May-13

Feb-13

Mar-13

Dec-12

Jan-13

Nov-12

Oct-12

Sep-12

Jul-12

Aug-12

Jun-12

Apr-12

May-12

Feb-12

Mar-12

Dec-11

Jan-12

Oct-11

Nov-11

Sep-11

0

Source: customs data

100

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Energy Prices Update Coal October average coal prices continued to drop 3 percent to US$ 69.6 per ton on a still weak demand from the market. The coal price have fallen to their lowest level for years, mainly due to weak demand from China, which adds concerns about the recovery of dry bulk markets in 2015.

But according to the International Energy Agency, seaborne thermal coal prices may rise 40 percent by 2020 as producers shut high-cost mines and demand increases. Based on a scenario of annual average economic growth of 3.4 percent, thermal coal prices will raise to more than US$110 by 2040. India is expected to overtake the US as the second-largest coal consumer after China before 2020.

October average coal prices continued to drop 3 percent to US$ 69.6 per ton on a still weak demand from the market. The coal price have fallen to their lowest level for years, mainly due to weak demand from China, which adds concerns about the recovery of dry bulk markets in 2015

Australian coal price lost 3 percent compared to August and 20 percent from one year ago, staying at US$68.5 per ton. Oversupply and lower import demand from China caused a steady decrease over the first nine months of this year, and the prices will remain subdued for the rest of 2014. But despite the Chinese ban on coal, Australia has abundant supplies of cleaner coal that they have been selling to Japan and could export to China too. The latest negotiated prices for the long-term contracts were fixed at about US$73 per ton (on April), 7 percent higher than the current price. Industry experts expect coal prices to weaken by 6 percent in 2015. On the long term, as import demand continues to improve and weak prices during 2014–2015 reduce investment in new capacity and force less competitive operations to close, the coal contract prices are projected to rise to US$86 per ton by 2019.

In Indonesia, coal producers’ continuing efforts to cut costs are enabling them to

US exported

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

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Oct-14

Aug-14

Jun-14

Apr-14

Feb-14

Dec-13

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

150 140 130 120 110 100 90 80 70 60 50

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

Steam Coal FOB Average Prices (US$/ton)

CEMENT ENERGY MARKETS

CW Research improve production volumes and remain profitable even though prices are at the lowest since March 2009. Some companies have slashed their cash cost base by US$1-3 per mt since the beginning of 2014. The HBA average export price declined 3 percent in October compared to September, staying at the lowest level since June 2009.

In Colombia, the prices declined 2 percent versus September to US$ 67.7 per ton. US Energy Information Administration believes that the country has the potential to double its output between 2010 and 2020. Moreover, Colombian Natural Resources (CNR), owned by investment bank Goldman Sachs, plans to re-start coal exports and re-establish mining operations after suspended exports from its port at the end of last year because not meeting the new environmental standards effective from 2014.

In South Africa, the average price continued to wane in October by 3 percent from September to US$65.7 per ton, the lowest level since November 2009. Ukrainian government has been accused of fraud with September’s coal purchases from South Africa, with the price thrice as high as the market price and twice as high as the price for Ukrainian coal, according to Ukraine’s Opposition Bloc party led by former deputy prime minister in charges of the energy sector.

On the short term, the market outlook remains weak due to oversupply and slowing demand, but the prices are expected to recover on the medium term

On the short term, the market outlook remains weak due to oversupply and slowing demand, but the prices are expected to recover on the medium term.

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

20 O-14

S-14

A-14

J-14

J-14

M-14

A-14

M-14

F-14

J-14

D-13

N-13

O-13

S-13

A-13

J-13

J-13

M-13

A-13

M-13

F-13

J-13

D-12

N-12

O-12

0

Source: customs data

40

Petcoke Price of U.S. uncalcined petcoke for export markets lost another 7 cents in October and closed at around US$75.4 per ton. The downward trend in the price follows a long period of depressed coal prices worldwide. In the US Gulf Coast FOB 4.5% avg. sulphur slightly improved in October and raised 0.8% versus September. US Gulf prices still remain under pressure on lower global prices. The world’s largest refinery before being closed, the St. Croix refinery in the U.S. Virgin Islands, will reopen in approximately two years.

Hovensa’s refinery has been acquired by Atlantic Basin Refining and will process about 300,000 barrels of light oil a day when it reopens. In February 2012, the refinery was converted into an oil storage terminal after the operators reduced its capacity as the economic slowdown that began in 2007 reduced global fuel demand.

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In Phillippines, Petron Corp. the country biggest oil refiner, has begun operations of its US$2 billion Refinery Master Plan, which will enhance the market supply and lessen its dependence on higher-cost imported fuel products. The project was completed in 44 months and consists of 19 additional process units. The petcoke produced will be used as fuel for the newly-operational 140 megawaatt Refinery Solid Fuel Fired Boiler (RSFFB) Cogen Plant which, generates steam and power for the 180,000 barrels-per-day Petron Bataan Refinery (PBR).

Brazil’s state-run oil company Petroleo Brasileiro expects to receive the permit for starting operations at its newest Abreu e Lima refinery, which is designed to process 230,000 barrels of crude oil a day and is expected to reach this level in the second half of 2015.

Saudi Arabia will have 1.2 million barrels per day of new refining capacity by 2020, according to Riyadh-based Jadwa Investment. The total capacity includes Satorp refinery which is already operational, and the Yasref refinery which will be added in the last quarter of 2014. The new export-oriented Saudi refineries will have to face tight competition, as other major investments are made in countries like India and China.

Petcoke prices remain resilient

Natural Gas The Henry Hub spot price traded at US$3.8 per MMBtu in October, waning 3.4 percent versus the previous month as weather across most of the US remained unseasonably warm.

Prices in Europe raised 6.5% in October, reaching to US$9.8 per MMBTU. Germany is turning against coal as a fuel for generating electricity, a plan to reinforce Germany’s commitment to reduce fossil fuel emissions. The move will boost its reliance on natural gas from Russia.

Natural Gas Prices (US$/MMBtu) US

18

Europe

16 14 12

10

4

2

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Oct-14

Feb-14

Jun-13

Oct-12

Feb-12

Jun-11

Oct-10

Feb-10

Jun-09

Oct-08

Feb-08

Jun-07

Oct-06

Feb-06

Jun-05

Oct-04

Feb-04

Jun-03

Oct-02

Feb-02

Jun-01

Oct-00

Feb-00

Jun-99

Oct-98

0

Source: EIA, World Bank

8

6

MARKET DATA SNAPSHOT

CW Research

Volume variation analysis for selected countries that are major importers and exporters of coal and petcoke. This is a selection of notable markets. Additional detail is available from CW Research as well as on-line at http://www.coalweek.com/ to the market data section.

