India Cement & Construction Materials (vol 1 / issue 14)

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Cement issue 14

september/october 2013

& construction Materials

next stage in vertical roller mills

JAIPRAKASH ASSOCIATES CLOSES DEAL TO SELL CEMENT PLANTS

cw research update:

world cement volume outlook News

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Analysis

|

Market Coverage

|

Interviews

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People

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FEATURES 4 10 16

DEPARTMENTS

WORLD CEMENT VOLUME OUTLOOK World cement demand climbing out of stall speed?

1

EDITORIAL LETTER

2

NUMBERS IN BRIEF

When the going gets tough, the tough get going

JP Associates Deal closed to sell cement plants

Next stage in vertical roller mills Power limits pushed a long way upwards

46

Cement volume growth remains strong

20

south east asia focus Indian cement traders awaiting better times

24

coal market update

25

energy price update

28

table summary

construction & building materials 44

INFRASTRUCTURE & PROJECTS Mumbai will play host to World Trade Center twin towers while Andra Pradesh is to see a new 4 berths port growing at Duggarajupatnam, Nellore district.

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letter from the editor

When the going gets tough, the tough get going The industry is going through tough times, but there is definitely light at the end of the tunnel. At least this seems to suggest the charts and figures recently released by CW Research, as part of the twice-a-year updated Global Cement Volume Forecast Report. And as the word goes, when the going gets tough, the tough get going, or at least they should be, since there is just a bit more time needed before we may all bask in the sunshine of a recovering cement sector.

For this issue of India Cement & Con­ struction Materials Journal we had the exclusive opportunity to go through the detailed, data oriented, GCVFR report, and bring you the highlights of the extensive analysis undertaken by CW researchers. Our feature is focused on the trends and evolutions of the industry for the present and the next five years. Although the future is still shad-

ed by signs of weakness in various markets, CW Research believes the worst part is almost over, and we invite you to see why.

We then go into the reasons which pushed India’s JP Associates to recently ink a deal with UltraTech for its Gujarat unit. This would be the second merger between two Indian majors this monsoon season, after the ACC & Ambuja one. If Holcim however was eager to consolidate its Indian operations, you’ll have to go through the whole feature to find out why JK decided to say yes to a deal which under-valuated the Gujarat asset.

In the third feature of this issue, ICCM editors went tech and decided to present two technologically-advanced multi-drive solutions for vertical roller mills designed

by Siemens. See in this dedicated feature how these solutions provide superior out-

put capacity in an energy-efficient and economical way.

Finally, CW Research analysts take their usual look at the South East Asia cement volumes and the global cemenergy markets, providing a charts & figures-packed snapshot of the main industry trends, inside our Research and Analytics section.

Your opinions are important to us. As such, please don’t forget to write us - either to share a contribution or your feed-back.

Should you wish to do so, please contact us at editor@cemweek.com

Robert Madeira

Publisher and Head of Research

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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NUMBERS IN BRIEF

YOY CEMENT VOLUME GROWTH REMAINS STRONG; PRICES OVER 20 RUPEES SINCE BEGINNING OF THE YEAR Cement production volume has despite the negative news, remained resilient and is up over seventh percent for the calendar year months of the year.

CEMENT PRICES (RS PER 50 KG BAG) North

Central

East

South

West

350

250

MAR-12

APR-12

MAY-12

JUN-12

JUL-12

AUG-12

SEP-12

OCT-12

NOV-12

DEC-12

JAN-13

FEB-13

MAR-13

APR-13

MAY-13

JUN-13

JUL-13

SOURCE: CW Research

300

Prices seemed to have strengthened pretty much across all regions in India for the period, though they may continue sideways into the seasonally weaker months.

PAN INDIA CEMENT VOLUME (TONS) 2009

2010

2011

2013

2012

25,000,000

10,000,000

2

JAN

FEB

SEPTEMBER/OCTOBER 2013

MAR

APR

MAY

JUN

JUL

AUG

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

SEPT

OCT

NOV

BMWeek

DEC

SOURCE: CW Research

17,500,000

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.

CW Group Hosted Executive Summits: CW Group's Middle East Cement December 10Finance, Strategy & Trade 11, 2013 Summit 2013

• Dubai, UAE

Conferences where the CW Group will be presenting: Solid Fuel Summit (SFS) India 2013

October 7-8, 2013

• Hilton Mumbai International Airport Hotel • Mumbai, India

Cement Business & Industry (CBI) India 2013

October 9-10, 2013

• Hilton Mumbai International Airport Hotel • Mumbai, India

CBI Brazil & LatAm 2014 Cement & Lime Conference

February 5-6, 2014

• Hilton Morumbi • Sao Paulo, Brazil

CW Research & Analytics Webinars: The world of White Cement - a bright spot in a gray world?

October 24, 2013 at 2:00 PM GMT

Brazil & Americas Cement Business Sentiment Update

October 31, 2013 at 2:00 PM GMT

feature

World cement demand climbing out of stall speed?

CW Research’s just released 2H2013 Global Cement Volume Forecast Report (GCVFR), published in early September, indicates that cement markets around the world seem to be stabilizing, even as much Europe is further downgraded and some emerging markets disappoint. Fiscal woes, offset by commercial construction activity, will help keep the India long-term trajectory positive.

4

SEPTEMBER/OCTOBER 2013

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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feature

W Research’s forecast for the current year cement consumption was revised to 3.9 billion tons, up 4.9 percent compared to last year.

However, in the mid-2013 update, world cement ex-China consumption growth rate advanced at its slowest pace since the crisis in 2008 – 2009, rising only 2.7 percent to 1.6 billion tons. India cement demand is expected to expand over seven percent per year on average through 2017.

“Even though we have a bottom-up approach where we model each country individually, we can see in the aggregate, as the global economy remains mired in a morass of headwinds, optimism having waned in many markets at a dramatic pace.

Geopolitical issues aside, weaker global resource trade keeps pressuring emerging markets, fuelling inflation in some cases, lack of public spending in others. The drag is taking its toll on construction and we are materially less optimistic about 2013 and 2014 than we were six months ago,” Robert Madeira, CW Group Managing Direc-

6

SEPTEMBER/OCTOBER 2013

We see the India mediumand long-term growth story intact.”

“

tor and Head of Research exclusively commented for ICCM. He added: “We see the India medium- and long-term growth story intact, even as we see weakness coming out of 2012 and into 2013.”

Indian capacity utilization remains a concern as the country utilizes slightly more than two-thirds of its more than 350 million tons per year production potential.

The softening of domestic demand has further exacerbated the capacity utilization issue. One of the most important factors influencing the domestic consumption slowdown has been the constant delay

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in infrastructure projects budgeted for this year. Many of the projects announced to start during Q1 2013 have been rescheduled. It is widely believed that the Indian government may even decide to cancel some of the planned infrastructure projects due to spending cuts, especially in light of a rapidly depreciating rupee.

For many regions growth remains muted and uncertain, but China has surprised and defied earlier predictions of a demise as the government has poured resources into the infrastructure construction sector as a favored conduit of economic stimulus.

