India Cement & Construction Materials (vol 1 / issue 21)

india A CemWeek Publication

issue 21

November - December 2014

Cement & construction Materials

FEATURE

CLAUDIUS PETERS

A leader in innovation in clinker cooler manufacturing

CW RESEARCH

Vietnam and Iran lead exports in the region in 2014

FEATURE

RISK MANAGEMENT IN CONSTRUCTION contracts

GCTPR - Global Cement Volume Forecast Report

News

|

Analysis

|

Market Coverage

By Er. Ashis Kumar Chakraborty

|

Interviews

|

People

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DEPARTMENTS

FEATURES 5

Vietnam and Iran lead exports in the region in 2014

1

EDITORIAL LETTER

3

NUMBERS IN BRIEF

india

Cement & construction Materials

www.cemweek.com/india

Vietnam leads cement exports in Asia

GCTPR - Global Cement Trade Prices Report

11 CLAUDIUS PETERS

A leader in innovation in clinker cooler manufacturing

15 RISK MANAGEMENT IN

CONSTRUCTION CONTRACTS

Cement Prices: Mixed fortunes In the last year

42 ANALYST RECOMMENDATIONS Latest Broker Recommendations

cemweek publisher head of cw group research

Abhishek Jayakumar Editorial Coordinator

By Er. Ashis Kumar Chakraborty

research and analytics

rOBERT MADEIRA

Advertising Sales Consultant

cement

21 cement volumes

29 MARKET AND COMPETITION

24 coal market update

31 M&A and FINANCE

RALUCA NEAGU project manager

LAURA GOLDNER Shailee Gupta Sushmita Rai JOSEPH WALLACE contributing analysts

33 PROJECTS AND EXPANSIONS

25 energy price update

35 VOLUME AND PRICING

construction & building materials 40 INFRASTRUCTURE & PROJECTS

India’s cement sector to be strengthened by more construction projects

36 PEOPLE 37 REGIONAL UPDATE 39 EQUIPMENT HIGHLIGHTS

CRISTIAN DUMITRU Santosh shettye DESIGNERS

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letter from the editor

Vietnam leads cement exports in Asia ndia is a growing economy. It is predicted to be third largest economy by 2050 due to the GDP growth due to more emphasis on infrastructure growth from road-ways to airways, ports to airports, power production facilities etc. InfrastrucCement trade for the last quarter of 2014 has mostly kept in line with the trends set during the rest of the year. The year closes with Europe still relying on exports in order to rid of surplus, and with the Asian cement makers continuing to boost their production to meet both domestic and foreign demand. The India market has received increased cement exports from the like of Pakistan and Iran, with no major changes in trading patterns.

India trading activities have not changed significantly. Though being the second largest cement producer in the world, India has still not picked up the pace in what exports are concerned, partly because its cement manufacturing plants are not running at full capacity, partly because it is difficult to compete on the Asia cement trade market, where the commodity trades at a low price compared to other regions. If Pakistani cement traders, for instance, have been exporting cement at the same price since 2012 in order to better perform in the stiff competition with Taiwanese, Chinese, Iranian and South Korean cement exporters, Indian cement producers would much rather sell

1

November - December 2014

their products on the Indian market, where prices are significantly higher.

The lower price of imported cement, compared with the one of domestically produced cement, is the reason why India imports cement from Pakistan and Iran. During the last quarter of 2014 Pakistan exported with 0.5 million tons more to India than it had in 2013. About 0.7 tons of cement were imported by India, the price being of approximatively US$50 per ton. Pakistan exports have been quoted at competitive prices and buyers in India find the cement cost effective since Pakistani producers have no plans of increasing their prices.

The year which has just closed has been a fruitful one for the Vietnamese cement sector, both domestic and foreign demand rising month after month. Abundance of raw materials, as well as the country’s convenient position near important trade routes, have enabled the country to export both more cement and clinker than it had in 2013.

Though the situation of cement exports has been encouraging for cement manufacturers in Vietnam, the industry is making an effort to be better prepared for “long-term� cement exports. For instance, Tran Viet Thang, general director of the Viet Nam Cement Industry Corporation,

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

mentioned that the company exported 1.8 million tons during the first 10 months of the year, and that his company is prepared to ramp up overseas markets.

Cement exporters from Pakistan have stopped procuring coal from South Africa. The decision came as no surprise in the context of the ongoing investigation initiated by the Trade Administration Commission on the alleged dumping of cement from Pakistan. Five to six local exporters of cement have been the biggest buyers of South African Coal, Pakistan being the third largest coal buyer from South Africa.

Pakistani producers are now considering to import the coal necessary for manufacturing cement from Indonesia.

The anti-dumping case has most affected Lucky Cement, the leading supplier of Portland cement to South Africa. Lucky has been selling cement for a lower price than PPC, the most notable local cement manufacturer in South Africa, but the imposition of an anti-dumping duty of 48 percent has nullified the entire difference between the prices offered by Lucky and by PPC. Robert Madeira

Publisher and Head of Research

INDIA

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WHO SHOULD ATTEND? ↘ Professionals from the thermal coal and petcoke industries involved

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PAST REGISTERED COMPANIES INCLUDED: ABB • ACC Minerals (ACC Limited) • Bharathi Cement Corporation • Binani Cement • CW Group • Dron Energy • Essar Power • Greentech Engineering • Hira Power & Steel • i-maritime • Jenissi • JK Organization • Reliance Industries • Oceanbrave Shipping • OSPL Group • RNCOS • Salva Report • Tata Power • Ultratech • Yes Bank Organized by GMI Global LLC | www.gmiforum.com sales@gmiforum.com or phone at +1-203-516-7424 GLOBAL CONTACT: Beatrice Ene | be@gmiforum.com | 0040 722 764 802

NUMBERS Cement prices: Mixed fortunes In the last year

Source: CWCentral Statistics Office, Ministry Of Statistics & Program Implementation India, CW Research

Price index for select markets (Dec 2013 = 100 in local currency) 1.25x 1.20x 1.15x 1.10x 1.05x 1.00x 0.95x

Dec - 13

Jan - 14

Feb - 14

Mar - 14

Apr - 14

May - 14

Jul - 14

Aug - 14

Sep - 14

Oct - 14

Nov - 14

Dec - 14

Jun - 14

On a retail level basis some of the formerly “hot markets” started seeing notable headwinds in the second half of 2014 (e.g., Brazil, Colombia). Nonethesles, pricing discipline was notable in some of the European markets with strengthening

200

20%

0%

-20%

0

LH: Ex-works prices ($/ton)

RH: QoQ change

Source: CWCentral Statistics Office, Ministry Of Statistics & Program Implementation India, CW Research

Ex-works cement pricing for select markets (3Q2014 average selling prices in USD/t)

On an ex-works basis – in US$ terms - Peru saw high gains in 3Q2014 and pan-India pricing also showed improvement, though regional variations were notable.

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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feature FEATURE

Highlights from:

GCTPR 4Q2014 Global Cement Trade Prices Report

Vietnam and Iran lead exports in the region in 2014

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November - December 2014

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

ement trade for the last quarter of 2014 has mostly kept in line with the trends set during the rest of the year. The year closes with Europe still relying on exports in order to rid of surplus, and with the Asian cement makers continuing to boost their production to meet both domestic and foreign demand. The India market has received increased cement exports from the like of Pakistan and Iran, with no major changes in trading patterns.

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November - December 2014

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feature

India trading activities have not changed significantly. Though being the second largest cement producer in the world, India has still not picked up the pace in what exports are concerned, partly because its cement manufacturing plants are not running at full capacity, partly because it is difficult to compete on the Asia cement trade market, where the commodity trades at a low price compared to other regions.

If Pakistani cement traders, for instance, have been exporting cement at the same price since 2012 in order to better perform in the stiff competition with Taiwanese, Chinese, Iranian and South Korean cement exporters, Indian cement producers would much rather sell their products on the Indian market, where prices are significantly higher.

Traditional imports partners The lower price of imported cement, compared with the one of domestically produced cement, is the reason why India imports cement from Pakistan and Iran.

During the last quarter of 2014 Pakistan exported with 0.5 million tons more to India than it had in 2013. About 0.7 tons of cement were imported by India, the price being of approximatively US$50 per ton.

tons, was delivered to the Indian Punjab region. Pakistan exports have been quoted at competitive prices and buyers in India find the cement cost effective since Pakistani producers have no plans of increasing their prices. Nonetheless, the non-tariff barriers are still preventing the Pakistani exporters from penetrating the market as much as they would like to.

Iran is also an important cement trade partner for India, the two countries having recently signed a preferential trade agreement that reduces tariffs for certain products traded between the country, cement included. India is Iran’s forth biggest importer of Iranian non-oil goods, and the pact can only solidify even more the trade partnership between the two countries.

Other Asian markets Cement exports from Vietnam to further increase The year which has just closed has been a fruitful one for the Vietnamese cement sector, both domestic and foreign demand

The largest volume, around 0.2 million

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November - December 2014

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

rising month after month. Abundance of raw materials, as well as the country’s convenient position near important trade routes, have enabled the country to export both more cement and clinker than it had in 2013.

The main destination for Vietnamese cement has been Bangladesh, which bought more than 6.1 million tons during the first nine months of the year. Up until November, the country exported an estimated 19 million tons of cement and clinker, out of which 2.8 tons were white cement. The figure exceeds the target for the period by 4 million tons.

Though the situation of cement exports has been encouraging for cement manufacturers in Vietnam, the industry is making an effort to be better prepared for “long-term” cement exports. For instance, Tran Viet Thang, general director of the Viet Nam Cement Industry Corporation, mentioned

that the company exported 1.8 million tons during the first 10 months of the year, and that his company is prepared to ramp up overseas markets. Other notable exporters from Vietnam are Son Cement, whose main foreign client is Bangladesh, and Ha Tien Cement, which has mainly exported to Cambodia.

Saudi Arabia cement makers green lighted for export After the Ministry of Commerce and Industry stopped issuing licenses allowing the export of cement in 2012, the chairman of the National Committee of cement companies in the Council for Saudi Chambers

Pakistan exports have been quoted at competitive prices

of Commerce and Industry, Jihad Rasheed, revealed at the beginning of December that cement manufacturers in the Kingdom have been granted permission to export the product.