Coal - Exports (million tons)

Petcoke - US Exports (million tons - Sep)

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

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Coal - Imports (million tons)

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

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Coal - Global export prices (USD/ton)

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Natural Gas Prices (US$/mmBtu)

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Natural Gas prices MoM (%)

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Source: CW Group analysis estimates LM: latest month Aug except where specified; 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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Source: CW Group analysis estimates

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cement market and competition

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arket and competition

India’s cement demand set to grow Newfound confidence in the performance of the Indian cement sector has risen as a consequence of signs of increasing demand. Evidence of said confidence lay in the appreciation of shares of companies like Grasim, Ambuja Cement and ACC. Grasim’s shares rose 3.82 percent on Tuesday, while Ambuja Cement and ACC met with similar growth, namely of 3.65 percent and 3.63 percent, respectively.

Though many infrastructure project on which the industry is relying have yet to take off, production meant to meet the increase in demand has risen, going up 16.5 percent in July 2014 over the previous year, namely by 21.3 million tons, India’s total capacity now standing at around 375 million tons per year.

For the past few decades, the sector has been dealing with a supply-demand mismatch which led to excess capacity and, eventually, to lower plant utilization. Demand in India currently reaches about 300 million tons per annum, yet cement companies managers believe that the gap between supply and demand will shrink due to the revival of stalled infrastructure projects.

South of India performance Cement companies in the South of India outperformed through the past six months, the rise being particularly driven by expectations of improved demand and increase of prices. According to press, the 29 SEPTEMBER / OCTOBER 2014

cement companies in this region generally bettered the performance of cement companies elsewhere in India.

With prices and demand on the rise, India Cements, a southern Indian company which hasbeen doing particularly well since the beginning of the year, announced that it will focus on its core cement business, demerging its Indian Premier League franchise, Chennai Super Kings, into a wholly-owned subsidiary.

JSW Cement plans on profiting on the steep growth taking place in the region.

The company targets a 9-10 percent growth in South India this year, the costal state of Kerala reportedly appealing to the company as the location of an upcoming investment. Pankaj Kulkarni, director of JSW Cement, mentioned that the company’s focus in Kerala would be to sell Portland slag cement, a type of cement which is environmental friendly, is highly resistant to corrosion from soil and atmosphere and would be beneficial for the region. Demand in South India currently stands at 56m million tons, out of which JSW Cement produces 3 million tons. Meeting the increasing demand in the region will also be accomplished by JSW by expanding its clinker capacity in the near future thorough a plant in Chittapur, Karnataka.

On the other hand, cement units in the southern states of Andhra Pradesh and Telangana incurred losses for the first

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quarter of the financial year. Cement units in the area are in severe strain because of a sharp decline in demand occurring three years ago. Though demand is expected to pick up from January, cement manufacturers forecast that it will take about two to three years to reach peak level.

Valuation of cement companies in India pushed up Rally in cement stocks, which occurred mainly due to expectations in investment in the infrastructure of the country, have pushed up valuations of most cement companies in India.

Press in India has commented that cement companies are currently trading at an average enterprise value 8.9 times larger than the projected EBIDTA for FY16. On the other hand, cement capacity utilization has stayed under 70 percent during the last 3-4 years, meaning that even if cement demand and volumes manage to grow by 8-10 percent in the following years, reaching a capacity utilization of 85 percent will still prove to be difficult for cement companies.

Strikes trouble Indian cement market Workers of ACC Cement staged rallies in October, their demand being the renewal of permission to mind limestone.

Hundreds of workers protested for such a permission, claiming that the inability of using the mine reflects on production of cement, thus their livelihood is being threatened. The strikers have addressed 29

Photo by: www.binaniindustries.com

JK Cement India Plant

a memorandum to the Chief Minister to the Collector seeking intervention on the matter.

According to press, over 6,000 truck operators have gone on strike in India, causing transportation and other related operations to come to a halt. Four truck operators’ societies suspended loading and unloading of cement in clinker. The operators’ societies are The Mangal Land Losers, JP affected Truck Operators society, Panch Dev Truck Operators society and Rani Kotla Operators society. All of the above operators are engaged in transportation of materials at JP Cement Company, Bagga. Among the requests of the truck operators are listed the need to increase freight charges as the price of diesel had risen. Nonetheless, according to representatives of JP, transport related operations should resume soon.

Regulatory forces Competition commission rejects charges against UltraTech The Competition Commission of India, India’s main fair trade regulator, has rejected the case against UltraTech Cements regarding unfair business practices in the market of wholesaling. The case came

under the evaluation of the Competition Committee after an individual cement retailer filed a complaint against Ultratech, accusing the company of having violated competition norms by imposing arbitrary and unfair terms in stock list agreement.

More so, UltraTech was accused of stopping regular supply of cement as well as accepting orders as per its will.

Amma Cement Scheme announced by Indian government India has announced the populist “Amma Cement Scheme” aimed at the lower and middle classes. Under said scheme, the Tamil Nadu government will be able to procure cement from private manufacturers and sell it at Rs. 190per bag in the chance the rates in key construction sector will increase. The government will procure 200,000 tons of cement from private manufacturers every month and sell them through all urban and local bodies in the country at the above mentioned price.

Recently, Chief Minister Jayalalithaa discussed the situation regarding production of cement from the state and supply from outside, finding that companies in certain regions of the country had hiked the prices of cement by Rs. 80-100 per bag. The more detailed account of the project reveals that

the scheme is valid only for the putting up of houses whose size range from 100 square feet to 1500 square feet, and that one can buy maximum 750 bags of cement under this scheme. More so, the Amma Cement scheme can also be accessed by houses being built under solar-powered greenhouse schemes.

The company acting as anodal agency will be Tamil Nadu Cement Corporation, while Tamil Nadu Civil supplies Corporation and rural development and panchayat raj departments will be responsible with the implementation of the program and with the dissemination of the cement bags.

JK Cement and UltraTech bid for cement supply contract According to press, Indian cement manufacturers JK Cement and UltraTech Cement have placed bids for supplying cement to the Ministry of Road Transport and Highways. The Ministry is said to be preparing to set into motion its plan to put put up concrete cement roads. The global tender has closed on October 24, the following step being the National Highways Authority of India signing rate contracts with cement manufacturers who, at their turn, will supply cement at a fixed price for the next one year.