Chart: Global Consumption forecast (‘12-‘17) & comparison to last forecast

LH-axis: Mm tons; RH-axis: change in CW Group forecast vs last update; bars show CW Group forecast as of 1H2013 & Fcst

0.2% 2012

2013 E

Africa is just a bit better, but and the overall situation looks gloomy, at least in the short run driven by troubled Northern markets. The forecast for the region as a whole is thus down and the trend is driven by the important, relatively large markets in the north, from Morocco in the west, where consumption is highly influenced by housing policy, to regional giant Egypt in the east, where the situation is particu-

4,521

4,573 4,313

4,113

4,128

3,916

0.2%

10% 8% 6% 4%

0.4% 2014

0.7%

1.8%

1.1%

2015

larly difficult as a result of civil unrest and security risks. But there are some exciting exceptions, from of Algeria, which has emerged as a leading regional cement importer, taking over the mantle from Nigeria.

With the upward revision in the Chinese outlook, the 2013 Global Cement Volume Forecast Report outlook has been raised on the back of a strong production growth in the first half of 2013, which also contributed to an upswing of the longer-term revised trend. As a result, the world cement volume forecast expanded upwards 0.2 percent for 2013 and 0.4 percent for 2014.

Overall, cement consumption is expected to expand by 5.2 percent per year on average through 2017.

Excluding China, we remain with a 4.9 percent growth per year on average, generated outside Asia’s giant.

2016

2017

2% 0%

SOURCE: CW Research

3,400

3,732

3,800

3,739

4,200

3,923

4,600

4,342

5,000

4,735

1H2013

4,818

2H2013

Regional dynamics confirm global evolutions A brief look at the CW Research data from a regional perspective reveals similar patterns for the cement industry mainly contractions for the near future, followed by positive growth in the medium and long run. Figures indicate major episodic volume dips that CW Research believes will mean revert - for instance in the U.S., Brazil and India. Nonetheless, the suffering for these markets is part of a developing process, while others, also undergoing important structural contractions, such as Spain and Greece, are unlikely to reach their former glory again in the medium term.

The downward revisions for the current and the next year revisions are not only limited to the developed markets of Western Europe, but CW Research also sees traditional growth markets slowing down almost to a standstill. Examples include Brazil, Egypt, Colombia and India – the latter to a lesser extent. This puts a negative drag on the evolutions in Latin America and Africa, in particular in the short term.

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CW Research also sees traditional growth markets slowing down almost to a standstill.”

“

Chart: Forecast revisions by Region (1H2013 vs 2H2013 update) YoY consumption change, percentage

2% 1% 0% -1% -2% -4% NORTH

-5% AMERICA

LATIN AMERICA

2012

8

SEPTEMBER/OCTOBER 2013

WESTERN EUROPE

2013

E EUROPE & CIS

2014

MIDDLE EAST

2015

2016

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AFRICA

2017

ASIA EX-CHINA

CHINA

SOURCE: CW Research

-3%

“The much-expected bounce-back of North America is somewhat late to arrive in 2013, but there is hope for 2014. Western Europe, on the other hand, will most probably stay into the red for the entire forecast period,” said Claudia Stefanoiu, Senior Analyst with the CW Research team. “The Africa contraction in 2013 was driven by political instability, but the effect was offset by strong growth in many markets of the Sub-Saharan region,” Stefanoiu added.

Across many countries in the emerging markets, the cement sectors have been hit hard as a result of the global economic conditions, and this is increasingly showing up in local construction activity and cement demand. Notably, in the Americas, Brazil, Colombia and Mexico have all slowed down, while India, though still

expected to expand in 2013 is fraying at the edges. As a barometer, before the U.S. economic activity starts picking up, CW Research estimates that several disparate markets worldwide will continue to struggling and face volatile conditions.

Forecast points to sluggish global market Beyond 2013, global growth will remain sluggish through 2017. European countries will be hit harder while some recovery is expected in most countries in Latin America and Asia. China will maintain its position as the world’s leader in cement consumption, with its share of the global market jumping to almost 60 percent starting 2013. The biggest loser will be Western Europe, whose share will decrease from 5.4 percent in 2009 to 2.6 percent in 2017.

Questioned on whether there is some light in sight for the global cement industry, CW Group’s Robert Madeira said: “We do feel that we are bouncing around the low point in many key markets.

This should set the stage for a recovery, though we may continue to see volatility in volumes, as global as well as local uncertainties work themselves through the system. Capacity additions are likely to be muted, as risk appetite in many markets is weaker and operators are more careful in placing bets. However, as someone said: “there is always a bull market somewhere” – the current environment just requires more discipline in identifying these opportunities than historically perhaps, but they are out there.”

There is always a bull market somewhere.”

“

Heatmap: 2013-17 YoY Outlook Growth

-2% to -1%

-1% to 1%

1% to 2%

2% to 4%

4% to 5%

5% to 6%

6% to 8%

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

8% to 9%

9% +

SOURCE: CW Research

YoY percent change in consumption growth (tons)

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feature

Jaiprakash Associates closes deal to sell cement plants In a move that was long anticipated, Jaiprakash Associates Ltd announced it has reached an agreement with Ultratech to sell its Gujarat cement units. It took Jaiprakash Associates more than a year and a few unsuccessful attempts, to find a suitor and close a deal, in the middle of a rapidly contracting Indian economy.

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SEPTEMBER/OCTOBER 2013

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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feature Company background Jaiprakash Associates, formed in 1979, is an infrastructure conglomerate based in Noida, India, engaged in engineering, power, construction, cement, expressways, real estate and hospitality. Through its more than 30 years of service to the Indian market, the group has participated in several iconic projects such as the Yamuna Expressway and the Buddh International Circuit, venue for the annual For-

mula One Indian Grand Prix. The company stocks were first listed in the Bombay Stock Exchange in 1987.

One of the more critical components of the group’s business is cement production.

The first cement unit, with a total capacity of 1 million ton per year, was commissioned in 1986. The Jaypee Rewa Plant (JRP) located in District Rewa, Madhya Pradesh (MP) marked the beginning of

the group in the cement business. The 1.5 million tons per year second unit came online at the Rewa plant in 1991, followed by the Bela plant in 1996 (1.7 million tons per year).

Subsequent acquisitions and greenfields increased the capacity of the company almost 140 times from its original footprint, making Jaiprakash Associates the third largest cement producer in India, with

JAIPRAKASH ASSOCIATES CEMENT GEOGRAPHICAL SPREAD

Islamabad Lahore

Pakistan New Delhi

Nepal

Jaipur

India

Kolkata

Hyderabad

Pune

Bangalore Chennai

a total capacity of 35 million tons per year.

In November 2011, Jaiprakash Associates merged its Gujarat and Andhra Pradesh plants with its Jaypee Cement Corporation

SEPTEMBER/OCTOBER 2013

bhutan

Banglades

Gujarat

12

Through its more than 30 years of service to the Indian market, the group has participated in several iconic projects.”