The decision has been long awaited as manufacturers have been struggling with surplus cement and clinker. For instance, Zamel Abdul, member of the National Committee of the Cement Council of Saudi Arabia, estimated that the clinker surplus of companies operating in Saudi Arabia would have reached 25 million tons had not the Kingdom allowed green lighted exportation, a scenario which would have caused cement companies to register sharp losses.

Global gray FOB average (USD / ton)

Global gray FOB average (USD / ton)

Global avg (all reporting set) Global avg (last available reporting set)

Linear Regression for Global avg (all reporting set) Linear Regression for Global avg (last available reporting set)

95 90 85 80 75 70 65 2014-07-01 2014-01-01 2013-07-01 2013-01-01 2012-07-01 2012-01-01 2011-07-01 2011-01-01 2010-07-01 2010-01-01 2009-07-01 2009-01-01 2014-10-01 2014-04-01 2013-10-01 2013-04-01 2012-10-01 2012-04-01 2011-10-01 2011-04-01 2010-10-01 2010-04-01 2009-10-01 2009-04-01 # U T

All available countries

Period 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

# countries in set 14 36 36 40 38 39 36 39 36 34 37 41 40 40 41 39 39 41 42 40 39 36 35

US$/ ton 79.23 77.26 78.3 81.48 79.9 79.72 82.61 79.78 79.99 75.53 79.66 80.55 78.83 79.25 78.15 76.01 81.17 77.66 77.57 76.49 80.39 78.76 72.9

Last available country set

Trade vol (k ton) 2,150 5,544 5,573 6,216 6,346 6,477 6,143 5,808 4,126 4,706 4,721 5,426 6,095 6,394 6,309 6,075 5,973 7,104 7,078 5,982 4,515 5,374 4,214

US$/ ton

Trade vol (k ton)

79.23 76.18 77.72 79.03 78.94 80.52 80.11 80.15 77.77 72.74 70.94 74.61 70.91 73.17 69.85 67.57 71.21 74.93 72.37 71.85 72.65 70.68 69.46

2,150 2,145 2,230 2,063 2,269 2,437 2,584 2,227 1,906 1,966 1,725 1,790 1,943 2,297 2,163 1,974 2,060 2,516 2,707 2,474 2,126 2,043 1,837

Note: "All", "All reporting set" and "All available" indicate a variable set of countries that includes all available and reporting countries for a specific period, which may vary across periods and time. "Last available reporting set" and "Last available" indicate the set of countries that defines the most recent period in the "All reporting set", which is shown with separate pricing to give an indication of how the most recent period's price relates to previous price points for the same set that constitutes the las t period's average. This additional data point informs about the directionality and likely estimation error for the most recent period for the "All available" price trendline (notably the current and second to most recent period's price point). The global average onl y shows periods for which at least five price points are available (which may change over time as additional reporting countries are included in the set, or excluded).

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feature

With the new export agreement in place, cement companies in Saudi Arabia will export cement surplus to Qatar, Bahrain, Egypt, Iraq and Sudan.

Pakistani cement exports Cement exporters from Pakistan have stopped procuring coal from South Africa.

The decision came as no surprise in the context of the ongoing investigation initiated by the Trade Administration Commission on the alleged dumping of cement

from Pakistan. Five to six local exporters of cement have been the biggest buyers of South African Coal, Pakistan being the third largest coal buyer from South Africa.

Pakistani producers are now considering to import the coal necessary for manufacturing cement from Indonesia.

The anti-dumping case has most affected Lucky Cement, the leading supplier of Portland cement to South Africa. Lucky has been selling cement for a lower price

The year which has just closed has been a fruitful one for the Vietnamese cement sector

than PPC, the most notable local cement manufacturer in South Africa, but the imposition of an anti-dumping duty of 48 percent has nullified the entire difference between the prices offered by Lucky and by PPC. Iran boosts cement and clinker exports With Iran’s cement production being forecasted to reach 120 million tons of cement over the next 10 years, Iran has a shot at becoming the largest cement exporter in the world. At the moment, Iran is the third largest exporter of cement in the world, and the first one in the region. Currently exporting to 24 countries, among which more notable are Iraq, Russia, India, China, Pakistan and Turkey, the manufacturers in the country are planning on increasing the volumes shipped out of the country’s borders.

For starters, exports from Iran to Iraq have considerably augmented as result of a new trade agreement between the governments of the two countries. On the other hand, illegal cement exports from Iran to Pakistan have also been on the rise. These illegal imports have been affecting not only the local industry, but also squeezing revenues of national exchequer. Cement imports are committing irregularities under the brand names of Sistan, Khash, Mumtazan, Kirman and Ghain, then selling the product

Major exporters: Granulated Slag FOB average (USD / ton)

Major exporters: Granulated Slag FOB average (USD / ton) Japan FOB

Italy FOB

Germany FOB

China FOB

30 25 20 15 10 5 0

U

T

2014-10-01 2014-08-01 2014-06-01 2014-04-01 2014-02-01 2013-12-01 2013-10-01 2013-08-01 2013-06-01 2013-04-01 2013-02-01 2012-12-01 2012-10-01 2012-08-01 2014-11-01 2014-09-01 2014-07-01 2014-05-01 2014-03-01 2014-01-01 2013-11-01 2013-09-01 2013-07-01 2013-05-01 2013-03-01 2013-01-01 2012-11-01 2012-09-01

# Period Nov '14 Oct '14 Sep '14 Aug '14 Jul '14 Jun '14 May '14 Apr '14 Mar '14 Feb '14

9

China

Japan 6.82 6.61 6.94 7.67 7.16 6.93 8.11 8.27 8.98 5.35

889,033 1,041,559 990,951 986,266 1,157,150 977,945 807,518 707,755 864,219 839,797

November - December 2014

0 0 11.09 15.61 13.98 14.91 11.9 11 12.48 12.06

Italy 0 0 33,000 36,190 89,083 80,401 80,278 41,000 66,909 166,790

0 0 8.78 8.88 8.78 8.91 9.04 8.67 9.07 9.06

Germany 0 0 68,679 157,040 178,325 126,211 129,576 171,008 123,595 118,171

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

0 0 12.61 13.27 17.5 14.74 19.63 22.24 23.5 22.69

0 0 174,802 198,332 213,250 149,315 134,086 86,770 87,059 79,874

on the local market at rates much lower than the Pakistani brands.

The situation has become a source of stress for the cement industry in Pakistan, which is already dealing with issues like shortage of labor, slowdown of construction activity and low exports.

Habei province in China to begin exporting cement The authorities in the Habei Province have made public their intention to transfer excess capacity from its cement industry

abroad by 2023. By 2017, the province intends to export 5 million tons of cement, whereas by 2013 the proposed figure is 30 million tons. The Chinese cement sector has been struggling domestically, but exports have not proven to be as fruitful as in the past either.

The local government in China began encouraging cement producers to set up joint ventures and subsidiaries in South America, Africa, Southeast Asia and East Europe in order to remain afloat.

Global Cement Trade Price Report - GCTPR The Global Cement Trade Price Report (GCTPR) is the source for cement and clinker prices, as well as for market information for most regions worldwide. This extensive quarterly report includes current pricing in comparable units for cement and clinker traded internationally through imports and exports, and compares price trends in five continents.

The Global Cement Trade Price Report, the source for global cement and clinker price data. Each report is approximately 80 pages in length and includes gray cement, white cement and clinker import and export prices from all major regions of the world.

The key factor determining a cement trader’s global price competitive position remains its pricing strategy. This applied to vertically integrated cement traders, independent traders, shippers as well as buyers.

Timely knowledge of global cement prices and trends remains a cornerstone for competent internal strategic planning within the cement industry. Join a global group of international cement companies, analysts and others in subscribing to the only publication that consistently tracks cement trade prices.

For questions, inquiries and orders please contact your CW Group Client Service Coordinator or sales@cwgrp.com .

For a complete table of contents of the report, please visit the CW Research website: http://research.cwgrp.com .

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

November - December 2014

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FEATURE

feature

A leader in innovation in clinker cooler manufacturing

Cement granules x100 magnification. Š Claudius Peters.

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November - December 2014

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Claudius Peters, worldwide leader ETA main test

manufacturer of equipment for the cement sector, is a brand name that has been synonymous of innovation and efficiency in the industry.

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feature

laudius Peters, worldwide leader manufacturer of equipment for the cement sector, is a brand name that has been synonymous of innovation and efficiency in the industry.

Claudius Peters, one of the world’s most respected engineering houses in the world, has more than 100 years’ experience in setting the benchmarks for the design, manufacturing and commissioning of materials handling and processing systems for the gypsum, cement, coal, alumina and bulkhandling industries. The foundation of the company goes back to 1906, handling the European main dealership for Fuller mills and Fuller pumps, at first on a commission basis, later under a licensing agreement. The product range is soon enlarged by the addition of Fuller-Kinyon conveyor systems and by additional licensing agreements with Bailey Meters of Cleveland/ Ohio and Detrick of Chicago.

The company’s first products were a coal pulverizing mill and a range of pumps.

These were soon joined by conveyor systems for bulk materials (coal, limestone meal, cement, gypsum, lime, soda, magnesite etc.). The product range was expanded over the years to include installations for a number of other manufacturing operations and manufacture of components like stringers for the aircraft industry.

Claudius Peters clinker coolers Claudius Peter’s clinker cooler has enjoyed wide spread popularity since it has entered the market. The company started supplying coolers for the cement industry in 1950. By the early 1990’s it was building the then largest models of cooler with a daily throughput of 10,000 tons of clinker.

On the span of little over 60 years, more than 790 coolers have been commissioned around the world. The debut was marked with the Claudius Peters grate cooler, which came to meet some noteworthy improvements over time. In 1975, the cooler was enhanced with a hydraulic grate cooler, whereas four years later

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November - December 2014

the roller crusher was added to the piece of equipment, both of these features being present in the most recent versions of the cooler. More so, Claudius Peters made an effort to achieve optimum clinker distribution across the cooler width through adding a cross motion grate in 2000. One year later, a new feature was added to the equipment, its purpose being of preventing fine material from falling through the grate, resulting in a minimum construction height.