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cement M&A AND FINANCE

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&a and finance

Lafarge and Holcim begin to sell assets In order to meet the Competition Commission of India’s requirements, Holcim and Lafarge, the two companies which announced their merger, have to begin an internal process in India to identify the assets that ought to be sold off. In this sense, both Holcim and Lafarge are now in the process of identifying plants and operations which are not directly connected to their strategic global plans. More so, the process will also involve the consolidation of operations and processes, the aim being to align strategically the two companies in India and to create a future organization whose processes will already be uniform.

In India, Holcim has the upper hand in terms of capacity, its plants having a total production of 47 million tons per year, whereas Lafarge only produces around 5 million tons per year.

Aditya Birla Group’s Chairman plans on buying merger assets One of those who has expressed his interest for Lafarge-Holcim assets following the merger is Indian billionaire KumanMangalam Birla. As chairman of the Aditya Birla Group, one of the largest conglomerate corporations in the country, Birla has announced that a proposal will be submitted soon, while according to an informed source, Birla’s plan is to retain most of the assets and possibly sell some to third parties. Birla’s interest is not limited to Indian 31

SEPTEMBER / OCTOBER 2014

assets of Lafarge and Holcim, but expands to South American cement plants.

Indian cement companies shelve acquisition plans in the South of India Several Indian major manufacturers have shelved their plans of acquiring cement production units in Andhra Pradesh and Telangana. At the bottom of the reason why South Indian and global investors are not ready to invest in the region sit claims of higher evaluation by the targeted cement manufacturers.

Demand is supposed to increase in the South of India on two grounds. First of all, the state of Andhra Pradesh will kickstart works for a new capital for the state.

Secondly, the new state of Telangana has announced its intentions to invest in infrastructure programs. On a more general level, India has been giving signs of economic recovery, further prompting the supposition that demand will meet an ascending path in the months to come. Put together, Andhra Pradesh and Telangana have a cement manufacturing capacity of 360 million tons.

Sagar Cements proceeds with BMM acquisition One of the companies which has gone through with its plans in the area is Sagar Cements. The company’s board of directors has recently greenlighted a plan involving the acquisition of BMM Cements, a plant located near Tadipatri, Anantapur district,Andhra

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Pradesh. The plant has a 1 million tons per year cement capacity, being equipped with a 25MW captive power plant as well. The capital for the investment, namely US$70.5 million were raised after Sagar Cements sold a 47 percent stake in France’s Vicat.

Speculation of acquisitions UltraTech to make future acquisition from Jaypee Cements After having acquired the Gujarat units of Jaypee Cement in June this year, UltraTech Cement is reportedly considering acquiring three more cement plants from the same company, according to press, the three plants are located in Madhya Pradesh and would be acquired following aRs 5,500-6,000 crore deal.

At the moment, UltraTech’s capacity of gray cement stands at 62 million tons per year, but the company also produces ready mix concrete and white cement. The Jaypee plant acquisition completed in June, comprised of an integrated unit in Sewagram and a grinding one in Wanakbori, added 4.8 million tons per year to the company’s total capacity. As far as the reportedly new acqusitionsUltratech plans on making,

representative of the Indian major company released no official statements commenting the news, yet investment banks involved in talks revealed that discussions are underway for a possible deal.

Jayprakash Associates in talks with Shree Cement Speculations of sales and acquisitions in India’s cement industry point towards a new possible deal between Jaiprakash Associates and Shree Cement. Reportedly, Shree Cement is to purchase Jaiprakash Associates’ 2.1 million tons Bhilai Cement unit for Rs. 1800 crore. Nonetheless, none of the two parties involves have released any official statement nor commented on such rumors.

Finances Sagar Cements, UltraTech post better performance for the JulySeptember quarter According to press Hyderabad-based Sagar Cements had a core profit of Rs. 282 crore during the second half of this fiscal year.

This comes as an encouraging sign, especially when considering that the company posted aRs.1.15 crore loss in the same period during last year. As for revenues, they grew by 23.6 percent, reaching RS. 125 crore. The company also reported a core profit of Rs. 349 crore from the sale of its joint venture with French company Vicat.

UltraTech Cement, India’s largest cement manufacturer has recorded a steep growth in net profit over the same period, its combined cement and clinker sales rising considerably. For the quarter ended September 2014, UltraTech Cement posted a 55 percent year-on-year increase, its profits reaching 410 crore for the quarter. Combined clinker and cement sales amounted at 10.35 million tons, whereas 9.22 million tons had been sold in the same period during 2013.

growth in process of petcoke, input material and royalty on limestone.

Slight increases in profit for Shree and ACC Shree Cement has posted slight increases in profits during the quarter, mostly driven by higher yield in its power segment. Profits before interests, taxes and appreciation reached Rs.93.4 crore, the company having sold 487.7 million units during the quarter, with 17 percent more than it has in the same quarter last year. The revenues of the company reached Rs.1,608 crore.

ACC saw its profits increase during the quarter due to better realization, though the company’s volume growth has proven to be below expectation, and power and fuel costs continued to trouble the company and its group firm, Ambuja Cements.

Sales were 1.4 percent higher during the quarter when compared to the same period in 2013, reaching 5.62 million tons of cement. Analysts, nonetheless, foresaw a volume growth of 3 percent for the company.The price of an ACC bag of cement grew as well, reaching Rs. 320, with 7.9 percent more expensive than in the year ago quarter. Better volumes and the increased cost of cement sustained the company’s financial growth during the quarter, and it is expected that ACC will continue to ride an ascending trend.

Jaiprakash Associates and India Cement post losses Not all cement manufacturers have en-

joyed a good run this quarter financially.

Jaiprakash Associates stock had underperformed the market over the past months, falling 3.56 percent to RS 35.35. Overall, the stock had a negative performance on the market up until September 11, 2014, plummeting by 37.63 percent.

Among the reasons found for the depreciation of JP’s stock are the uncertainty regarding India’s Supreme Court ruling on coal allocations and one of the company’s promoter sell of 1.45 percent stake in the company.

Nonetheless, promoters of Jaiprakash Associates are assured that investors and stakeholders will not lose interest in the company nor confidence in its management.

India Cement is also facing troubled financial times. The cement maker is mulling to raise Rs. 500 crore from the investors through a fundraising activity from its investors. The funds will be raised through securities that will issued to investors. “The board of directors at its meeting will, consider the following issue of QIP, FCCB, GDR and/or other securities for a total sum not succeeding Rs. 500 crore ($80 million),” a spokesperson for India Cements commented.