“

Tajikistan

Bay of Bengal

Limited (JCCL), a wholly-owned subsidiary engaged in cement production in west and south India, with a capacity of 9.8 million tons per year. JCCL is currently setting

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up an integrated cement plant at Shahabad district Gulbarga, Karnataka. The project is expected to be online in October 2014.

With Debt-Equity ratio at a critical level of 4.4 by mid-2012, the company decided to ease pressure from debt service payments through divestment of some assets from its cement business.

Jaiprakash Associates started talks with global cement companies to sell its Gujarat and Andhra cement plants. UltraTech, Lafarge, and Holcim expressed interest in acquiring Jaiprakash’s assets.

DEBT/EQUITY RATIO 5.0

4.4

4.0

+114%

-58%

3.0

2.0

2.1

1.9

1.0

0.0

2009

mid-2012

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

2013

SOURCE: JAIPRAKASH ASSOCIATES, REUTERS

A long way to close the deal For the past seven years Jaiprakash Associates had been growing its business and increasing its assets value, but the expansion resulted in a total net debt that reached INR 50,300 crore at the end of the fiscal year 2011-2012. The rising debt translated to massive interest and principal payments that substantially reduced the company’s profit margins.

Meanwhile, the new capital expenditures were not expected to yield sufficient revenues in the near term to aid with debt servicing.

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To halt the negative impact on share prices, Executive Chairman Manoj Gaur clarified that the sale of the Gujarat unit had not been shelved and it was expected to be completed by year-end with the intention of deleveraging the company’s balance sheet. He added that prices had been declining due to different reasons. In May 2012, prices tanked when the Himachal Pradesh High Court ordered the company to pay INR 100 crore in penalties for violation of environmental laws. Prices continued to slide when its 400 MW hydro power plant was shut down due to floods in Uttarakhand. Stock prices fell about 21 percent between May 2012 and August 2012.

14

SEPTEMBER/OCTOBER 2013

JAIPRAKASH ASSOCIATES LTD STOCK PRICE 130 120 110 100 90 80 70 60 50 40 30

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SOURCE: CLOSE PRICE, BOMBAY STOCK EXCHANGE

However, just when market news speculated that negotiations with Ultratech were in its final stages, the company announced that it was shelving plans to sell the Gujarat unit due to inability to arrive at an agreed valuation. JPA stock prices fell by about 8 percent when news of the failed negotiations broke out.

Proceeds from the sale would be utilized to improve Jaiprakash Associates financial position.”

“

JUL-10 SEP-10 NOV-10 JAN-11 MAR-11 MAY-11 JUL-11 SEP-11 NOV-11 JAN-12 MAR-12 MAY-12 JUL-12 SEP-12 NOV-12 JAN-13 MAR-13 MAY-13 JUL-13 SEP-13

Proceeds from the sale would be utilized to improve Jaiprakash Associates financial position and reduce the company’s debt by as much as INR 8,000 crore by year-end.

To give the company breathing room, lenders reduced interest rates from 15 percent to 12.5 percent and restructured loan terms from 10 years to 18 years.

The deal was finally closed in early September and according to company sources the sale of its Gujarat Cement Plant, comprising an integrated 2.4 MTPA Cement Plant at Kutch and a 2.4 MTPA Cement Grinding Unit at Wanakbori, was valued at INR.3,800 Crores or USD 600 million as of mid-September exchange rate, or approximately USD125 per ton of cement.

The challenge ahead for Jaiprakash Associates Considering its penalty woes and debt burden, the road ahead for Jaiprakash Associates will be rocky at best. Critical to its recovery would be the reduction of debt which depends largely on fund-raising efforts. The company is still focused on divesting assets to deleverage its balance sheet.

Meanwhile, even with subdued growth in India’s cement industry the past years, prospects are positive because of the government’s efforts to implement econom-

ic reforms intended to bring the country back into its growth momentum.

Cement demand is projected to improve to as much as 312 MT by 2015 in view of the government’s 12th Five Year Plan (2012-2017).

Under the 12th Five Year Plan (20122017), the government has allocated USD 1 trillion for its infrastructure budget,

USD100 billion of which is targeted for roads and highways alone. To meet such demand, total industry capacity should reach about 400 MTPA. For Jaiprakash Associates, its current cash flow position hinders any new expansion plans for now and funds generated from its cement and real estate business is intended to be used for debt reduction.

INDIA CEMENT DEMAND (MT) 350 300 250 200 150 100 50 0

2006

2007

2008

2009

2010

2011

2012

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

2013

2014

2015

SOURCE: CW Research

After a solid recovery at the end of the year, stock price plummeted from January amid rumors they wouldn’t be able to sell the plants.

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feature

Next stage in vertical roller mills with Siemens technology

Source: courtesy of Siemens

Two compact solutions for the optimum and energy-efficient driving of vertical mills

16 September / October 2013

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look at cement-production figures worldwide reveals considerable growth over the years.

This gives rise to a demand for even higher-performing and naturally economical production systems.

Two new drive solutions from Germany, with outputs of up to 15 MW – that is, just under double the output of common drive solutions today, are aimed at helping to achieve superior output capacity in vertical mills in an energy-efficient and economical way.

Even if Germany is not one of the world’s most important cement producers, German machinery and plant construction plays a major role in global competition due to its innovative solutions for the cement industry area. What we should look at is that cement works are mostly major projects, low ­ investment recovery rates of, for instance, 25 years. Given proper design and with the help of modern technology and maintenance operations, large units may even have useful life-cycles exceeding 30 years.

ly for the requirements of vertical mills used in cement production and they may also be used for crushing slag, lime, gypsum and other materials as well as in the processing of coal.

Despite outstanding mill technology, however, there is a slight snag: the international demand for even larger, more efficient crushers cannot be fully met, as already existi n g

Operation with fixed speeds or solutions with simple speed control repeatedly gives rise to less than optimum operating conditions, resulting in wear, quality reduction and even safety cut-outs.

Moreover, because of the size of the gear-unit housings and the torque transmissible via bevel-gear pairs, a power limit of about eight megawatts results.

Variable-speed drives with high control dynamics as the one found on the Flender Multidrive, on the other hand, ensure quiet operation. Practitioners know that grinding-table speed is optimum when vibration is minimal. Furthermore, with the modular, variable speed drive solutions by Siemens, up to 15 MW of power can be transmitted.

The trick is that up to six independent drive systems drive a common girth gear. The high-dynamic speedtorque control, with appropriate load distribution, thus ensures a high-quality grinding result without excessive stress on the system parts, and for the optimum possible use of energy.

Siemens has developed two gear units and drive systems designed to meet the requirements of both worlds: efficient and durable production capacity and modern, energy-saving technology.

A major factor influencing the total cost of ownership for cement equipment and supporting the demand for economical cement technology is energy efficiency. The approximately five dozen plants in Germany require, by themselves, an electrical energy input of about 3 million MWh each year.