Features that have stood the test of time The hydraulic driver added to the Claudius Peters clinker coolers in the 70s remains an important feature in the ETA model.

Now called the Claudius Peters Full Stroke Hydraulic Cylinder Drive Control, the piece of equipment is improved as to control and monitor all actions of the lane/cylinder motion, while continuously measur-

Reducing costs and improving efficiency Most outstandingly, if the first Claudius Peters cooler had a capacity of 500 tons per day, the newest model, the ETA Clinker Cooler, has a capacity of up to 13,000 tons per day. The company understood that adapting its products is essential in the fast moving industry of manufacturing cement, realizing that their pieces of equipment and the innovations they bring on the market play a significant part in aiding cement plants to increase their capacity and reduce operational costs.

Overall, the ETA Clinker Cooler’s design ensures minimal operating costs and a low overall investment costs

The latest cooler, named after the ancient Greek symbol for efficiency, incorporates the evolution of clinker cooling in one complete system. Optimizing fuel utilization was a focus point in creating the ETA Clinker Cooler. In other words, the goal was to create a cooler that would increase heat recuperation while reducing cost fuels, enabling the piece of equipment to be both fitter to meet environmental standards and more cost friendly.

transport principle for a 5-lane -Cooler

Clinker Coolers Units sold 100 80 60 40 20 0 Through 1979

1980-1989

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

1990-1999

2000-2010

2011 and after

ETA Hydraulics Full Stroke Hydraulic Cylinder Drive

ETA moving floor

ing the position of the cylinders. Its main purpose is to ensure the stroke lengths required for each individual lane. The hydraulic cylinder drive benefits from an extremely compact design, low maintenance demand.

The roller crusher, a feature that innovated the cement equipment industry, remains an alternative to the conventional hammer crusher that has been a standard tool for ridding of oversized clinker. The roller crusher, which is integrated in the ETA model, reduces the rotational speed of the crusher, leading to minimal wear and reduced maintenance costs. Among the assets of the roller crusher, one would mention its long crushing life, minimal dust generation, low power consumption, ease of maintenance, lack of refractory damage and its ability to crush large lumps without kiln stoppage.

Overall, the ETA Clinker Cooler’s design ensures minimal operating costs and a low overall investment costs, be it that we are talking about a new plan or a conversion.

Its adaptability to any rotary kiln system on the market shows that the engineers at Claudius Peters have completed the task of creating a higher availability and customizable piece of equipment. The ETA Clinker Cooler can be found in cement plants in China, the United States, Indonesia, India, Vietnam, Syria, Saudi Arabia, Turkey, Albania, Azerbaijan, Russia, Spain, France, Switzerland, Italy, Sudan, Nigeria, Ethiopia, Tanzania, Morocco, Bulgaria, Egypt and Philippines.

Being highly reliable and benefiting from the brand name Claudius Peters, the ETA Clinker Cooler has proven that a correctly chosen piece of equipment can increase productivity and minimize operational

Clinker Coolers Units sold per region America Africa Middle East Asia ex-China-HK-Taiwan China-Hong Kong-Taiwan Europe 0

10

20

30

40

50

60

70

80

costs, regardless of the cement plant where it is installed.

Claudius Peters leadership Technical experience, coupled with unremitting product development in the company’s Technical Center, continuous to be the main aspect that recommends the German company as a leading player in what cement technology is concerned.

The group manufactures an extensive array of products for the industry, starting from hydraulic drivers and roller crushers for clinker coolers, to expansion chambers for silos and reduced power consumption pneumatic conveying systems.

Such products have assured that Claudius Peters is a name synonymous with innovation and leadership in the industry of manufacturing cement technology.

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feature

Management Risk in Contracts PART 1 of 3

By Er. Ashis Kumar Chakraborty

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November - December 2014

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Source: forwallpaper.com

Risk includes the possibility of losing some or all of the original investment

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feature

Introduction: Risk (uncountable) may be defined as: • A characteristic of reality or risks as threatening agents, • The essential feature here is uncertainty.

• Without uncertainty there is no risk, only clear danger.

• Risk is an uncertain event or condition that, if it occurs, has an effect on at least one [project] objective.

• The probability of something happening multiplied by the resulting cost or benefit if it does.

• The probability or threat of quantifiable damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action.

• The probability that an actual return on an investment will be lower than the expected return. Financial risk can be divided into the following categories: basis risk, capital risk, sovereign risk, default risk, delivery risk, economic risk, exchange, interest rate risk, liquidity risk, operations risk, payment system risk, political risk, risk, reinvestment, counterparty risk and underwriting risk.

• As per The ISO 31000 (2009) / ISO Guide 73:2002 definition of risk is the ‘effect of uncertainty on objectives’.

Risk includes the possibility of losing some or all of the original investment. Different versions of risk are usually measured by calculating the Standard Deviation of the average returns of a specific investment. A high standard deviation indicates a high degree of risk.

Risks may be defined as an event or a situation which probably occurs during the lifetime of a project or contract that has potential consequences of damage to property or environment, or personal injury, and/or financial loss or loss of time. and financial resources to mitigate the adverse effects of loss. vital points that may lead to loss: • Financial risks - such as cost of claims and liability judgments • Perimeter risks - including weather or political change • Strategic risks - including management changes or loss of reputation • Operational risks - such as labor strikes The accidental losses are unforeseen and unplanned, but there are methods which can make events more predictable.

The more predictable an event, the less risk is involved since the occurrence can prevent or mitigated; at minimum, expenses can be estimated and budgeted. The key to an economical and efficient based risk program is control over the risk manage-

Risks may be defined as an event or a situation which probably occurs during the lifetime of a project or contract that has potential consequences of damage to property or environment, or personal injury, and/or financial loss or loss of time.

Risk management is the continuing process to analyze, evaluate, identify and treat loss exposures and monitor risk control

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

ment functions with assurance that actions performed are desirable, necessary, and effective to reduce the overall cost of operational risk.

The most important issue is to verify the documents of land located for the site and their judicial documents or ownership, lease agreement, actual land as per the server report of revenue department of the state.

The ownership must be clearly stated and registered with land revenue department, municipal corporation authorities and obtaining various NOC including certification of non-agricultural land. The statutory clearances like TOR, Environment Clearance from Ministry of Environment & Forest (MoEF), Central Pollution Control Board (CPCB) GoI and Consent to Establish issued by State Pollution Control

Board with valid dates. This part is very vital and need to be checked seriously with a professional legal expert.

A risk management program may be formulated and evaluated.

The cost of Risk is comprised of: • Retained Losses - Deductibles, Retention or Exclusions • Net Insurance Proceeds • Cost for Loss Control Activities • Claim Management Expense • Administrative Cost to Manage the Program

The benefits of a risk program should result in overall savings to the corporate entity when evaluating these components in the aggregate.

• Personnel - Through Death, Disability, or Retirement Key Personnel or catastrophic loss tomany employees and associates

Types of Loss Exposures within the province of risk management: • Property - Real & Personnel, Tangible & Intangible • Net Income - Reduction in Revenue or Increase in Expense; can be due to loss of Property loss due to Civil or Statutory fines and judgments, or by loss of Key Personnel • Liability - Civil and Statutory (Torts, Statutory Workers Compensation, EPA and other

Risk management strategies are involved as per below concepts:

The key to an economical and efficient based risk program is control over the risk management functions with assurance that actions performed are desirable, necessary, and effective to reduce the overall cost of operational risk.

Elements of Loss Expense • Actual damages to physical assets to repair or replace.

• Increase in expenses or reduction of revenue due to loss.

• Cost of investigation, legal fees, fines and awarded judgments.

• Loss of worker productivity and adverse publicity and public opinion.

• Higher potential insurance premiums.

• Payments made due to the death, disability or resignation of employees.

Risk Control Techniques • Avoidance of activities which cause loss.

• Reduction of the frequency of loss - risk prevention.

• Reduction of the severity of loss - risk reduction.

• Contractual transfer of responsibility for loss occurrence.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

November - December 2014

18

feature Risk Financing Techniques • Retention of losses either by design or omission.

• Borrowing of funds or use of bonds or use of other forms of capital • Contractual non-insurance transfer of responsibility for loss payment.

• Insurance transfer to a non-owned insurance company when and if the exposure is insurable and the cost is not prohibitive.

Risk Management is concerned with all loss exposures, not only the ones that can be insured. Insurance is a vital technique to finance some loss exposures and, a part of the broader concept of managing risk.

Identify Exposures to Loss: • Property • Personnel • Net Income • Liability Risk Funding Techniques: • Current Expensing

Identify Exposures to Loss

19

November - December 2014

Examine Feasibility of Alternative Techniques

• • • • • •

Unfunded Reserves Funded Reserves Borrowing Captive Insurers Commercial Insurance Contractual Transfer for Risk Financing

Definition of Commercial Insurance: A contract under which one party, the insurer, agrees - in exchange for the payment of a premium - to pay for specified losses the insured may suffer, up to specified amounts, under conditions specified in the insurance contract.

Sample Insurance for workers & employees: • Workers Compensation • General Liability • Automobile • Umbrella or Excess Liability • Professional Liability (Design Build, Engineering Only • Property/ Contractor’s Equipment • Property/ Builder’s Risk • EPLI/D&O/RRP/OCP/Pollution

Select the Apparent Best Technique

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

One has to consider the Workers Compensation Coverage under commercial insurance.

Compensation Costs can be considered as:Premium = Payroll x Rate x Experience Factor Further the General Liability Coverage’s&Impact Costs also to be keep in mind i.e. indicated in the following points: • Third Party Damages compensation • Bodily Injury, Property Damage, Personal Injury/Partial Injury etc.

• Defense Expenses • Settlements, Awards, etc.

It is interesting to know the cost may be incurred towards automobile or transportation coverage. This is applicable if any damages or accident happened at the site of construction or in the premises of the project. Even on stationary condition and if damaged due to fall anything from the top.

Implement the Chosen Techniques

Monitor and Improve the Risk Mgmt.