The company’s cement sales have dropped during the quarter ended September, the volume contraction weighing on the company’s stock. Demand, which was expected to improve after several infrastructure and construction projects took off, has not come to experience any noteworthy advances.

According to representatives of the company, the end of the quarter saw domestic sales grow by 11 percent due to higher demand and additional capacity from the newly acquired Gujarat units. More so, increased prices were also influential in the increase in prices, being impacted by the INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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cement projects and expansions 5

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1 rojects and expansions

JSW’s projects and expansion plans JSW Cement has announced a series of projects and expansion plans meant to help the company meet the future increase in demand, the cement company’s plan being of increasing its total capacity to 25 million tons by 2025. First of all, the company is considering to set up a new cement plant in Gulbarga, Karnataka. The new plant’s capacity would be of 4.3 million tons per year, meaning that the company would add more than 50 percent over its current capacity of 6.4 million tons per year in Karnataka, Andhra Pradesh and Maharashtra.

According to SS Sandhu, vice president of JSW Cement, the greatest incentive for this increase in volumes comes from hopes for demand revival in the south of the country, the vice president expressing his confidence in a pick-up in utilization which will reach 75 percent by the end of the year.

Exploratory drilling in Karnataka The company’s plans in Karnataka are not limited to the new cement plant. According to press, JSW Cement is now seeking statutory approvals to undertake exploratory drilling at a limestone in the region.

The limestone extracted will be then put to use in the 3 million tons clinker plant JSW is to set up in Chittapur, in the northern part of the state.

Greenlighted projects Saraswati’s expansion project approved Saraswati has announced its intentions to 33 SEPTEMBER / OCTOBER 2014

build a cement plant in the Guntur District, at Machavarammandal. The total investment in the project is expected to reach Rs.35,247 million and the plant’s capacity would be of 7 million tons per year. The project would consist of an integrated cement plant and of a captive power generation unit. Up until recently, nevertheless, there was an impediment for the company to proceed with its plans because farmers in the region would prefer to use their lands for agriculture. Even though Saraswati has yet to purchase any land for the future factory, farmers were stopped from preparing the land for farming by the company.

After the company expressed its clear interest in moving forward with the setting up of the plan at Machavaram, the authorities granted it the right to set up the cement nit on the land. According to YSR Congress president Y.S. Jaganmohan Reddy, no other factory has come up in Dachepally-Machavaram area, though there are seven companies which have secured permissions for setting up their plants.

Bhavya Cement grinding unit approved The State Level Single Window clearance Authority (SLSWCA) has approved Bhavya Cements’ plan for a three million tons per year cement grinding unit in Tentuliapada under Odapada tehsil in Dhenkanal district. The investment in the project would reportedly amount to Rs. 365 crore.

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In a statement released by the Industrial Promotion and Investment Corporations of Odisha it is mentioned that about 5-6 proposals came under the consideration of SLSWCA, all of which will be reconsidered in the future by taking into account issue like water availability and pollution.

Shree Ceemnt has also proposed a plan for the establishment of a three million tons per year cement grinding mill in the same location, yet there are no clear data on whether the project will go through or not. In so far, Odish has signed agreements with four cement manufactures, namely Odisha Cement, UltraTech Cement, ASO Cement and Shiva Cement. Out of these cement production projects, the only company to have started production is OCL, which has kick-started cement manufacture at its 3.5 million tons per year unit in Sundergarh.

Chettinad Cement goes ahead with project in South India According to press, India’s Chettinad Cement will move forward with its plans of setting up new plants and expansion in Andhra Pradesh, Maharashtra and Karnataka. In Andhra Pradesh, the 3.5 million ton integrated plant the company is moving to set up will require an investment of Rs.1,100 core. The company also plans of putting up a grinding unit and a captive thermal power plant in the region, this auxiliary projects costing about Rs.660 crore.

In Karnataka, the company plans on ex-

panding its current 2.5 million tons per year capacity to 7.75 million tons and to set up a 130-MW captive thermal plant unit.

Over all, the Karnataka projects will cost the company Rs.2,010 crore. Chettinad cement has received all the clearances necessary for going ahead with its projects and is expected to make the projects operational within three years from the start of constructions. According to MAMR Muthiah, Chettinad Cement Groups’ Managing Director, the installed capacity of the company’s cement units has grown from 1 million tons per year to 13.5 million tons per year, the Director expressing his hopes of increasing manufactured volumes to 20 million tons per year.

JK Cement begins manufacturing at new facility JK Cement’s cement manufacturing units at JK Cement Works, Mangrol, Chittorgarh district in the state of Rajasthan have begun cement production. Overall, the facilities’ capacity reaches 1.5 million tons per year, making JK Cement one of the largest manufacturers in northern India and the largest producer of white cement in the country.

subsidiary Gulbarga Cement. Apart from the cement unit, the company will also set up a 50MW captive power plant. With the completion of this project, the company’s total production will reach 10 million tons per annum, propelling Zuari on the first place in what cement manufacturers in South India are concerned.

New plans in the sector BLSC and Wonder Cement plans In the western part of the country, BLSC hopes to set a joint cement plant in Birmitrapur and to get environmental clearance for the plant no later than December this year. The company’s plans are closely linked to the economic situation of the region and to the fact that SAIL’s proposed cement plant near Birmitrapur has yet to be set up.

In Andhra Pradesh, Teja Cement is planning a limestone mining project which would have an output of 3 million tons per year. According to press, the limestone will be used for the company’s integrated cement plant, which will be built near the limestone quarry. Teja Cement now has to wait for environmental clearance before setting up the mine and cement production unit.

In Rajhastan, Wonder Cement is planning to expand its Tehsil Nimbahera cement unit by adding more production capacity. In this sense, the company has already placed an order with Gebr. Pfeiffer for raw meals and coal mills.

French company to commission unit in India Foreign investments are picking up in India, the French company Kerneos planning on setting up a cement unit in India by December 2016. The plant would be located near Visakhapatnam in Andhra Pradesh due to its proximity to the port, which offers the advantage of raw materials imports, while also being a point of export

Expansion plans in the South The Southern region of India continues to be an attractive spot for several investors in the area. Probably the most ambitious plan for the region comes from Zuari Cement, which plans to set up a 3.2 million tons per year cement plant in Gulbarga through its

Kolkata, West Bengal, India

Jean-Marc Bianchi, presidend and CEO of Kerneos Aluminate Technologies, part of a French multinational group, announced

that the investment in the unit will probably reach Rs. 120 crore and that the cement plant will be dedicated to manufacturing calcium alumna cement (CAC). He added that the initial capacity of the plant will reach 30,000 tons, and that a similar capacity will be added at a later stage depending on the commercial success of the product.