Siemens has developed two gear units and drive systems designed to meet the requirements of both worlds: efficient and durable production capacity and modern, energy-saving technology .

The gear units are designed specifical-

drive concepts are not fully scalable. Siemens is now filling this gap with its Flender Multidrive and Flender EMPP. Power limits pushed a long way upwards The reason for the new development of the Flender Multidrive is that conventional solutions for vertical mills are based on a gear unit with a three-phase asynchronous motor. Frequently one meets such solutions in combination with a bevel-helical planetary gear unit.

Redundancy for uninterrupted grinding operation Thanks to this set-up, this solution creates a high redundancy factor, as every single drive system is mounted on a carriage. If it fails, it is simply taken out of mesh. While the service engineers quietly work on it, the other units continue to drive the girth gear.

At the very worst, there is a brief reduction in production output but not a complete production stop, if, for example, a motor has to be changed.

To ensure as wear-free a drive as possible between the large girth gear and the drive pinion, the latter is self-aligning.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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Variable-speed, dynamically controllable drive solutions ensure that an optimum grinding result can be achieved from the hard raw material – and with an energy-efficient use of resources.

to ensure decoupling of the vibration in the mill structure and the frequency-regulated three-phase asynchronous motors.

Lastly, the new drive solution has a considerably lower installation height than conventional mill drives, a feature which underscores the demand for space optimization and at the same time makes more space for the mill construction.

Compact motor-in-gear-unit solution for up to 15 MW A further new development in the same manufacturer’s range of solutions is the Flender EMPP. This mill drive is based 18

SEPTEMBER/OCTOBER 2013

on a newly developed synchronous motor which is located in the gear-unit housing, below the planetary stages. With outputs of between 500 kW and 15 MW, it is outstandingly suited for middle-sized to very large mills. Thanks to the extremely compact construction, the drives can even be used on retrofit projects. The unit is simply positioned right under the vertical mill.

Identical dimensions to those of conventional gear units mean that neither complicated conversions nor foundation reinforcement are necessary. That also applies to changeover from an existing gear unit to an EMPP drive, because these have the

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Source: courtesy of Siemens

feature

same housing dimensions and require the same foundations and system designs.

Because of the coaxial arrangement of drive motor and output flange, the otherwise usual bevel-gear stage is dispensed with, thus more than offsetting the added cost of the brushless synchronous motor with permanent magnets. Even in comparison with unregulated drive trains, the system proves economical. Depending on the power category, power is transmitted with the aid of one or two planetarygear units located above the motor. One advantage of the EMPP’s modular con-

Source: courtesy of Siemens

The new Flender EMPP drive system for up to 15 MW with a synchronous motor integrated in the gear-unit housing is especially compact and therefore also excellently suited for retrofit projects.

struction is that the motor and the gear unit can be transported separately according to power level, and assembled only when they are on site.

motor. A further plus point is the ATEX certification, which is especially important for coal mills running in environments with highly flammable coal dust.

However, not only is the cost of this new compact solution lower, but also the control dynamics are considerably higher because of the low overall transmission ratio. As in the case of the Flender Multidrive the optimum control thus possible ensures higher efficiency of the grinding table. Furthermore, there are the efficient cooling systems ensuring optimum cooling and the lubrication of gear unit and

A lot of detailed work for long operating times As with the Multidrive, the Flender EMPP offers designers a high degree of flexibility, because the integration of the motor into the gear unit means a quarter less overall installation volume and weight. By comparison with a system with one bevel-gear and two planetary gear stages, this drive system has about 20 percent fewer active

parts. The possible number of fault sources decreases accordingly, thus increasing availability as well.

Furthermore, there are other advantages with immediate positive effect in operation. These include the force-lubricated sliding bearings in the motor and gear unit, which prolong service life. The frequency inverter included allows easy decoupling from the power supply, meaning that power surges due to short circuits in the network have little or no effect, which ltimately contributes to extending the service life of vertical mills.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

19 Week CW Group CemWeek BMWeek September / October 2013 Coal CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group Coal Week

CW Group CW Group CW Group

CEMENT

CW Research & Analytics CemWeek BMWeek CemWeek BMWeek CemWeek BMWeek

SOUTH-EAST ASIA FOCUS

INDIAN CEMENT TRADERS AWAITING BETTER TIMES India’s 1H 2013 cement exports fell behind the level reached in the first six months of last year. Indian cement companies exported 0.95 million tons of cement between January and June 2013, while cement exports topped 0.98 million tons in 1H 2012.

The decline was mostly driven by Nepal, which registered a 21.5-percent slump in cement imports in the first half of 2013 (165,000 tons in 1H 2013 versus 210,000 tons in 1H 2012). The new Nepalese cement plants commissioned in the first ten months of FY2012-2013 have progressively led the country to self-sufficiency. However, some cement imports are still entering Nepal, due to the number of ongoing development projects with foreign investment for which the government has provided customs, tax, and VAT waivers on cement imports from India.

On the other hand, Sri Lanka remains a strong market for Indian cement traders, with almost 0.63 million tons imported in 1H 2013 (5 percent increase over 1H 2012). The rise is even more impressive when considering that domestic demand was down 7 percent in the first half of 2013. The second half of 2013 is projected to fare better.

Holcim Lanka expects the country to close 2013 with a marginal 2 percent decline in cement demand. Operating in these challenging conditions, it is unlikely that Indian cement traders will be able to benefit once again from peak volumes similar to those registered last year in October and November.

INDIA MONTHLY CEMENT EXPORTS STRUCTURE (TONS) Nepal

Others

To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748 20 SEPTEMBER/OCTOBER 2013

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

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Jun-12

May-12

Apr-12

Mar-12

Feb-12

Jan-12

300,000 250,000 200,000 150,000 100,000 50,000 0

SOURCE: CW Group Analysis

Sri Lanka

CEMENT

oal Week oal Week oal Week

India’s cement imports continued to plummet and eventually closed the first half of 2013 at below 0.24 million tons, a sharp decline compared with the 0.42 million tons imported between January and June 2012. The 43.2-percent decline was severely felt by Pakistani cement traders, who reported an all-time low for their cement exports to India. It is important to note that in June 2013 Pakistan managed to export to India a considerably higher cement volume (49,000 tons versus the 12,000 tons average monthly volume for January-May). However, the revival of cement exports came on the back of plummeting FOB cement prices.

FOB EXPORT PRICE TO INDIA (USD/TON)

Pakistan

Bangladesh

100 80 60 40

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

Nov-10

Sep-10

Jul-10

May-10

Mar-10

Jan-10

Nov-09

Sep-09

Jul-09

May-09

Mar-09

Jan-09

0

SOURCE: CW Group Analysis

20

Pakistan was not able to keep a high level of cement exports to India despite the discussions, yet to be concluded, surrounding the granting of Most-Favored Nation (MFN) status to India. In fact, the expected boom in trade, after a further strengthening of Indian-Pakistani ties, is far from being fulfilled.