Program

The followings are the examples in the said category:

To calculate the cost = Vehicle Type, Usage and Cost x Rates x Experience

Third Party Damages • Bodily Injury & Property Damage Liability • Hired and Non-Owned Liability • Medical Payments

The equipmentsthat are installed by contractor in a premises or construction site need to have insurance coverage on mobile equipment, material in transit, hired, borrowed or rental, overloading of vehicle, crane, etc.

The third party compensation also includes if damaged / accidents happened due to Professional Errors & Omissions etc.

First Party Damages • Uninsured and Underinsured Motorists • Comprehensive and Collision Coverage’s • Hired Physical Damage

A company should consider the followings risk coverage and their cost impact during installation of equipment/ erection of structure at pre- commissioning stage.

This can be calculated as Cost of Construction x Ratesin the related area.

Risk Management is concerned with all loss exposures, not only the ones that can be insured.

Insurance is a vital technique to finance some loss exposures and, a part of the broader concept of managing risk.

• Principal employer / Owner of the project and the associate contractor’s Interests • Structure Under Construction • Material On-site • Materials Off-site • Materials In Transit • Loss of Use

Brief of author:

Er. Ashis Kumar Chakraborty is a Mechanical Engineer completed Environment Management System (EI & EA) at IIT –Kanpur &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 AdvisorGroup Corporate Affairs&Chief HRM & Business Excellence for Murli Cement.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

November - December 2014

20

CEMENT MARKETS

CW Research

CEMENT VOLUMES 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 housing starts and permits dropped in November, but trend still remains positive. Despite the deceleration shown in November builders in the US remain confident on the recovery of the sector in the medium term.

Despite the deceleration shown in November builders in the US remain confident on the recovery of the sector in the medium term.

In Spain cement demand in the first 11 months of 2014 reached 10 million tons, in line with the same period of 2013, howeverNovember deliveries totaled 0.9 million tons, 2 percent up from November of last year. Spain’s cement industry is regaining momentum after struggling for many years 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.Volumein November declined 21 percent from October, andthe first eleven months arenow 6 percent down from the same period of last year. Housing starts in the country are now at historical lows.

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 gov-

Jul 2014 Year-on-Year Cement Production Growth Rate (%)

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Source: CW Research

-10%

Argentina

Argentina

Japan

China

0%

Vietnam

10%

Colombia

20%

Saudi Arabia

30%

CW Research CEMENT MARKETS

ernment has launched many initiatives aimed at reducing the prices in order to boost demand.

Cement productionplunged 26 percent in November from the previous month and 10percent from November of last year. The year-to-date growth is now at 3 percent.

Cement consumption in France continues to contract.

Colombia’s construction sector remains solid, with and public investment in infrastructure is expected to support the cement demand in the short and medium term. Production remained flat in November versus October but yearly volume is up 10 percent from last year.

Jul 2014 Year-on-Year Cement Demand Growth Rate (%) Spain and US as of August

-20.0%

In Argentina, the cement sector continues to deteriorate following an unstable political environment and a falling oil industry. Cement productionis down 4 percent year over year as of November of 2014.

China’s economy slowdown has had his take on cement demand asconstruction activity remains weak.The country’s housing market still struggling and prices continue to drop, though at a slower pace in November. Decline reached 0.6 percent, an improvement compared to October’s 0.8 percent and September’s 1 percent. It is expected that house price decline will continue over next year, at a slower pace, but the slowdown in construction will have a negative effect in cement demand in China.

Source: CW Research

0.0%

France

Germany

Spain

Indonesia

Peru

Pakistan

20.0%

Saudi Arabia

40.0%

China’s economy slowdown has had his take on cement demand asconstruction activity remains weak.

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November - December 2014

22

MARKET DATA SNAPSHOT

CW Research

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.

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

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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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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

CEMENT ENERGY MARKETS

CW Research

CEMENT ENERGY MARKETS Coal Market Update Coal volumes further decline in November Globalcoal trading volumesdropped for the second month in a row in Novemberfromthe previous month, with significant declines from Colombia and South Africa.

Colombian coal deliveries plunged almost 38 percent in Novemberto an 8-month low, the lowest since March of 2014 which recorded 3.3 million tons due to Drummond’ssuspended export operations in the port in early January. Year to date volume exported out of the country is now at 81 million tons, 20 percent over the same period of 2013.

Colombian coal deliveries plunged almost 38 percent in Novemberto an 8-month low, the lowest since March of 2014 which recorded 3.3 million tons...

In South African coal deliveries dropped 18 percent and reached to6.0million tons, still 2 percent up compared to November 2013 while in Indonesia’s coal exports raised 3 percent from the previous month.The head of the Indonesian Coal Mining Association (APBI) has proposed that Indonesian coal mining companies slash coal production in 2015 by 100 million tons, however producers are unlikely to cut production despite the price slump. The country is also raising its coal output in order to increase revenue from the mining sector amid plummeting global coal prices.

In China, the Government continues its efforts to cut coal usage to reduce greenhouse gas emissions. However, it is expected that China alone will still account for the majority of the demand growth in the future, despite the country’s plans to reduce coal consumption and build up renewable and nuclear energy sources.

Coal Global Trading (million tons) 120

Indonesia

Australia

Russia

South Africa

Colombia

US

Rest

40

Oct-14

Nov-14

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

May-13

Apr-13

Feb-13

Mar-13

Dec-12

Jan-13

Oct-12

Nov-12

Sep-12

Jul-12

Aug-12

Jun-12

Apr-12

May-12

Feb-12

Mar-12

Dec-11

Jan-12

Nov-11

0

Source: customs

data

80

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24

CEMENT ENERGY MARKETS

CW Research

Energy Prices Update Coal Coal prices remain resilient in most markets. The average for November closed at US$70 per ton, while outlook remains bearish on oversupply, with no effect still seen in the market from recent cuts in production.

Australian coal price lost 2 percent compared to October and 24 percent from one year ago, averaging US$70 per ton during the month. Exports remain affected by slowdown in demand from China. Price will remain subdued towards the end of 2014. Profitability has started to return to Australia coal producer, following a drop in oil prices. As reported

by Glencore, the percentage of Australian coalmines that were losing money had fallen to about 25 per cent. However, the companyannounced it has tol shut down its Australian coal operations for three weeks due to an oversupply of the commodity. The three week shut down was be carried out across all of Glencore’s Australian coal operations in December. Also reported that Australia could be supplying coal to Ukraine, in a move from that country to reduce its dependence on gas from Russia.

The average for November closed at US$70 per ton, while outlook remains bearish on oversupply

In Colombia, coal export price declined 3 percent from October to US$71 per ton. The coutry, whose export volumes plunged in February and March after Drummond was forced to halt its operation in the port in early January, is investing heavily in the industry.

Colombia’s Ministry of Mining and Energy has announced that coal production could reach a record high in 2015 after the extraction of around 100 million tons. However, officials said this increase will only be realized is all the projected infrastructure is completed along with other investments in the industry.

US exported

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

150 130 110 90

Nov-14

Sep-14

Jul-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

Nov-12

Sep-12

Jul-12

May-12

Mar-12

Jan-12

Nov-11

Sep-11

Jul-11

May-11

Mar-11

Jan-11

50

Nov-10

70

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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

In South Africa, the average price remained relatively flat in Novemberbut it still at its lowest level since November 2009. CIL (Coal India)has announced it is considering a proposal to register a wholly-owned subsidiary in South Africa for acquisition and development of coal assets in that country.

In Indonesia, producers are unlikely to cut production despite the price slump while in Russia coal miner Kuzbassrazrezugol will cut its production by 2.3 million tons in 2015 due to unfavorable international market condition. Kuzbassrazrezugol produced 30.8 million tons of coal for export in 2014 from its mines in Siberia.

In the short term a decline is expected in coal prices

In China the Government released its comprehensive Energy Development Strategy Action Plan (2014-2020). A significant component of the strategy plan is the cap on annual coal consumption below 4.2 billion tons until 2020.

In the short term a decline is expected in coal prices, at least in 1H2015 for US, EU while Asia to see premium to ARA. In the longer term price upside will be limited by structural factors -- not the least economic weakness and India demand. Lower crude may on the margin encourage higher volumes and consequently lower coal prices.

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

N-14

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

0

N-12

20

Source: customs data

40

Petcoke Price for the US Gulf Coast FOB 4.5% avg. sulphur declined slightly in November. Prices have been steady and resilient after the new 400,000 b/d Total-Saudi Aramco refinery in Saudi Arabia and BP’s new 410,000 b/d coker in Indiana begin to take up market share.

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26

CEMENT ENERGY MARKETS

CW Research

In Mexico, ICA Fluor signed a contract with Pemex Refinación for the construction of an 86,000 b/d delayed coker unit that will be installed at the Miguel Hidalgo Refinery in Tula, Hidalgo. Also uncertainty about demand for high-sulfur petokce from China has been pushing prices down. Venezuela continues to experience logistics challenges.

It’s also been reported that crude slated for US Gulf refineries has caused petcoke to have lower sulphur. This has brought down the prices and has also reduced the spread between mid-sulphur cargo and high-sulphur cargo.

NaturalGas The Henry Hub spot price traded at $4.1 per MMBtu in November, increasing 9 percent month on month as the winter season starts to hit and temperatures drop dramatically during the month across the country. In Europe, prices declined 9% following a mild summer and winter this year. Major producers preserved stockpiles pushing prices down.

The Henry Hub spot price traded at $4.1 per MMBtu in November, increasing 9 percent month

Southern European markets (Spain, Italy) saw year on year declines in natural gas demand across all sectors. A steady and uninterrupted supply from Russia, Good storage levels, a moderate macroeconomic outlook and substantial hydro reserves in both countries point to a slow demand in the short term.

Natural Gas Prices (US$/MMBtu)

US

16

Europe

12

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November - December 2014

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Nov-14

Mar-14

Jul-13

Nov-12

Mar-12

Jul-11

Nov-10

Mar-10

Jul-09

Nov-08

Mar-08

Jul-07

Nov-06

Mar-06

Jul-05

Nov-04

Mar-04

Jul-03

Nov-02

Mar-02

Jul-01

Nov-00

Mar-00

Jul-99

0

Nov-98

4

Source: EIA, World Bank

8

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.

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

WWW.CEMWEEK.COM/SUBSCRIBE

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

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TABLE AVAILABLE IN THE ICCM MAGAZINE PRINT EDITION.