This specific type of cement will meet the needs of Indian customers whilst respecting environmental norms and being conscious about the shortage of raw materials.

Expansions overseas India’s Aditya Birla Group is looking to expand overseas, while UltraTech Cement may consider some Holcim and Lafarge units.

Billionaire Kumar Mangalam Birla is taking into consideration buying overseas cement factories in a deal similar to one it had in 2007, when the billionaire’s company purchased aluminium maker Novelis for US$5.8. Birls was quoted saying that the company is at an infelction point, and that the strength the company has on the domestic market gives it confidence to be more aggressive abroad.

At its turn, UltraTech Cement may consider purchasing some units that are currently being sold by Lafarge and Birla in Brazil and the Philippines.

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cement volume & pricing

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olume and pricing

Cement makers to reduce prices for road projects Several cement makers in India have offered to lower the price of their products for critical road projects. Three dozen such manufactures are reportedly ready to lower the price of cement to Rs 125 per bag, meaning that they will sell the commodity for 30 percent less than they do for the rest of the market.

Growth in volume and demand Indian cement companies have been noticed to prepare for the upcoming increase in demand. More so, cement factories are keen on boosting sales in the coming quarters in order to ease off factors that might alleviate the growth of the industry.

ing ever since June, a bag of cement coming to cost almost Rs. 300, corresponding to the price of cement at the national level.

Ambuja Cement launches premium cement product Ambuja Cement has launched a product targeting small consumers and individual contractors. According to representatives of the company who lauched the product in Maharashtra, the new product can be described as a high quality PPC with advances SPE technology which aids in making concrete stronger and easier to work with, offering 20 percent more strength and durability than other types of similar cements.

In the March-August period, India based cement firms posted an 11 percent growth in its volumes, with 3 percent higher when compared to last year’s figures.

Highly influential in this respect is the growth experienced in the South of the country, a region where the cement industry seems to become more and more prosperous. Firstly, the formation of the state of Telangana state, which ended political uncertainty, seems to be leading to a pick-up in the region’s cement demand, allowing players in the South to catch up with Indian cement companies based in the North.

Secondly. Prices in the state of Andhra Pradesh, which had remained weak I the first quarters of the year, have been improv35 SEPTEMBER / OCTOBER 2014

JSW will only manufacture slag cement According to JSW Cement’s CEO, Anil Kumar Pillai, the company is to only produce Portland slag cement, a material ideally suited to infrastructure and housing projects. The CEO of the company mentioned that JSW has a 6 million tons per year capacity and that he expects an increase in demand for slag cement due to the government announced infrastructure programs.

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focus Indian cement volumes rise Fluctuation in prices After prices plunged in August this year, cement production in the country rose by 16.5 percent in July 2014 when compared with the previous year. More so, year-to-date output for financial year 2015 stood at 11.2 percent. The delayed monsoon and the ability of the market to adapt quickly led to a drop in prices in August, a bog of cement costing around INR 10-20 per bag all across India’s regions.

However, prices recovered in September and at the beginning of October, when a cement prices increased on account of higher transportation and production costs. According to press, the ones most affected by this soar in prices are middle-class families who saw their budget for building homes zoomed by a few lakhs.

In October, a 50 kilograms bag of cement cost between Rs. 390-Rs. 410, growing with about Rs. 30 compared with August’s prices and with Rs. 70 when compared to prices from four months ago.

people

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cement

eople

Lafarge India appoints Jean-Carlos Angulo as non-executive chairman Lafarge India has appointed the executive vice president of Lafarge Group, Jean-Carlos Angulo, as non-executive chairman of the Indian subsidiary of the firm. Mr. Angulo will replace UdayKhann, who will continue to stay with the company in an advisory position.

Organizational changes in Heidelberg India After Dr. Bernd Scheifele resigned from the position of director of HeidelbergCement India in September, the company has announced some noteworthy organizational changes at the level of the company’s

managerial structure.

Heidelberg’s Indian subsidiary has decided to appoint an Additional Director on the company’s Board. Accordig to press, Soek Peng Sim’s appointment to the position has come into effect beginning with September 2014.

Trinetra Cement appoints independent director The Board of Directors of Trinetra Cement has appointed V. Manickam as its independentdirector during a meeting held on November 12. V. Manickam is to replace N. Srinivasan, who resigned from the position in October.

focus UltraTech appoints additional directors UltraTech Cement, India’s largest cement producer, has appointed two additional independent directors on its board. Starting with October 2014, RenukaRamnath and SukanyaKripal will act on the company’s board of directors. RenukaRamnath is a former managing director and chief executive of ICICI Venture, while SukanyaKripalu is currently a director at Sukanya Consulting and was formerly CEO of Quadra Advisory.

AtulDaga has been appointed Chief Financial Officer of the company, replacing KC Birla effective the start of December 2014. The term of appointment of the managing director OP Puranmalka has been extended for a period of one year until March 31, 2016.

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regional NEWS

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egional news

Pakistani cement market Domestic sales rise Though Pakistani cement manufacturers saw their exported volumes decrease when compared to the previous year, local cement sales have somehow compensated the weakness felt on the foreign market.

According to our data, in September 2014 730,000 tons of cement against 816,000 during September 2013, marking a decline of 10.6 percent in foreign dispatches. On the other hand, domestic dispatches increased 13.9 percent in September, reaching 2.42 million tons. Overall, Pakistan’s total internal and external sales reached 3.15 million tons, with about 200,000 tons more than in the same month of the previous year.

The market in the south of the country is, nonetheless, severely crippled by unregulated smuggling of cement from Ian. According to statistics on the matter, if domestic sales increased by 10.8 percent in the northern region, they grew only by 5.4 percent in the southern region of Pakistan.

New cement product from Lafarge Lafarge Pakistan has launched a specialized ordinary Portland cement for the precast industry. The new product, called Stallion, is meant for the precast industry and is basically an early setting cement formulated specifically for this industry.

According to Lafarge Pakistan’s Director of Marketing, Rizwan Jamil, Pakistan’s ce37

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ment industry was in need of an innovative product and that Lafarge is committed to offer products tailored on the needs of carious customer groups.