The highest volume of cement exports to India was registered in FY 2007-2008 (0.79 million tons) and has plummeted since. In FY 2012-2013, when Pakistan was about to offer MFN status to India after reassurance that non-trade barriers would be removed, Portland cement exports notched a disappointing 0.25 million tons.

Although in July 2013 rumors of declining Bangladeshi exports to India, on the back of a falling rupee, flooded the market, Bangladesh-based cement traders exported almost 3 percent more cement to India in the first half of the year than in the corresponding period of 2012. An interesting development in the Indian-Bangladeshi trade relationship came in August 2013 from the clinker side, as India’s Star Cement became the first company to opt for a riverine route for clinker exports to Bangladesh. The company is aiming to export a monthly volume of 50,000 tons of clinker using the recently-opened route. Star Cement tested exports by road in 2012 in a pilot project, which was deemed inefficient.

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INDIA MONTHLY CEMENT IMPORTS STRUCTURE (TONS)

Bangladesh

Pakistan

Others

80,000 60,000

20,000

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Jun-12

May-12

Apr-12

Mar-12

Feb-12

Jan-12

0

SOURCE: CW Group Analysis

40,000

As the cement market entered the monsoon season, cement demand slid from this year’s maximum volume of 24.1 million tons in March to 19.6 million tons in June.

Cement demand is expected to have picked up earlier this year, since the monsoon started to retreat in the beginning of September, a week earlier than its usual pattern.

In a recent development, the depreciating rupee intensified the lookout of Indian cement companies for exporting markets. India Cements stated that it intends to increase cement exports to Sri Lanka and to foray into the South African cement markets, while Dalmia Bharat Enterprises aims to initiate exports to Myanmar and East African countries by the end of this fiscal year.

INDIA MONTHLY CEMENT PRODUCTION AND CONSUMPTION (TONS) Cement Production

Cement Consumption

30,000,000 25,000,000 20,000,000 15,000,000

5,000,000

To learn more, please contact the CW Research & Analytics team at sales@cwgrp.com or +1-702-430-1748 22

SEPTEMBER/OCTOBER 2013

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Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Jun-12

May-12

Apr-12

Mar-12

Feb-12

0

SOURCE: CW Group Analysis

10,000,000

Jan-12

CEMENT

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The resource for global cement prices The CW Group's Global Cement Trade Price Report includes current pricing for cement delivered through the retail channel as well as import and export pricing for major markets around the world.

Worldwide monthly cement prices

■ Major market retail prices ■ Regional retail price indices ■ Covers grey and white products

Regional monthly cement price indices:

■ ■ ■ ■

Mediterranean basin North America & Caribbean East & Southeast Asia And other regions

Global import and export cement prices:

■ ■ FOB export prices ■ CIF import prices

Global market cement prices.

Import & export trade prices.

All in a single must-have resource.

Annual subscriptions include four quarterly 50+ page reports:

■ ■ ■

Single user: USD2,300 Multi-user (max 3-users): USD3,800 Corporate use: Upon request

Contact us at sales@cwgrp.com to discuss this unique offering further.

We know the cement industry well. Let us guide you. For more information please contact us at inquiries@cwgrp.com or on +1-702-430-17 48 Ave, Box Suite#1658, 12 Larchmont, NY 10538, USA 848132 N. Larchmont Rainbow Blvd., Las Vegas NV, 89107, USA

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CEMENERGY MARKETS

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CEMENT ENERGY MARKETS COAL MARKET UPDATE

Colombia’s coal exports sink after miners go on strike August total trading volume slightly dropped versus the previous month following a decline in Colombia’s coal deliveries. The reduction in output from Colombia comes after a 52-days strike at Drummond’s coal mines. Drummond, a US-based coal miner, produced 26 million tons of coal in 2012, around 30 percent of the total manufactured in the country. The strike reportedly caused a loss of 70,000 to 80,000 tons of coal production per day or an estimated volume of around 4 million tons of coal, for the entire duration of the strike.

According to the local “National Mining Agency”, before the Drummond strike started, Colombia’s coal production during the first six months of the year had declined 13 percent versus 2012, reaching 40.5 million tons. At the beginning of 2013 the local government estimated an output of 97 million tons of coal for the year, which was later revised down to 94 million. Colombian authorities are maintaining their latest estimate untouched after the strike.

COAL GLOBAL TRADING (MILLION TONS) 100

Rest

US

Colombia

South Africa

Russia

Australia

Indonesia

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0

Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13

50

CEMENERGY MARKETS

oal Week oal Week oal Week

Indonesia and Australia year-to-date exports look promising. Indonesia rose 20 percent, while Australia is up 15 percent, the last one thanks to an increase in deliveries to Asian countries.

South Africa’s coal output from Richards Bay Coal Terminal (RBCT) declined 16 percent in August 2013 to 5.2 million tons after ramping up 16 percent in July. Volume was mostly affected by a substantial drop of 50 percent in deliveries to South Asia.

In India, Coal India Limited (CIL) announced it will start importing coal to meet supply commitments with power utilities, as the company continues to miss production targets; however, a sliding rupee is tightening conditions for importers and could put pressure on pass-on pricing model defined in the agreement.

The United States Energy Information Administration (EIA) revised its short term forecast and is projecting a decline of 8 percent in coal exports for this year compared to 2012.

ENERGY PRICES UPDATE COAL Coal trading prices in main export hubs remained weak in August. An extended plunge that started at the beginning of the year have put most prices below the US$80 per ton mark, and the average for five of the top exporter countries is now around US$78 per ton, the lowest since November 2009.

STEAM COAL FOB AVERAGE PRICES (US$/TON)

US exported

150

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

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

Aug-13

Jun-13

Apr-13

Feb-13

Dec-12

Oct-12

Aug-12

Jun-12

Apr-12

Feb-12

Dec-11

Oct-11

Aug-11

Jun-11

Apr-11

Feb-11

Dec-10

Oct-10

Aug-10

Jun-10

Apr-10

Feb-10

Dec-09

Oct-09

Aug-09

50

SOURCE: CW Group Analysis

100

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Group Coal Week 25Coal CemWeek CWCW Group Week CemWeek BMWeek SEPTEMBER/OCTOBER 2013 CemWeek CWCW Group Coal Coal Week BMWeek CemWeek Group Week BMWeek CemWeek CWCW CemWeek BMWeek Group Coal Coal Week Group Week

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CEMENERGY MARKETS

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Australia’s Newcastle and South Africa’s Richards Bay are down 17 percent and 18 percent respectively from December 2012. Colombia’s Puerto Bolivar declined slightly in August and is currently at US$84 per ton, after reaching levels of low 100’s in 2011 and 2012.

The average Harga Batubara Acuan (HBA) coal price in Indonesia closed at US$77 per ton in August, going back to the same level it had in January 2010.

In China, the Bohai-rim Steam Coal Price Index (BSPI), which covers six major coal shipping ports in China, slide at the end of August to reach 546 Yuan (US$89), 14 percent below the closing price in December 2012. The decline comes following an effort by local producers to lower their prices in order to compete with foreign imports.