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

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Source: CW Group analysis estimates LM: latest month Nov 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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November - December 2014

28

cement market and competition

M

arket and competition

Recovery in sight for the Indian cement industry After a year when cement manufacturers across India had to struggle with weakening demand, excess capacity and falling prices, cement producers are now confident in the improvement in the market conditions of 2015.

Some notable elements added up in making 2014 a difficult year for the sector. First of all, demand and prices of cement fell after the elections that took place in the first half of the year. Secondly, since demand growth is highly dependent on new contracts with the government and infrastructure projects, pick-up in demand did not reach the levels the producers hoped for.

H.M. Bangur, managing director of Shree Cements has stated that India is expected to grow at 5.5 percent in the 2015 fiscal year, and that the stalled infrastructure projects the government is now trying to set into motions will have the possible effect of triggering demand for commodities like cement. Infrastructure output growth rate began climbing starting with November 2014, when India posted a 6.7 percent gain in output. The figures represent a five-month high for India, output growth for infrastructure having been 6.3 percent in October.

Shares of cement makers in India have been seen rising on account of the anticipated better market conditions and of the increase in cement prices. At the end of 29 November - December 2014

2014, cement prices in India have increase by 25 to 30 percent. As such, the value of ACC shares grew by 3.3 percent, Ambuja Cement’s by 1.8 percent, UltraTech’s by 4.7 percent and India Cement’s by 5.4 percent.

Mid-cap cement companies in the country are also poised for strong earnings during 2015 on account of the expected increase in demand. As such, companies like JK Cement are planning on capacity expansions.

New investment commitments announced in India Leading Indian business houses have announced their intention to invest in cement and energy plants across India at the Vibrant Gujarat Global Summit held at Mahatma Mandir in Gandhinagar, India.

Adani Enterprises announced the signing of a memorandum of understanding with SunEdision, a solar technology provider, stipulating the set up of the largest, vertically integrated solar photovoltaic manufacturing facility in India. The same company has signed a similar memorandum with Australian major Woodside Energy for cooperation for exploiting business opportunities across a broad spectrum in the oil and gas sector in India.

Aditya Birla Group plans on investing as much as Rs 20,000 crore for its brownfield expansions, the group’s chairman Kumar Mangalam Birla, mentioning that Gujarat is a focus state for the company.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Problems of the sector India’s Southern cement industry faces falling demand The year debuted with falling demand heightened by overcapacity and a sharp rise in the cost of raw materials in the southern part of India. Moreover, the industry actors have not been able to increase the price of cement enough to compensate for the cost pressure they are currently experiencing.

India Cements, for instance, has increased the prices of cement, but has yetto come to better financial results. India cements gets about Rs 180 for a bag of cement with a retail price of around Rs 370 per bag, Added tax comes to around Ra 48 and excise duty is Rs 39.

The industry also expects boost from the proposed capital city in Andhra Pradesh.

The cement industry in the south is suffering from over-capacity.

Cement manufacturers ask for a cut on cement overall tax India’s Cement Manufacturers Association has urged the Union Government to bring down the overall tax on cement by 20 to 25 percent. At the moment, excise duty is levied at 12 percent, with overall duties hovering around 60 percent, comparable with that of luxury goods.

The manufacturers’ main complaint is that the tax is too high for an industry that is a core one to the Indian economy.

The news came as a surprise after the plant’s management announced a package of INR 165 crore to modernize the factory. M Asokan, district president of Centre of Indian Trade Unions (CITU) has stated that nothing has been achieved in the sense of modernizing the plant, despite former chief minister J Jayalalithaa’s announcement of providing investment for this purpose.

According to government officials, the halt of operations at the Arasy Cement plant came after the issuing of a report that showed that there would be no limestone in the near future.

Mawluh Cherra Cements in need of financial assistance The Mawluh Cherra Cements (MCCL), which is the only cement plant under the control of India’s Meghalaya government, requires financial assistance worth Rs 50 crore in order to ensure smooth production after April 2015.

In a report tabled by former chief minister and state planning board Chairman SC Marak, requests for government assistance of the value of Rs 12 have been made, but have not been found resolution.

The Mawluh Cherra plan has outlived its lifespan, its production now being in dismal.

Governmental interference Tamil Nadu government rolled out the Amma Cement scheme The state authorities in Tamil Nadu rolled a cement scheme planned since 2014 that stipulates the retailing of cement at a subsidized rate. According to the scheme, the government will procure 200,000 tons of

source: ariyalur.co.in

Cement plant in India to halt operations The government owned cement factory Arasy Cement at Alangulam in Virudhanagar district, Tamil Nadu, plans to close its production unit. The plant’s management board has issued a circular asking its workers to obtain transfer to another government cement factory in Ariyalur.

Ariyalur Cement Plant

cement from the private sector and then sell it at Rs 190 per bag in all local body limits.

The plan has been welcomed by Tamil Nadu cement consumers who would normally buy a bag of cement for almost a double price in normal circumstances.

There are certain limits to accessing the scheme, though. Beneficiaries can avail a minimum of 50 bags of cement for 100 square feet and a maximum of 750 bags for 1500 square feet at Rs 190 each. Moreover, they have to submit the approved building plan with the local authorities to avail it.

Rajasthan Government retakes possession of limestone mining area As of the end of 2014, Rajahstan Government’s Mines Departments has retaken possesion of 10 square kilometers of limestone mining area in the Naguar district. The mines had until then belonged to Aditya Vikram Birla Group, under which UltraTech functions, the company having allegedly brought the mines illegaly from a private firm.

The move is believed to be a major setback for India’s largest cement producer, UltraTech Cement, since the company had bought the mine from Gotan Limestone Khanij Udyog, owned by a Chauhan family.

The Anti-Corruption Bureau of Rajasthan

has files an FIR against four directors of Gorna Limestone Khanji Udvog and three directors of UltraTEch Cement, namely, Kailash Chandra Birl, Rahul Mohnot and Mukesh Babu Aggarwal, as well as against the then Director of Mines and Geology.

India’s Competition Commission to decide on the Lafarge-Holcim merger According to the Chairman of the Competition Commission of India (CCI), Ashok Chawla, the institution will decide on the merger proposal between Lafarge and Holcim in due time.

In the meanwhile, Lafarge and Holcim have issued a joint filling to the CCI in which they state that the merged form of the two competition will continue to face strong competition from Indian cement manufacturers. Names such as UltraTech Cement, Shree Cement and Jaypee Group, companies which produce and sell cement at a pan-Indian level, have been listed as some of the companies with which the new company will compete.

The merger, nonetheless, is still under examination as it is thought to raise competition concerns.

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November - December 2014

30

cement M&A AND FINANCE

M

&a and finance

Acquisitions Jaiprakash Associates sells two of its plants to UltraTech The Indian company will sell two of its cement plants to cement majorUltraTech Cement in a transaction estimated at Rs 54 billion. The company has started selling assets some quarters ago in order to unload its debt, which reached Rs 72,600 crore, and improve its balance sheet.

The two cement plants to become part of UltraTech Cement are located in the state of Madhya Pradesh. UltraTech, which is the country’s leading cement maker, will see its cement production capacity boosted by 5 million tons per year with this acquisition from Jaiprakash.

Dalmia Cement acquired BokaroJaypee Cement India’s Dalmia Cement Bharat has made an important move in consolidating its presence in the eastern part of India by acquiring BokaroJaypeeCement in a deal worth Rs 1,150 crore.

The acquired company had been a 74:26 joint venture between Jaypee Cement and SAIL, its capacity being of 2.1 million tons per year. The acquisition process started in March 2014, when DalmiaBahrat bought the majority stake from Jaypee, while the remaining shares had been acquired from SAIL in November last year.

According to MahendraSinghi, CEO of Dalmia Bharat, the purchase will consolidate the company’s presence in the east of India, bringing the total production capacity of Dalmia Bharat to 24 million tons per year.

Lafarge-Holcim merger The merger proposal between the two companies has been placed for public scrutiny in India, the country’s competition watchdog being likely to prescribe a structural remedy before giving the green-light to the merger.

Holcim operates in India through subsidiaries ACC and Ambuja Cements,which have a combined production capacity of 46 million tons, while Lafarge’s units in India are Lafarge India and Lafarge Aggregates & Concrete,with a capacity of about 8 million tons. In order to get the necessary clearance

A

UltraTech Cement, which last year had a

production capacity of 60 million tons per year, plans on seeing production capacity grow to 71 million tons by 2012, and to 100 million tons in 10 years’ time.

Holcim Cement Plant

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November - December 2014

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

A

Lafarge Cement Plant

from the Competition Commission of India (CCI), the two companies have been trying to divest certain assets that would reduce the impact of the merger on the market.

Despite these impediments, the merger is going on track in India, the future structure for India awaiting to be announced after getting clearance from the CCI. FINANCIAL UltraTech to raise funds for purchasing Holcim’s Brazilian assets UltraTech Cement is reportedly trying to raise US$1.2billion to purchase Holcim’s Brazilian assets, the company now being in talks with banks that could fund the takeover of the assets.

In view of the merger with Lafarge, Holcim needs to sell assets in Brazil in order to meet the regulatory requirements established by the country’s competition commissions.

The Indian cement producer hasmade a non-binding offer to take over the assets, but it is facing competition from the likes of Irish cement maker CHR, Cemex, HeidelbergCement and VotorantimCimentos.

The company has reached a record high in

financial terms, its stock having opened at Rs 2,911 and touching Rs 3,033 so far. The shares of the company surged by 11 percent during the past three trading seasons as compared to the less than 1 percent gain in the benchmarks S&P BSE Sensex. Analysts say that they are expecting UltraTech Cement to report 6.1 percent quarter on quarter top line growth to Ra 5,760 crore.

Such growth would reflect a volume increase of 3 percent to 10.7 million tons of sold cement, and around 5 percent realization to Rs 5,641 per ton.

Shiva Cement boosts cement and clinker dispatches The Indian cement manufacturer has achieved a 31 percent increase in cement and clinker dispatches between April and November 2014 when compared to the similar period of the previous year. On the other hand, the company’s shares last traded at Rs 4.1 as compared to theprevious close of Rs 4.21.

announced that part of the pending salary for the employees of MawmluhCherra Cements have been released.