Pakistan’s cement trade Pakistan’s exports to India grew by 40 percent during trade year, albeit Indian-Pakistani ties being on shaky ground. More so, the floods in Kammu and Kashmir are expected to further move the trade forward.

According to Vinay Vij, a Delhi-based importer of Pakistani cement, huge demand is expected in the region as the buildings in the Jammu and Kashmir area had been severely affected by damaging floods.

The most significant part of the growth experienced in trade between the two countries was felt in July and August, when Pakistani cement shipments to India grew by 70 percent when compared to the same period of the previous year.

On the other hand, export prices of Pakistani cement have remained unchanged for two years now, sticking around Rs 300 per 50 kilograms bag. Export prices have remained in this range, though local selling

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of a bag of cement is Rs 540, because of the stiff competition with Taiwan, China, Iran and South Korea, to name just a few.

Pakistani exporters still face nontariff barriers Though foreign cment demand has been on the rise, Pakistani cement manufacturers still face non-tariff barriers when exporting cement to India. Nonetheless, a sharp demand came about from the Indian Punjab. According to press, demand grew with about half a million tons in fiscal year 2014, going from 0.2 million tons to 0.7 million tons of cement.

At the moment, eight cement plants in Pakistan are exporting cement to India at US$50 per ton, yet exporters claim that they could better penetrate the market if the non-tariff barriers were removed.

Nepal cement manufacturer posts loss The Udayapur Cement Factory has post loss worth tens of millions of rupees after having been banned on excavation of sand and aggregate in Nepal’s Chure on June 30.

According to press, the move significantly affected construction sites in the region, which, at their turns, caused a sharp decrease in sales of Gainda brand of cement.

The company, which is state-owned, has reported losses that amount to Rs. 50 million after the above mentioned ban, being forces to lower production to around 300 tons per day, even though the plant’s total daily capacity reached 800 tons.

orders & equipment highlights

Gebr. Pfeiffer secures order with India’s Emami Cement Emami Cement is now in the process of setting up a greenfield cement plant in Chhattisgarh, India, but is also constructing a separate grinding unit in West Bengal. For the grinding unit, which will be designed in order to be capable of grinding fly ash cement and granulated blast-furnace slag, the company has placed an order for an additional MVR cement mill from Gebr.

Pfeiffer and its Indian subsidiary.

Source: emamicement.com

An MVR 6000 C-6 mill with an installed drive poser of 6700 kW, capable of producing 335 tph of OCP will be delivered and installed at the Emami plant. The feature that sets this equipment apart is its six rollers, which enable the mill to continue to operate in case on an unplanned outage of the grinding roller. More so, this new concept allows the consumer to carry out maintenance works on the two rollers

while the mill is still producing cement at a slightly lowered capacity.

dian coal, the mill will come equipped with an adapted protection wear.

For Emami Cement, this is the second order placed with Gebr. Pfeiffer through the manufacturer’s Indian subsidiary for its new cementfacility.

The engineering team of Gebr, Pfeiffer India in Noida will perform the planning

Wonder Cement orders further MPS mills from Gebr. Pfeiffer Wonder Cement of Rajasthan is planning to extend its cement works in Tehsil Nimbahera in the Chittorgarh district. As such, the company has placed an order for a rotary kiln with a daily capacity of about 8,500 tons.

The order is a follow up, the company having already operated identical pieces of equipment coming from the German company.

The MPS 5600 B ordered will help in the production of 605 tons per hour of raw meal with a fineness of 1.5 percent residue.

The mill will also be equipped with an SLSBK high efficiency classifier, allowing both coal and lignite to be ground and dried with the process gases in the mill and classified in the integrated classifier. More so, given the high degree of abrasiveness of In-

Raw material grinding with MVR roller mill

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orders & equipment work for the grinding plants, as well as provide arrangement drawings, specification of components, and support during erection and commissioning of the mills.

Ever since October 2014, the Tuban plant has been equipped with a vertical mill for grinding operations, allowing the grinding plant to operate at 1.5 million tons per year and to respond to the increasing demand on the market. The piece of equipment, which has been supplied by Danish FLSmidth, has the lowest level of energy consumption, requiring an average of 24 kW per ton of cement. As far as added capacity goes, the milling unit has an average production reaching 270- 290 tons per hour, with bline between 350-260 tons per hour.

FLSmidth signed agreement with Indonesian PT Antam The Danish equipment manufacturer has signed a Memorandum of Understanding with PT Antam to supply design, testing, and services for the developing of mining

FLSmidth’s QCX Robolab

projects in and around Indonesia. PT Antam is a mining and metals company headquartered in Jakarta.

The Memorandum of Understanding offers details about the newly created relationship, the main focus being the fact that FLSmidth will be assisting Pt Antam in the development of plant designs, provide pilot testing, support the integration of plants with other facilities, find cost-optimization solutions and facilitate co-engineering. The understanding also stipulates that FLSmidth will provide operation maintenance services and training services, as well as evaluation services for existing facilities.

Source: gpse.de

FLSmidth has been present in Indonesia for more than a century, having since es-

MPS roller mill

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Source: FLsmidth

Semen Indonesia adds equipment for new grinding plant Semen Indonesia has increased its capacity at its Tuban plant with the aid of a new vertical mill (OKMill), its production levels at the Tuban plant now reaching 14 million tons per year.

tablished a long standing working relationship with local customers.

FLSmidth releases QCX/RoboLab and QCX/AutoSampling V8 FLSmidth has released updated versiona of its QCX/AutoSampling and QCX/RoboLab software. The V8 variant of the two software represents a major leap forward in laboratory automation solutions. The main pluses of the software are to the improved usability of the operators and maintenance personnel.

The aimof the Danish equipment manufacturer was to create the most operator and maintenance friendly software, maintainging a high degree of flexibility. The new programming standard comes as a great help in FLSmidth sampling, sample transport and preparation equipment.

Infrastructure & projects

I

nfrastructure & projects

Infrastructure projects Central government plans to build more roads India’s central government has given approval for almost 500 road projects after unblocking some funds, the target being of bringing Rs 5 lakh crore worth of road projects over the next five years.

Many pending projects have been blocked because of insufficient funds. Nitin Gadkari, the Minister of Road Transport and Highways, has mentioned that the ministry he runs has “found a way to clear Rs 1.20 lakh crore worth of projects of the Rs 1.80 lakh crore of projects stuck for various reasons. Now, 500 projects will be ready on our shelf.”