PETCOKE The 12-month average price of U.S. uncalcined petcoke for export markets remained unchanged in July at US$79 per ton. Average annual prices seem to have stabilized after a long slide that started in the fourth quarter of 2011. The downward trend has eased in some markets, especially in India, where the price is now at the same level it was a year ago.

U.S. petcoke export volume rose 15 percent in July following higher shipments to China, India, and Japan. As the economic crisis still hits Europe, U.S. year-to-date petcoke exports to some European markets remain weak. The countries with the US PETCOKE EXPORT PRICE (US$/TON) ROLLING 12-MONTH AVERAGE

120

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SOURCE: CW Group Analysis

Jul-13

Jun-13

May-13

Apr-13

Mar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Jun-12

May-12

Apr-12

Mar-12

Feb-12

Jan-12

Dec-11

Nov-11

Oct-11

Sep-11

Aug-11

0

Jul-11

60

CEMENERGY MARKETS

oal Week oal Week oal Week

highest drop in volume are Ireland (down 84 percent), United Kingdom (down 67 percent), Spain (down 48 percent) and Portugal (down 60 percent).

NATURAL GAS Japan’s Liquefied natural gas (LNG) import price increased for the second consecutive month in July, while the country continues its efforts to lower LNG cost and search for more suppliers. Price is now at US$16/mmBtu, reaching the same level it had one year ago.

In Europe, natural gas price eased in June and July, but the annual average remains high when compared to previous year. Year-to-date price for the first 6 months of 2013 is 6 percent higher than the same period of 2012. Demand in Europe is still sluggish and Russia’s Gazprom, the largest gas supplier to European markets, announced it will cut gas prices for European buyers this year, to deal with tight competition from other suppliers.

In the U.S., Henry Hub spot price declined to US$3.4 per mmBtu in August, after reaching levels over US$4 per mmBtu in April and May, following mild weather conditions in most regions of the country. Prices are expected to remain low as most weather forecasts call for lower temperatures than previously forecasted.

NATURAL GAS PRICES (US$/MMBtu) US

Europe

Japan LNG

20

16

12

8

Aug-13

Dec-12

Apr-12

Aug-11

Dec-10

Apr-10

Aug-09

Dec-08

Apr-08

Aug-07

Dec-06

Apr-06

Aug-05

Dec-04

Apr-04

Aug-03

Dec-02

Apr-02

Aug-01

Dec-00

Apr-00

Aug-99

Dec-98

Apr-98

Aug-97

0

SOURCE: CW Group Analysis

4

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CEMENT PRODUCTION (MILLION TONS)

CEMENT CONSUMPTION (MILLION TONS)

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SOURCE: CW Group Analysis LM: latest month (August except where not speciямБed); MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

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cement

market and competition

M

arket and competition

ndian cement producers’ fortunes go back and forth under monsoon season. While some resume operations and aim for capacity increase, others take to new greenfield projects or take dips on the stock exchange. In the meantime, a new state is ready to emerge on the Indian market from the split of Andra Pradesh.

JK Lakshmi Cement’s Chattishgarh plant has resumed operations after its recent hiatus. In the first half of the next fiscal year, the company is expected to complete an expansion of the plant. The upgrades will increase the plant’s capacity to 8 million tons, up from its current level of 2.7 million tons. This increased capacity may provide a much-needed boost to JK Lakshmi,which has recently watched its stock price fall by 62 percent. This drop represents a notably high one when compared to the average decrease of 42 percent exhibited bythe company’s mid-sized peers. The benefits of JK Lakshmi’s expansion should be evident in its revenues by the second half of the next fiscal year.

Profits and stock values take dip across the board Except in the southern region, where supply currently exceeds demand, profits of cement companies throughout India have been impactedbyreduced demand. In the western and northern regions of the country, where JK Lakshmi Cement’s capacity is located, demand has been impacted by both the scarcity of water and the general economic slowdown. Demand fell by 5

30 SEPTEMBER/OCTOBER 2013

percent, year-over-year, in the June 2013 quarter.In illustration of the situation, the stocks of India's major cement companies lost between 7 and 18 percent in August.

Shree Cement was hit the hardest on the stock exchange, with its counter falling over INR 700, or 17.21 percent. Majors such as ACC and UltraTech Cement, the country's largest cement maker, were not far behind, weakening by 15.5 percent and 14.3 percent, respectively. Ambuja Cements, which has exhibited continuous

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share price declines since Holcim's ownership restructuring announcement in July, lost a little over 7 percent in August.

ACC goes for greenfield project and capacity expansion ACC plans to spend Rs 3,000 crore to expand its capacity in three eastern region Indian states by nearly four million tons per year over the next three years.While the growth strategy includes capacity expansion at two existing plants, the com-

AndraParadesh vs. companies in air pollution case Due to environmental concerns, the Andhra Pradesh Pollution Control Board has ordered closure of the India Cements Limited factory at Yerraguntla and has initiated action against four other cement factories in KadapaDistrict.The decisions stem from non-compliance with Board directions and standards, and activities causing severe air pollution in areas surrounding the factories.The closure orders were issued by APPCB Member-Secretary JanakiKondepi, in the interest of protecting public health and environment. The decision to take action against the factoriesresulted from a hearing conducted by the APPCB on August 5.

To enforce the closure, electricity authorities have been directed to disconnect the power supply to ICL factory.

Utilization rate much below capacity Due to over-construction of capacity and low demand, cement utilization within India is far below current capacity, forcing the country’s cement industry toconsider exporting the building materialto other countries in order to remain competitive.

At current levels, just 60 to 70 percent of the existing capacity in India is in active use for cement production, leaving a large part of the installed capacity idle for want of demand. Even if future economic growth spurs cement demand by boosting the housing, road, and infrastructure sectors, the cement industry will still need to improve its competitiveness.

focus New state planned on Indian map India’s plan to split the state of Andhra Pradesh and to spin off a new state called Telangana appears to be a new business opportunity for Indian cement producers. Indeed, the creation of Telangana is expected to impact Andhra Pradesh’s cement industry less than other industries.

The new state has easy access to the markets of Karnataka and Maharashtra.

In addition, it contains most of the region’s limestone deposits. Availability of limestone, as a critical ingredient of cement production, can elevate growth and infrastructure development in the new state.The government of the new state is expected to create fresh incentives for new investments and also to initiate more infrastructure, housing, and urban development projects. By itself, the creation of a capital for the new state is expected to require infrastructure development of INR 1 lakh crore.

The cement industry in Andhra Pradesh, one of the largest in the country, has around 40 units, with an installed capacity of about 55 million tons. Reflecting its importance, international majors such as CRH of Ireland, Italcementi of Italy, and Vicat of France all have presence in the state. In addition, the industry composition in the state is well-balanced by the

presence of big Indian players such as UltraTech, India Cements, ACC, Jaypee, JSW, Orient, Kesoram, and Madras Cement.