Managing Director Sanjay Goyal, has been quoted saying that the government has released about Rs 2.5 crore, representing the two months’ salary for the employees of the company working both at the headquarters and at the site at Sohra. The director further noted that the amount was released as part of a goodwill gesture and in keeping with the assurance given to the employees. The funds for the remaining three months, which reach over Rs 5 crore, could be worked out this year.

Funds for MawmluhCherra Cements salary dues released The Indian government-owned company has been failing to pay its over 500 employees since July 2014, but it has now

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cement projects and expansions

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rojects and expansions 71 million tons by 2016 once the projects under implementation are completed.

NEW PROJECTS The Kutch region will have new cement plants The Indian region is expected to attract investments worth Rs 40,000 crore during the next 2-3 years in projects in the areas of cement, power and minerals, both of large and small size. Mahendra Patel, IAS, Collector in Kutch, states that cement companies like Reliance ADA, Binani and DLF are already setting u cement plants in the region.

Reliance ADA, for instance, has invested Rs 5,000 crore in a 5.6 million tons per year plant. Binani Cement plans to set up a cement plant with a production capacity of 4.5 million tons per year, while DLF has expressed its intentions to develop a 3.4 million tons per year cement plant in the region.

UltraTech plans new greenfield expansion phase After two year dominated by aggressive acquisitions, UltraTEch Cement is now planning its next phase of greenfield expansions in order to be able to meet the expected revival in demand.

As part of its expansion plan, UltraTech will set up two greenfield units in Bihar and West Bengal, as well as a bulk terminal in Maharashtra and increase capacity at its existing plant in Rajasthan. At the moment, UltraTech Cement has a capacity of 62 million tons, yet it intends to rise it to 33 November - December 2014

Malabar Cements plans major revamp The company plans to improve its cement business as the government has accorded sanction to set up aRs 16 crore bulk handling unit at Willingdon Island in Kochi. According to press, the facility will be commissioned on the land owned by Cochin Port Trust and then leased to Malabar Cements. The company will then use it as a bulk material storage even for other PSUs in the state.

The news came at the right moment for Malabar Cements, which plans to import 132,000 tons of bulk cargo for cement manufacturing per year, such as limestone, sand, coal and clinker.

The feasibility report for the project was prepared by the National Council for Cement and Building Materials (NCCBM), the total cost of the project, as expected

by NCCBM, is of 160 crore, and the first shipments could take place as soon as February 2015.

JSW Cement to increase its production four times The company, which intends to boost production to 15 million tons in ten years’ time, is adopting a step-by-step approach in reaching this goal. As such, JSW Cement is setting up greenfield projects in Chennai, Kochi and Dolvi in phases.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

At Dolvi, the company will expand its grinding unit to a capacity of 1.2 million tons per year, while the other two locations will benefit from new units which will each have a capacity of 0.45 million tons per year.

According to Chief Executive Officer of JSW Cement, Anil Jumar Pillai, the company is currently scouting for land in the South for some small grinding units. The units will each need an investment of about Rs 150-175 crore, and they will be commissioned within 15-18 months.

Seshagiri Rao, joint manager director of JSW, commented that the company’s presence in the cement sector is a small one when compared with companies which have a capacity of 60-70 million tons per year, justifying in this way the company’s intentions to drive up its cement capacity.

Sanghi Industries to invest in renewable energy and port development Sanghi Industries Limited, one of the major cement players in western India, has announced plans to invest Rs.250 crore over the next couple of years, with a focus on sustainable development, innovation and energy conservation projects. The company will invest Rs.150 crore in a new 15 MW waste heat recovery (WHR) system and a further Rs.100 crore to develop its facilities at Navlakhi Port in Gujarat.

Source: sanghicement

Sanghi Cement Plant

The WHR project is already underway, the contract having been signed for its installation at Sanghi Industries’ cement plant in Kutch, Gujarat. Some 15 MW of power will be generated from the waste gases released to the air. This technology will save valuable fossil fuels, foreign exchange will be saved and there will be a significant reduction in the emission of pollutant gases such as carbon dioxide and sulfur dioxide. Sanghi will recover more than 70% of waste heat generated from its cement manufacturing process.

To conserve coastal soil, the company will undertake a mangrove plantation spread over 200 hectares on the Gujarat coast.

This initiative will protect the ecology and coastal environment and will also improve socio-economic development.

Explaining the company’s strategy, Mr. AlokSanghi, Director of Sanghi Industries Ltd said, “Our focus is on increasing efficiencies at our manufacturing facilities as well as reducing our carbon footprint by cutting down on pollutants that affect the environment. Also, in line with the Ministry of Shipping agenda to increase trans-

portation through the coastal sea rout, Sanghi has set up a terminal with an investment of Rs.50 crore at Navlakhi Port.

We will invest an additional Rs.100 crore to further develop the terminal at Navlakhi as the sea route reduces our transportation cost considerably.”

Sanghi Industries has been a pioneer in the industrial growth story of Kutch district in Gujarat and has been a partner for each successive Vibrant Gujarat Global Investors’ Summit since 2003 - the company has committed investments in Gujarat at each one of these summits. At the 7th Vibrant Gujarat Global Investors’ Summit the focus has been on sustainable development, innovation and conservation of energy and renewable energy – keeping these as focus areas Sanghi Industries has signed MoUs in the areas of renewable energy and sustainable environment on the coast.

COMPLETED EXPANSIONS Mangalam Cement completes expansion The company has completed the expansion of its Morak (Rajasthan) grinding

unit at a capex of INR 500 crore. The capacity expansion added 1.25 million tons per year to the grinding’s unit, representing a 63 percent year-on-year increase.

The grinding unit’s current capacity is of 3.25 million tons, while clinker capacity rose by 18 percent, reaching 2.3 million tons per year.

As a consequence to these expansions, the company expects a solid growth in volumes during the current financial year, with volumes being expected to further increase in FY16 by 12.4 percent, and by 5.3 percent during FY17.

Andhra Cements starts production at two new plants The third largest cement manufacturer in India, Andhra Cements, informed the Bombay Stock Exchange, that it has commenced commercial production at two new cement plants.

After completing successful trial runs, operations began at Durga Cement Works at Dachepalli, Guntur, Andhra Pradesh, and at Visakha Cement Works at Visakhpatnam.

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cement volume & pricing

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olume and pricing

High prices affecting the sector Cement prices began increasing in 2014, and they are expected to further escalate into 2015. According to press, the price of a bag of cement could reach as high as Rs 400 by the end of February.

At the moment, a bag of premium cement, which used to cost Rs 260, now costs Rs 300- 320. Non-premium quality cements hover around similar prices.

Builders in Tamil Nadu protest cement prices Though the government of Tamil Nadu launched the Amma Cement scheme at the end of 2014, builders across the Indian state are protesting the too high price of cement.

Members of various associations have held hunger strikes and marched the streets in awareness of the high cement prices, trying to persuade the government to take more action in bringing cement prices down.

Associations such as the Builders’ Association in India and the Civil Engineer’s Association claim that the governmental scheme in selling cement comes with too many conditions and that it would do little to benefit large scale projects. More so, the builders’ associations have called for a regulatory body that would have more control over cement prices.

The Amma Cement scheme, though highly anticipated, did not interrupt the upward movement of prices in the South of 35 November - December 2014

India. R. Balamurugan, president of Chennai Civil Engineers Association, has stated that the amount of cement subsidized through the scheme will not meet even half of the requirements across Tamil Nadu.

Falling demand also at play Apart from the sharp rises in prices the region is experiencing, the cement manufacturers are also being troubled by falling demand. Moreover, cement producers are facing the issue of increase in raw material prices and energy costs.

N Srinivasan, vice chairman and managing director of India Cements, has stated that even the current price at which cement is being retailed does little to compensate the cost pressure.

Growth in volumes India’s Mangalam Cement to see growth in volumes Mangalam Cement, a BK Birla group company, has an installed capacity of 3.25 million tons per year in Morak, Rajasthan.

According to Arihant capital markets, the company has a price potential of Rs 429 based on Evton of US$75.

The manufacturer sells cement under the brand name Birla Uttam in the northern and central regions of India. As far as the proportion of sales go, 51 percent of the company’s output reaches the northern part of India, while the rest is distributed in the central re-

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

gion, the major selling markets in both the regions being Rajasthan, Delhi, Haryana, Uttar Pradesh and Madhya Pradesh.

Rajasthan accounts for 31 percent of the company’s cement volumes, but sales are expected to reach 50 percent in the region due to sales tax benefit scheme announced by the state government. According to the scheme, Mangalam Cement will receive sales tax subsidy for 7 years starting from FY15.

Dalmia Cement sets target for current financial year In its two year of operations in the NorthEast of India at its three production units, the company’s cement sales amounted to 2.1 million tons. As such, the company has set the target of selling 1 million tons of cement during 2015.

Dalmia Cement’s Executive Director (North East) AbhraBanrjee, stated that the company has been able to capture 20 percent of the market share during the last two years, an accomplishment which has not been achieved by any other brand in such a short span of time.

India producing high volumes of fly ash The country’s annual production of fly ash through thermal plants has reached about 256 million tons, out of which the country uses around 55 percent of the byproduct.

Half of the residual fly ash is used by cement companies, while the rest is employed in filling for mines and for agricultural purposes.

people

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cement

eople

New director at Anjani Portland Cement Anjani Portland Cement’s board of Director have taken on record the resignation of Mrs. Geetha Muthiah as Managing Director of the Company. During the same meeting, held on January 19, the Board approved the appointment of Mr. ASubramanian as Additional Director of the company and as Managing Director.

Anjani Portland Cement shares last traded at Rs 73.65 as compared to the previous close of Rs 75. More so, the stock hit an intraday high of Rs 77 and intraday low of Rs 65.

The position of CEO of the new company will be occupied by Lafarge’s current CEO, Bruno Lafon.

Dalmia Cement helps affected people in Kokrajhar Employees of the Dalmia Cement North East team have started a project in which they extend a helping hand to the people affected by the recent attacks in Kokrajhar, Assam. The employees have collected an amount of Rs 1,60.100 from individual salaries, as well as 2,000 pieced of clothing

that have been shared among women, children and men. The contribution gathered by the company has been handed over to the Assistant Deputy Commissioner in charge of the relief camp.