As far as financing goes, Gadkari added that the ministry is now looking into low interest foreign loans which have a better inter-

nal rate of return. Discussions with some countries which offer loans for a low interest have already been held, the goal being of getting a loan with an interest of 3-4 percent, which will mean that the internal rate of return will reach 13-14 percent.

The government is confident that the target will be met in the next five years, though there are still some issues that may prove to be challenging for the government’s plans.

Out of these issues, land acquisition remains the greatest challenge. As such, the government is now working towards bringing changes to the Land Acquisition, Rehabilitation and Settlement Act of 2013, in the sense of making it more transparent and simpler, without reducing compensation.

Highway projects worth Rs 1.50 Lakh crore announced by government The government has set as a target the building 30 kilometers of highway per day for the following two years, having already

streamlined execution of highway projects worth RS 1.50 lakh crore.

Road Transport and Highways Minister Nitin Gadkari has said that the goal of the government is to bring the country’s highways to international standards. He has also stated that the project execution of the highways in not possible under the PPP model, the EPC model being a better suited one.

The projects still have to get environmental clearance before construction can begin.

Prime Minister Modi proposes facility to finance SAARC infra projects Prime Minister Modi has expressed his concerns over the infrastructure within the South Asian Association for Regional Cooperation (SAARC), finding infrastructure as being the region’s greatest weakness.

Better infrastructure, the Prime Minister finds, would lead to the strengthening of ties within the SAARC region.

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infrastructure & projects Addressing state leaders at the 18th SAARC Summit, Modi proposed a Business Traveler Card that would support businesses conducted between the countries of SAARC. In making his point, Modi reminded the audience that less than five percent of the region’s global trade actually takes place between the members of the Association, pinpointing infrastructure as being one of the problems that prevents the region from having a more successful cooperation.

Tamil Nadu monorail receives funds from the local government The Ministry of Urban Development in Tamil Nadu has granted in-principle approval for the Phase-I monorail project in the state, whose estimated cost is likely to reach Rs 3,267 crore. The entire funding for the monorail project will come from the state government, government agencies and a PPP partner. After the approval, the project will be implemented under the “design, build, operate and transfer (DBFOT)” model.

The project has already been granted Rs 200 crore from Tamil Nadu’s administration in the 2014-2015 budget estimate, the plan being that the money will be implemented by the Metropolitan Transport Corporation.

The above mentioned corporation has called for request for qualification from interested parties for eligibility criteria, feasibility reports, ridership estimation reports and MTC bus passenger data.

Monorail services between Poonamalle and Kathipara with a link from Porur to Vadapalani, covering 20.86 kilometers will be provided under the project.

Some conditions have to be me met in order for works at the project to begin. The Tamil Nadu Government should ensure price based measures to promote the usage of the railway as part of an integrated traffic and should find a suitable arrangement, independent of Special Purpose Vehicle for periodic revision. More so, the government ought to set up a Unified Metropolitan Transport Authority which would facilitate coordinated planning and implementation of urban projects, as well as a joint oversight mechanism.

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Telangana government aims to complete metro project as per schedule Both Telangana chief secretary Rajiv Sharma and chief minister K Chandrasekhar Rao have been particular in seeing the Hyderabad Metro Rail (HMR) project completed according to schedule.

Number of new housing projects dropped during the third quarter During the third financial quarter, 166 new housing projects were launched in eight big cities in India, most of them, namely 45, being recorded in Chennai. The least amount of new projects were announced for Ahmedabad, namely five.

NVS Reddy, HMR managing director, has reported that there are 283 critical properties identified for road widening in three metro corridors for a smooth flow of traffic during execution. In an official press release, Reddy has said that tight targets have been set for land acquisition by the end of next month.

According to a study conducted by global real estate consultancy Cushman & Wakefield, there has been a drop of over 50 percent in the total number of affordable residential units launched during the quarter when compared to the figures registered during the same quarter in 2013. Though the demand for affordable residential units has remained high, real estate developers have been weary of investing in the sector. The study conducted by the real estate consultancy firm has also shown a drop of 14 percent in mid-level residential unit projects, and a 10 percent descent in the number of new high-end residential unit projects.

Also, railway officials have been asked to hand over portions of land between LekhaBhavan and Oliphentabridge for the construction of a station and for road widening.

Residential projects Puravankara to develop Pune land, West India Puravankara Projects, a Banglore-based company, has entered a joint venture with Pune-based Oxford Group and Mumbai-based EKTA World for the developing of 30 acres of land in Mundhwa in East Pune, Maharashtra. The project’s goal is to yield 2 million square feet of residential development.

After Punvankara Projects announced it has entered the joint venture deal with the said companies, its shares rose by 3 percent, reaching Rs 94.

The National Housing Mission is in advanced stage of preparation The projects, whose goal is to ensure universal housing in India by 2022 is now in its advanced stage of preparation, union Urban Development Minister M. Venkaiah Naidu announced at a convention hosted by NAREDCO. Because the government alone is not able to implement the large scale mission of providing housing for everyone, the government has been in talks with stake holders in order to come with a comprehensive policy on housing

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Among the reasons identified by the consultancy firm, the large scale of construction and management and the rising input cost for development prevailed. Other disadvantages identified were the lack of developable land within the city limits, high prices of land and of development, as well as the increased costs of construction and material.

The average national trend was beaten by the locations of Kolkata, West Bengal,the region seeing a rise in the new launches during the analyzed quarter over the same period of last year. The market recorded an overall improvement of around 28 percent, namely of about 2,300 units. The growth was driven by mid segment offerings, which cater a larger consumer base.

A 13 percent growth was registered in Pune, Maharashtra, due to the festive season improved demand. As such, many project which were previously in prelaunch stages have been pushed ahead due to the festive season.

A sharp decrease of 62 percent was noticed in Ahmedabad, Gujarat, and a 54 percent on in the Delhi-National Capital Region.

analyst recommendations ACC ICIC has recommended a “BUY” rating for ACC stocks. As opposed to other cement stocks which have remained subdued for the last couple of series, ACC has stocks have been moving around the 2012 levels, namely at around Rs 1520-1540. Whenever stock prices have reached Rs 1450-1380 levels, ACC stocks have bounced back, moving toward Rs 1550-1560 levels. ICIC analysts consider that the stocks will go for a breakout soon, since the consolidation of the price of stocks has been lasting for threefour months. The company’s performance during the third quarter was remarkable, ACC having reported a 61 percent jump in its consolidated net profit. More so, the company’s total income increased by 9 percent, EBITDA was up 32 percent, and volumes rose to 5.62 million tons.