Nevertheless, a recent report stated that cement consumption in Andhra Pradesh has newly fallen by about 4 percent, to 1.6 million tons per month,due to political uncertainty and to delays in projects across sectors. Major cement plants in the state have been operating at less than 50 percent capacity, because construction and expansion projects more than doubled installed capacityin the last five to six years,even as local consumption started to fall.The formation of a new state is expected to inject fresh energy into the regional market, providing a new impetus for growth in cement demand in coastal Andhra Pradesh.

After the split, India Cements will have two plants in each of the two states. In combination, the plants in Andhra Pradesh will have a total capacity of 2.19 million tons, while those in Telengana will have a total capacity of 4.9 million tons. About 45 percent of the forest area in Andhra Pradesh is in the Telangana region, while 20 percent of the country's coal deposits are also found here.

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CEMENT: MARKET AND COMPETITION

pany also expects to start construction of a 1.5 million-ton grinding unit at Kharagpur by next January. The current eastern region capacity of ACC amounts to approximately 6 million tons per year.

In addition, ACC is in talks with the West Bengal government regarding its plan to construct a factory in Kharagpur in West Midnapore district. The new factory would have a capacity of 15 lakh tons and require an investment of INR 600 crore. If it moves ahead, the factory will begin production within the next three years.

cement

m&a and finance

m

&a and finance

5

1

ummer looks like the right season for mergers and acquisitions, at least this year. After Holcim’s consolidation of Indian operations through the merger of ACC and Ambuja Operations, here comes the turn of another long expected deal on the Indian market. Jaiprakash Associates has finally reached a deal with UltraTech Cement for the sale of its Gujarat Unit.

JK & UltraTech Deal signed A final deal between UltraTech Cement and Jaiprakash Associates has finally transferred ownership of Jaiprakash‘s Gujarat cement unit to UltraTech for about 37 billion rupees. The transaction would take about six months to complete, but an agreement may be announced as early as next week. The sale is part of an attempt by Jaiprakash Chairman Manoj Gaur to cut debt. The chairman’s strategy includes selling assets to cut costs and reverse a two-year decline in profit, as a cash crunch prompts lenders to raise interest rates for the first time since 2011.

Of likely concern to Jaiprakash, the valuation of the Gujarat-based cement unit is far lower than it was when talks between the two companies began, early this year.

The unit is currently slated to be sold at USD 130 a ton, compared to its previous price of USD 160 a ton.

hibitively low: selling factories for USD 120 a ton of enterprise value is lower than the asset’s replacement cost.

The Gujarat unit has a cement production capacity of 4.8 million tons per year.

The purchase will help UltraTech increase

Jaiprakash initially expected to get around INR 4,500 crore from the sale, but now will receive a tad below INR 4,000 crore (with one report estimating a valuation of INR 3,700 crore). The value is almost pro-

32 SEPTEMBER/OCTOBER 2013

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its presence in western India, a prospect that has drawn billionaire Kumar Mangalam Birla to the table. Following the sale, Jaiprakash Associates will retain 5 million tons of cement production capacity in South India.

In the current climate, the likely Gujarat unit sale is a positive sign. The shares of Jaiprakash Associates rose 10.05 percent to INR 33.40 after reports that the sale of the unit is near finalization. On 22 August 2013, the stock of Jaiprakash hit a high of INR 33.45 and a low of INR 29.65. For comparison, the stock hit a 52-week high of INR 106.75 on 12 December 2012, and a 52-week low of INR 28.40 on 19 August 2013. Overall, Jaiprakash Associates’ shares have dropped 68 percent in 2013.

At the most recent check, the company’s shares registered a gain of 1 percent in Mumbai, to INR 31.45.

JK profits surged in spite of debt levels In spite of its financial struggles, the net profit of Jaiprakash Associates surged 140.93 percent year-over-year, to INR 334.51 crore, in Q1 June 2013. The rise occurred on the back of a 10.38-percent rise in total income over the period to INR 3351.93 crore. The surge in net profit was due to an exceptional nonrecurring income on sale of stake in the company’s subsidiary Jaypee Infratech. The sale was conducted in order to meet the minimum public shareholding norms (MPS) of Jaypee Infratech. Overall, the company made a profit of INR 395.28 crore on the sale of 16 crore equity shares of Jaypee Infratech.

The strong commitment of Jaypee Group to reduce its debts comes as a response to heavy debt increases in recent years,

as Chairman Manoj Gaur expanded the cement’s maker’s power, sports, and construction businesses. Indeed, Jaypee Group’s liability increased five times in five years. The net debt of Jaiprakash Associates stands at about INR 62,300 crore. The company requires INR 8.100 crore just to service this debt.

To reduce this debt, Jaypee Group plans to sell a further 30 percent of its 35 millionton cement capacity, as well as real estate.

Its overall goal is to decrease its debt by 25 percent or INR 15,000 crore. However, sales conditions were better 12 months ago, and the company would have had a greater return from the sale of a unit at that time than it can expect in the current climate.

India Cements profits in the red at end of June The company India Cements registered a net profit that fell 73 percent for the quarter that ended in June 2013.

This decline represents a drop in profit to INR 16.82 crore from INR 62.07 crore the previous year. The decrease is blamed on the rupee’s steep depreciation against the dollar, as well as an increase in raw material costs.

Analysts expected profits to increase at INR 37.2 crore, but this is the fifth straight quarter in which the company has missed analysts’ expectations.

focus CCI to sell four mineral-reserves rich units

The India-based Cement Corporation of India is selling four non-operating units, located at Mandhar, Akaltara, Nayagaon, and Kurkunta. The units are available as outright sales. CCI has invited expressions of interest on a global level. SBI Capital Markets have been appointed the merchant bankers for the purposes of these transactions.

The non-operating units are intended to be sold on an “as is, where is” basis, without existing liability and with no restriction on post-sale use, etc.

Furthermore, these units have mineral reserves, which are projected to be sufficient for the useful cement manufacturing lifetimes of the plants.

They also have basic infrastructure.

Existing cement manufacturers will be able to enhance their production capacities by purchasing these units, which have very rich deposits of the best-quality limestone. Furthermore, these units benefit from advantageous locations, which will entice real estate and other investors to sell land for industrial, commercial, or residential purposes.

The discrepancy is due to cost increases, rather than sales difficulties: India Cements’s net sales were up 3 percent to INR 1,238.85 crore, beating analyst targets of INR 1,219.20 crore. However, reported foreign exchange losses reached INR 27 crore. Freight and handling expenses rose 19 percent in the June quarter, to INR 265.03 crore. Power costs rose 14.6 percent to INR 330.02 crore, while the operating margin narrowed to 16 percent in the quarter, from 23 percent in the previous year. These factors combined to draw down average net plant realization per ton of cement sold by 10 percent to INR 3,185.