MC Kini, Chief Executive Officer of Dalmia Cement’s North East division, has mentioned that there is a special bond between the company’s employees in the North-East and the people in the region, and that the purpose of the charity gesture was to provide some comfort to those affected.

The top executive team of the merged company will have Thomas Aebisher and Roland Kohler as financial chiefs. Lafarge’s current CFO, Jean-Jacques Gauthier will be in charge on integration and human resources inside the new group, while the company’s current head of operations, Eric Olsen, will lead the African and Middle-Eastern operations of the combined group.

Source: lh3.googleusercontent.com

Holcim and Lafarge decide on management for the merged company The two companies, which have been undergoing a merging process across the world, announced that each company would be equally represented in the executive committee of a combined group once their planned merger is finalized.

Dalmia Cement

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regional NEWS

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egional news and the cement will come in 50 kilograms bags.

NEPAL New plants begin production in Nepal Two new plants in Nepal have begun production of cement and clinker, namely Arghakhanci Cement and SCI, part of the Saurabh Group.

The Arghakhanchi Cement plant has started producing OPC cement during the third week of January 2015, though the company has been producing and supplying clinker to other cement factories in Nepal for the past four years. The first cement manufacturing unit of the company also has a plant of three generators that would ensure uninterrupted power supply.

The second company that has kick-started its commercial operations is Sarbottam Cement Industries (SCI), being established under the Saurabh Group at Nawalparasi, a region populated by mines. The latter group handles a major share in import-export business of cement, steel, tea and woolen products. The investment required for setting up SCI was of Rs 6.5 billion.

The new plant, which is located in Mainahiya VDC of Rupandehi operates with raw material coming from mines in Arghakhanchi and Palpa, having a production capacity of 1,000 tons of cement and 1,200 tons of clinker per day. The company will sell its products under its own name,

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

SCI’s plans output is of 400,000 tons of clinker, and like the Arghakhanci Cement plant, it is equipped with its own power plant, grinding machine and clinker unit.

Production halts for Ghorahi Cement Industry Having been affected by the protests of tipper operators in Dang, Nepal, the production and supply of Ghorahi Cement Industry, a cement manufacturer under Sagarmatha Cement, has been badly affected.

The tipper entrepreneurs that traditionally supplied raw materials to the company have been demanding an increase in the transport charge of raw materials from Rs 500 to Rs 650 per ton, capital that Chorahi Cement does not dispose of since its cannot afford the gas fees. As such, the company has halted production all together, having no means of supply the volumes of cement and clinker that are in its stock.

The Federations of Nepalese Chambers of

Commerce and industry has appealed the government to intervene and create a situation that would enable the cement manufacturer to carry on with its usual operations.

PAKISTAN Pakistan’s cement sector posted growth in 2014 The country’s cement sector has proven to be successful during 2014, being mostly driven by increased demand and aided by low coal and oil international prices. As such, cement companies outperformed the Karachi Stock Exchange-100 index by a rather wide margin.

Another factor that added to the profitability of the sector has been the overall economic growth in Pakistan and in the traditional foreign consumers of Pakistani cement. Better economic conditions led to increased consumption and to an increase of 10 to 12 percent in cement prices. According to AKD Securities analyst JawadShamim, the cement sector posted growth on all fronts during 2014.

Boosted exports and domestic sales Between July and November 2014, Pakistan exported with 1.9 percent more cement than during the similar period of 2013. During the period analyzed, the country’s cement manufacturers exported cement worth US$229.85 million, up from the US$225.56 million posted in the same period of 2013.

During the month of November 2014 alone, the country exported cement worth US$45.82 million, up by 28.06 percent from the US$35.78 million worth of cement exported in November 2013, and by 25.7 percent more than the quantity exported in October 2014.

On the domestic level, the cement market grew by 9.39 percent during the same period. North based cement mills, for instance, dispatched 8.872 million tons to domestic markets, by 11.3 percent more than it had in the same period in 2013.

Reluctance in cutting prices Though the cement industry in Pakistan will be the biggest beneficiary of the re-

duction in electricity tariff, manufacturers across the country are said to be reluctant in reducing cost benefit to the consumers.

The sector is thought to gain Rs 2.32 per kilowatts per hour from the cut in power tariffs. With electricity charges accounting for 18-28 percent of the total manufacturing costs for cement companies, one would expect the cut in tariffs to be great news, yet analysts clam that that the magnitude of this positivity remains minimal.

Furthermore, another reason why the price of cement will not drop derives from the change in region wise maximum retail price and corresponding sales tax.

Under the third schedule, sales tax was applicable on maximum retail price prevailing in the country, and not according to the zine. Starting with 2015, the sales tax will be calculated on region-wise basis, meaning that there will be different maximum retail price standards for the North and the South zones.

Arghakhanchi Cement

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orders & equipment

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highlights

rders & equipment

Sanghi Industries to invest in renewable energy and port development Sanghi Industries, one of the most important cement manufacturers in western India, has announced its plans to invest Rs 250 crore over the next couple of years in renewable energy and port development.

As such, the company will invest Rs 150 crore in a new 15 MW waste heat recovery system and Rs 100 crore to develop its facilities at Navlakhi Port in Gujarat.

The waste heat recovery project is underway, a contract having been signed for its installation at Sanghi Industries’ cement plant in Kutch, Gujarat. With this system, Sanghi will recover more than 70 percent waste heat generated from its cement manufacturing process, as well as saving valuable fossil fuels.

Moreover, to conserve coastal soil, the company will plant mangrove on over 200 hectares on the Gujarat coast. The purpose of this initiative is to protect the ecology and coastal environment, as well as improve socio-economic development.

HaldorTopse and FLSmidth to market catalytic filter bag technology HaldorTopsoe, a world leader in catalysis, along with FLSmidth, leading supplier of equipment and services to the global cement and minerals industries, have signed an agreement to commercialize a newly developed catalytic filter bag technology.

The product, which will be called EnviroTex catalytic filter bags and will be capable to remove dust, volatile organic compounds and nitrogen oxides in one integrated and cost-effective process. The cement sector is a targeted one for the product.

The feature that separates this product from similar ones on the market is that the EnviroTex consists of three layers of filter fabric, each layer containing a tailored catalyst optimized for the removal of specific kinds of compounds from the off-gas that passes through it.

Talking about the collaboration between the two companies, Thomas Schulz, CEO

in FLSmidth, stated that “The beauty of this collaboration is that we can fully leverage each other’s strengths and market presence and efficiently target a global market opportunity.

EnviroTex(TM) catalytic filter bags allow customers to upgrade their environmental equipment to fulfill tightened legislation at low cost and with minimum influence on existing production equipment.”

The new product will be manufactured at FLSmidth’s bag production facilities in Georgia, USA, whereas the filter bags will be assembled at Topsoe’s catalyst production site in Houstan, Texas.

LOESCHE is building the largest mill type LM Loesche is now building the largest mill type LM 7.4+4 Cope Drive, successfully adapting its module concept to a greater mill output. The development of the 4+4 grinding model offers more flexibility, allowing both throughout capacity to be achieved or 60 percent capacity, The development of the new mill came as a consequence of the increasing demands on the market, cement producers across the work being eager to increase their performance and requiring equipment that would enable them to do so.

Cope gearbox from Renx to Loesche Mill

39 November - December 2014

The 4+4 concept module for the new Loesche mill

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

There are some notable improvement to this model. First of all, Loesche is making use of the COPE gearbox developed in cooperation with Renk. The gear offers a redundancy of up to 8 motors at the motor end, achieving a capacity totaling 8.8 MW.

Infrastructure & projects

I

nfrastructure & projects

India’s cement sector to be strengthened by more construction projects According to Finance’s Union Minister ArunJaitley, the efforts of Modi’s government to revive the flagging housing and highways infrastructure sector would help cement demand in India reach the high levels it had enjoyed during the early 2000s.

The minister made the statement in replying to India Cements’ N Srinivasan’s statement on the cement industry during an interactive session organized by the Confederation of Indian Industry. During his intervention, N Srinivasan stressed that the drastic set back in demand experienced during the last decade has forced cement plants to consistently operate at less than 55 percent capacity.

ArunJaitley assured the India Cements owner that the situation regarding cement demand in India would start improving, though at a slow pace, once the government’s efforts to revive projects in housing and highways begin to pay off.

Jaitley began by pointing out that the issue is part of the legacy that had been handed down by a decade of UPA rule. But, the

Minister assured Srinivasan, the situation should begin improving, albeit slowly, once governmental efforts to revive Highways and Housing begin to pay off.

Residential projects Illegal construction grows after floods After the Jhelum River caused major damage during the floods, illegal constructions became rampant in the state of Jammu and Kashmir, prompting authorities to take action.

According to shopkeepers in the state, many people have illegally converted their small temporary shops into permanent ones following the flood. The government has turned a blind eye to the construction work post flood, and some people have even been adding additional floors to their shops.

Infrastructure Gujarat received notable funds for tourist infrastructure Under the UPA government, Gujarat received Rs 2,903 crore for the development

of tourism infrastructure. Mahesh Sharma, Minster of State for Tourism, said that of the total 50 circuit tours in India, two are located in the state of Gujarat. The central government sanctioned Rs 1,033 crore for the development of 153 tourism infrastructure projects in 2012-2013, Rs 1,664 crore for similar 226 similar projects in 2013-2024 and Rs 205 crore during the current financial year.

Chief Minister of Bombay to set up a mechanism to monitor infrastructure projects An estimated Rs 1 lakh crore are riding on large scale infrastructure projects in the state during the coming year, and as such chief minister DavendraFadnavis is keen on setting up a mechanism within his office which will closely monitor the infrastructure projects.

The “war room”on infrastructure, though it could be formally be given a different name, will be the setting in which minister Fadnavis will review important projects as to ensure that officials stick to their deadlines and coordination is in place. There are 10 large infrastructure projects that will be closely supervised, including the coastal

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infrastructure & projects The two bypasses are located at Sangrur (11 kilometers) and Dhanaula (25 kilometers) are worth Rs 251 crore. NP Singh, executive engineer at NHAI, stated that even though the tenders for the bypassers have already been allotted to Patel Infra, the government is highly likely to invite other tenders for other remaining projects, like the bypass from Patiala to Bathinda. road, the Navi Mumbai airport, the second and third Mumbai Metro line, the Mumbai trans-harbor line and the Nagpur Metro.