UltraTech Cement ICIC is bullish on UltraTech Cement, having recommended “BUY” rating on the stock.

According to the report issued by ICIC, UltraTech’s topline grew by 18 percent on a consolidated basis, reaching Ra 5,723 crore.

The company’s revenues have increased as well, namely to 5,381.8 crore, being led by strong volumes and better realizations.

The company has had to deal with pressure coming from high input cost and additional cost related to new plants. During the third quarter, UltraTech commissioned a 1.4 million tons cement mill at Karnataka and a 25 MW plant at Andhra Pradesh.

More so, the company has remained ahead of competition in terms of capacity expan-

sion, now benefiting from earning from recently acquired Jaypee Cement.

Growth is in the future of the company since its size and market coverage make it one of the major beneficiaries of the demand recovery. Taking under consideration the fact that the company is now debt free, there are solid reasons to believe that it will generate healthy cash flows in the future.

India Cements Emkay Global Finances has advised “SELL” on India Cements stocks with a target price of Rs 90. In its most recent report on India Cements, Emkay highlighted that the company’s EBITDA came below the estimate, mostly because of higher energy and freight costs. India Cement’s EBITDA was of Rs 1.62 billion, while volumes dropped by 4 percent in a year on year comparison.

The stock have been trying to remain at Rs 98-99 levels for quite some time, but it has broken below, now trading under that level.

Lack of positive triggers for the cost of India Cement stocks, as well as the increase of working capital that will continue to impact interest costs, have caused the analysts of Emkay to maintain “SELL” with a target price of Rs 90.

JK Cement MotilalOswal recommends “BUY” for JK Cement stocks for a target price of Rs 777.

The company’s revenue grew 32.6 percent in a year on year analysis, while EBITDA grew by 1.3 percent. Stronger volume

growth, marginal increase in energy cost and low taxation have helped the company’s assets become valuable on the market.

Shree Cement The brokerage house MotilalOswal is bullish on Shree Cements, having recommended a “BUY” rating on the stock with the target price of Rs 9778. Shree Cements’ revenues grew 28.7 percent when compared to last year’s same quarter figures, being driven by the new grinding capacity at Bihar. EBITDA grew as well, namely by 34.5 percent year-on-year. MotatilOswal evaluated that the company stands a solid chance at benefiting from the demand up-cycle due to strong utilization levers, cost leadership and healthy balance sheet.

Orient Cement “BUY” is the recommendation of Religare Capital for Orient Cement, with a target price of Rs 180. The company’s topline grew 20 percent year-over-year-, reaching Rs 3.8 billion. Volume growth, as well as the increased prices of cement on the Southern market, have helped in reaching such levels and offset cost pressures.

Like many other cement manufacturers, Orient Cement has seen its costs inching up because of increased power and fuel costs per ton, which have been up 20 percent when compared to the previous quarter. Nonetheless, the brokers consider that Orient Cement stocks have experienced a strong quarterly beat and better than expected realization for the southern region of India.

RATING 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’s Dalmia Bharat to place a bid on Holcim and Lafarge European assets

1

Turkey’s Oyak Group buys Denizli Cimento

2

Project for new cement plant in Bihar, India approved

2

Cemex will not make an offer for Lafarge and Holcim assets

3

India’s Competition Commission launches public scrutiny on Holcim-Lafarge deal

3

Turkey’s Oyak Group may buy Holcim and Lafarge assets

4

India’s ACC and Ambuja Cements to be in focus

4

Lafarge-Holcim merger to close very soon

5

India’s Aditya Birla Group is looking to expand overseas

5

Holcim Philippines eyes Lafarge Republic assets

6

Cement prices drop in India

6

CW Advisory supports Investment Corporation of Dubai on US$300mm investment in Dangote Cement

7

India’s Trinetra Cement reports financial results for quarter ended September 30

7

Belarus boosts cement production

8

Andhra Cements begins production at two new plants in India

8

Holcim to choose buyers for its assets by the end of January

9

India’s competition regulator expresses concerns about Holcim and Lafarge merger

9

Brazil’s CADE approves Holcim and Lafarge merger

10

India’s Trinetra Cement appoints independent director

10

Egypt’s Arabian Cement and Spain’s Cementos La Union enter joint venture

11

IBN approves FDI proposal for new cement plant in Nepal

11

Vietnam’s Viettel Group to acquire stake in Ha Long Cement

12

Kerneos to commission cement unit in India by December 2016

12

FLSmidth restructures South African business

13

Cement shortage hits realty sector in India

13

Spain’s Cementos Portland Valderrivas doubles losses

14

India’s competition watchdog to prescribe structural remedy for Holcim and Lafarge merger

14

Cement manufacturers in Saudi Arabia need to export clinker surplus

15

Pakistan’s Cherat Cement Company to install new production unit

15

China Construction and Lafarge Shui On Cement sign strategic agreement

16

Valuations of cement companies in India pushed up

16

New cement plant opened in Abu Dhabi

17

India’s Shree Cement to benefit from slide in crude oil prices

17

Document establishing Venezuela’s Cemento Cerro Azul published

18

India’s Birla Corporation posted decline in net profit

18

Cemex’s net sales rose in Q3

19

India’s ACC posts revenue growth in Q3

19

Dangote Cement cuts cement prices in Nigeria

20

India’s Mangalam Cement stock rose following India Capital Fund’s acquisition of shares

20

Holcim and Lafarge might sell operations in Slovakia

43 SEPTEMBER / OCTOBER 2014

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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.

webinars hosted by cw research

Conferences where the CW Group will be presenting

Global Energy Outlook Petcoke, Coal

January 13, 2015 at 2:00 PM GMT

Cement Trade Prices 4Q2014 update & outlook

Cement Business & Industry (CBI) Brazil & LatAm 2015

February 4-5, 2015

Hotel InterContinental Sao Paulo, Sao Paulo, Brazil

AshTrade Europe 2015 Fly Ash Industry Conference

April 22-23, 2015

Frankfurt, Germany

WPP Brazil & LatAm 2015

April 15-16, 2015

RADISSON SAO PAULO VILA OLIMPIA, Sao Paulo, Brazil

Cement Business & Industry (CBI) Africa 2015

June 25-26, 2015

Johannesburg, South Africa

January 20, 2015 at 2:00 PM GMT

cw summits

CW Summit Americas 2015 September, 2015 Miami, USA

For questions or inquiries please contact Liviu Dinu, Market Services & Marketing Consultant at the CW Group at ld@cwgrp.com For more information please visit http://research.cwgrp.com/meetings

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