A senior official inside the state government has stated that the past track record of earlier governments in completing infrastructure projects has been under the expected standard, with the Navi Mumbai airport, for instance, having been delayed by a decade. The official has also mentioned that completing these projects within the assigned deadline is dependent on the minister’s overseeing over the projects and on his holding the city’s agencies and top officials accountable.

NHAI attempts to move funds for road infrastructure projects The National Highways Authority of India (NHAI) has been having a hard time in raising funds for infrastructure projects because private players and banks have repeatedly pulled out of projects, as well as because of the economic slowdown experienced over the last few year. Nonetheless, with the development of the road sector being a key sector for the Modi government, the Finance Minister, ArunJaitley, has announced during his budget speech in July the allocation of Rs 37,850 crore (or US$6.2 billion) for road building plans via the NHAI. As such, the road ministry has decided on the increase of NHAI’s market borrowing limit of INR9,000 to INR30,000 crore, a decision which comes as a great help for the Authority in completing the infrastructure plans across the country.

During the last quarter of 2014, NIHAI has managed to award projects worth INR20,000 crore.

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November - December 2014

Construction progressing at KundliManesarPalwal expressway India’s ministry of road transport and highways made a statement expressing its disinclination in taking over the construction of the jeopardized 136 kilometers of the KundliManesarPalwal (KMP) expressway if the Haryana government does not clear the project of all financial liabilities.

The KMP project is running behind schedule by over five years, being tangled in legal and financial complications. As such, during a meeting between central and Haryana officials, top central officials advised the Haryana government to terminate the concession agreement for the KMP Expressway.

A Haryana official stated that there are only two options to be accessed: be it that the concession agreement is terminated, or going in for settlement of liability as per the actual cost of construction. The same official amended that only the latter option is a viable one since the former one would imply the lenders not getting any capital back.

The New Delhi government approved a termination payment of Rs 1,300 crore to be paid to concessionaire and lenders as settlement payment, but the BJP government disapproved the amount. More so, the state government has also filed an affidavit in the Supreme Court stating that the termination payment of Rs 1,300 crore needs to be revisited since new evaluations have to be made.

Gujarat company signs for two bypasses for National Highway-64 The Rajkot-based company Patel Infra has been allocated tenders to build two bypasses on the Zirakpur-Bathinda road (National Highway-64) by the National Highway Authority of India (NHAI).

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

The project for the widening of the Zirakpur-BAthinda, which has often been referred to as the lifeline of the Malwa region, started back in 2008, but could not take off for lack of bidders even after six year. As such, the government decided to complete the pending project by funding it under the engineer, procure and construct mode (EPC).

Plots to be handed over for Metro 3 line in Mumbai The construction of the fully underground Metro 3 line in Mumbai will require the temporary handing over of 14 plots of civic body, including seven public gardens and three pay-and-park areas.

The Mumbai Metro Rail Corporation (MMRCL) will take into custody on a leaveand-license basis for 11 months at Re 1 per plot, and will be used to construct underground stations and entry and exit points.

The MMRCl asked for 16 plots in order to avoid difficulties in obtaining clearances separately, but did not receive two plots it had required, namely one owned by Nair Hospital that will be used for the expansion of the hospital, and the Nehr Science Centre, which belongs to the state government.

The plots that have been handed over include the Colaba Woods garden, Bhatia garden, Rotary garden and a playground behind the Siddhivinayak temple in Dadar.

There are 36 conditions under which the civil authority in Mumbai agreed the handing over of the plants, such as restoring the plots to their original condition before they are returned and getting independent clearances from roads, storm-water drains and hydraulic engineer’s departments before beginning digging.

analyst recommendations UltraTech Cement Equities at IIFL Private Wealth Management recommenda “BUY”for UltraTech Cement stocks, but on dips. Anuj Jain, director of the company, said that a good buying point for UltraTech is closer to Rs 3,000 or Rs 2,900. The stocks have used up most of the steam when it closed during the second to last Friday of the month, so there is a possibility of a couple of them going a couple of percentages down before they move up UltraTechis moving forwards with its Indian expansion plans, securing its position as the leading Indian cement producer in the country. More so, rumors are circulating about the company’s intentions of buying assets following the Lafarge-Holcim merger in Brazil.

Prism Cement Analyse India recommends “BUY” for Prism Cement because its stocks have been reaching all-time highs. NooreshMerani, CEO of Analyse India, said that in a bull market an outperformer which has been a strong underperformer over the years makes for a preferable option. On January 23rd, a Prism Cement share was traded at

Rs 107.00, having hit an all time high of Rs 108.4 on January 22nd.

Ambuja Cements Analyse India offered a similar recommendation for Ambuja Cements. The company’s stocks have reached an alltime high of Rs 250.95 on January 23rd after staying at a steady level of Rs 210-220 throught the last quarter of 2014. Ambuja stocks will probably move upward on the long term being driven by the forecasted good performance of the entire cement sector during 2015.

ACC

cial Services is bullish on Orient Cement, recommending a “BUY” and accumulate rating on the stock with a target price of Rs 218. The company’s EBITDA stood at Rs 67 million, by 15 lower than estimated. Realizations decline 4.2 percent quarter-over-quarter because of the decline in coal and diesel prices.

The capacity expansion of 3 million tons per year the company has commissioned by the first quarter of FY16 in Karnataka would lead to volume CAGRof 14.3 percent. This improvement in margins is thought to lead to an improved EBITDA. India Cements

SudarchanSukhani of 2analystics.com recommends “BUY” for ACC with a target of Rs 1,600 and stop loss of Rs 1,519.

ACChas been forming a good base around Rs 1,350-1,400 levels, outperforming other competitiors. ICICI recommende going low on ACC stocks.

ACC has seen a good surge in cement stocks as well as a hike in cement prices Orient Cement Brokerage house Emkay Global Finan-

Emkay Global Financial Services is bearish on India Cements, recommending a rating of “SELL” on the stock. The target price recommended is of Rs 90. With EBITDA coming below expectations because of higher energy and freight cost, weak demand and volumes decline, analysts at Emkay downgraded India Cements’ stock on account of lack of positive triggers. The delay in monetization plans of existing assets has also been quoted as part of the reason why India Cements’ stocks should be sold.

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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 China Construction and Lafarge Shui On Cement sign strategic agreement

2 Andhra Cements begins production at two new plants in India

2 Cement companies in Saudi Arabia to expand to meet growing demand

3 India’s UltraTech Cement considers buying Jaiprakash cement plants

3 Cemex wants to expand mining operations north of Brooksville, Florida

4 Holcim and Lafarge merger well on track in India

4 Lafarge Africa Plc expands production capacity in Nigeria

5 Cement shortage hits realty sector in India

5 Atlantic Cement builds new plant in Morocco

6 India’s Dalmia Cement Bharat moves to consolidate its presence in the eastern region

6 Lafarge Canada to expand operation near Caledon village

7 India’s JSW Cement moves to increase production by over four-fold

7 New cement plant to be established in Angola

8 India’s Kutch region to have new cement plants

8 Chinese cement production rose in January-October

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

9 Holcim develops educational forest in Indonesia

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

10 Cement company in Saudi Arabia to establish new production line

11 India’s UltraTech Cement plans new greenfield expansion phase

11 Holcim and Lafarge name management for merged company

12 Cement prices in India to rise further

12 Mexican Elementia eyes IPO in early 2015

13 Production of India’s Ultratech Cement will not be affected by limestone mines cancellation

13 Three groups fight over Lafarge and Holcim assets

14 India’s Birla Corporation posts decline in net profit

14 Mexican businessman to become the largest shareholder of Spanish FCC

15 India’s Cement Manufacturers Association calls for cut on cement overall tax

15 Major cement manufacturers in Nigeria battle for cement market dominance

16 India’s Mangalam Cement completes expansion

16 Tokyo Cement’s Board of Directors moves to amalgamate Fuji Cement

17 India to benefit from lower commodity prices

17 CRH streamlines ahead of possible bids for Lafarge and Holcim assets

18 India’s Shiva Cement boosts cement and clinker dispatches

18 Lafarge plans takeover of Romania’s AGEM

19 Indian steel maker SAIL sells stake to JV

19 Lafarge Ash Resources seeks to have fly ash exempted as hazardous waste

20 India’s UltraTech Cement to raise funds for Holcim’s Brazilian assets purchase

20 New cement plant to be built in Algeria

43 November - December 2014

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

CW GROUP MEETING AGENDA The CW Group will be hosting and participating in a number of webinars and conferences.

We invite you to join us on-line or in person at the events to discuss our views of the industry.

Conferences where the CW Group will be presenting

WORLD PULP & PAPER

Cement Business & Industry (CBI) Brazil & LatAm 2015

February 4 - 5, 2015

Sao Paulo, Brazil

BrasCon 2015

March 4 - 5 2015

S達o Paulo, Brasil

AshTrade Europe 2015 Fly Ash Industry Conference

April, 22-23 2015

Frankfurt, Germany

WPP Brazil & LatAm 2015

15 e 16 de Abril de 2015

Sao Paulo, Brazil

Cement Business & Industry (CBI) Africa 2015

June 25-26, 2015

Johannesburg, South Africa

webinars hosted by cw research

Global Slag Markets:

A quick look at the past year February 5, 2015 at 2:00 PM GMT

cw summits

2015

CW Summit Middle East 2015 December, 2015 Dubai, UAE

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

REGISTER NOW! A CEMENT AND LIME INDUSTRY CONFERENCE AND EXHIBITION BY

LOCAL CONTACT

NOVEMBER

SUPPORTED BY:

CemWeek CemWeek

NEW DELHI, INDIA

ABHISHEK JAYAKUMAR Business Development Manager aj@gmiforum.com 91 9004469779

GLOBAL CONTACT BEATRICE ENE Client Development & Marketing Director be@gmiforum.com +40 722 764 802

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