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CEMENT: m&a and finance

JK debt service profits from the transaction Of Jaiprakash's total debt, estimated in March of this year at INR 24,337 crore, ICICI Bank, State Bank of India, and IDBI Bank have the highest exposure. These banks are therefore nudging the company to sell its cement unit in order to cut debt. According to analysts, the high leverage in Jaiprakash was bleeding the company of its revenues, as almost 60 per cent of the firm's EBITA (earnings before interest, tax, and has been) is being used to pay interest cost.

cement

projects and expansions

5

p

1 rojects and expansions

K Cement seeks funds for kiln expansion while Dalmia prepares for capacity increase and Anil Ambani receives green light for setting up plant at Raghunathpur.

JK Cement recently provided a tour of its Khrew, Pulwama District plant to the Jammu and Kashmir State Secretary of Industry and Commerce, Sorabh Bhagat.

Bhagat was accompanied by JK Cement Managing Director, R.K. Razdan, who delivered to the Secretary a detailed explanation of the cycle of cement production.

During the visit, the JK Cement Managing Director requested the release of the INR 10.66 crore balance of equity, to be used for further development of the company’s kiln. Additionally, there were discussions about the future commissioning of a 300TDP clinker grinding and packing unit.

JK Cement company’s performance for FY 2011-2012 and 2012-2013 demonstrated revenues of INR 4.35 crore and INR 4.10 crore, respectively, and was accompanied by a growth in cement sales revenues. The company’s an overall growth rate in the period was 47.18 percent.

plant in Karnataka. The company expects to commission its new cement plant in north Karnataka, at Yadawad, near Belgaum, by February 2014. The company is investing INR 1,300 crore for the greenfield plant, which will have an annual capacity of 2.5 million tons. Dalmia Cement has raised a debt of INR 900 crore for the project, while the balance of INR 400 crore has been contributed through equity.

The new Belgaum plant will cater to markets in Maharashtra and Goa. The company is now looking at new opportunities in central and northern India as part of its quest to become a true pan-India player by the next fiscal year. Dalmia also plans to set up a second plant in Karnataka at Gulbarga in north Karnataka. The additional plant would also have a production capacity of 2.5 million tons of cement.

Dalmia capacity to jump 18 percent after Karnataka completion In spite of current weak demand for cement in the country, India’s Dalmia Cement (DCBL), the nation’s fourth largest cement maker, is set to expand its installed capacity by 18 percent to 19 million tons with the completion of its new

34 SEPTEMBER/OCTOBER 2013

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focus Anil Ambani approved for factory near Raghunathpur Anil Ambani group’s Reliance Cement recently obtained the allotment letter required to set up a factory unit on a 100-acre parcel of land at Purulia’s Raghunathpur. The lease price for the Reliance Cement plot stands at INR 14.43 crore. The project is expected to bring in investments worth INR 600 crore and the new factory unit will have a capacity of 3 million tons.

The development will generate job opportunities for about 1,000 people.

Volume and pricing

V

olume and pricing

ement prices across India fell by INR 10 to INR 40 per bag across all regions in August 2013.

Demand was poor during the period due to subdued construction activity owing to heavy rains, floods in some states, and the overall economic slowdown.

Dealers agree on likely INR 10 to 15 price increase The consensus view among 25 dealers across regions is that cement demand is likely to improve in the coming months, leading to a gradual increase in prices of INR 10 to INR 15 per bag in the third week of September. While 2QFY14 will probably continue to be a weak quarter in the wake of poor sales volume and lower realization, the recent steep fall in cement share prices has largely factored in the likely subdued performance, and a gradual recovery in cement demand as well as prices in 2HFY14 should boost share prices. Therefore, Equity Bull has retained its positive view on the cement sector in spite of recent price fluctuations.

Weak price hike unsustainable In spite of the current tepid demand for cement, manufacturers are nevertheless expected to pass on increases in costs of raw materials to consumers. The resulting price hikes could reach around Rs 50 per 50-kg bag in Mumbai. However, weak demand is expected to make these rate hikes unsustainable. Prices took a hit in August following relatively stable rates in July. The August decline was driven by the combination of increased supply due to the entry of new players,

poor demand, shortage of materials, and good monsoons across most regions.

The decision on the part of manufacturers to increase prices in the near future is an attempt to offset the lower prices in July and August, to combat the continuous increase in the costs of inputs to make cement, and to ramp up for the postmonsoon building season. The end of the monsoon season generally signifies a period of increased construction activity.

Monsoon takes toll on northern India sales Sales in northern India have been recently affected by the monsoon, and have consequently undercut sales in the southern portion of the country. Shree

Cement recorded dispatches of 3.17 million tons for the past quarter, a value 6 percent lower than the same period last year. Ambuja Cements recorded a drop in dispatches of close to 3 percent, to 5.38 million tons. JK Lakshmi Cements, which operates in North and West India, saw dispatches drop 14 percent. However, not all companies reported negative news. India Cements reported dispatches of 26.49 lakh tons in the June quarter, up 11 per cent, compared with 3 percent growth recorded in the same period last year. Ramco Cements reported dispatch increases of close to three percent, to 22.1 lakh tons, despite a high base. Some of that volume growth has come from expansion into newer markets.

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cement

people

P

eople

Analysts concerned over Madras CSR The Madras Cement company has set aside a total of INR 30.5 crore for the Raja Charity Trust, a move that concerns analysts because it contributes to an increase in company expenditures. The Chennai-based company set aside the amount in two phases, first representing about 6 percent of net profit for 2012-2013, and second representing 8.7 percent of the net profit for the first quarter of the current exercise.

The Madras Cement CEO backed up the move with a statement of defense, declar-

ing that the decision is part of the company’s CSR strategy. ”We need a lot of manpower, and we felt that this is the right time to start an engineering college as we already have the expertise," he said.

However, analysts have reacted negatively to the cement maker’s decision on this. Madras Cements' stock has shed 31 percent so far this year, representing a sea change in fortunes from last year. The company ended 2012 as the fifth top-performing stock, with a jump of 139 percent in value, aided by huge

operating margins that exceeded those of even large peers.

Lucky cement bags awards for sustainability The Pakistan-based company Lucky Cement Limited has won two awards for its corporate and sustainability disclosures. In a statement, the company said that it has always been at the forefront of disseminating accurate and transparent information about its operational and financial health through its corporate and sustainability reports.

focus A-Tec appoints new Group Managing Director

A Tec Group announced the appointment Ghassan Broummana as the new Managing Director of the Group. In his position, he will be responsible for for Sales and Marketing within the A TEC and A TEC GRECO group.

Broummana started his career in early 1987 designing and starting up cement manufacturing plants. He voyaged to Switzerland to join Holcim Group Support in 1996, developed and rolled out various corporate initiatives. In 2004, he moved to Siam City Cement, Thailand to start up a new Business Unit ‘Geocycle’, preparing alternative fuels and raw materials from industrial and household waste.

In 2009, Mr. Broummana elevated to India

36 SEPTEMBER/OCTOBER 2013

and has been appointed as Member of the Managing Committee of ACC Limited and

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Member of the Executive Committee of Ambuja Cements Limited, India, with a bigger responsibility of restructuring a unified technical support service center. that provides expertise to both companies with the aim of improving the efficiency and effectiveness of over 25 integrated cement plants and grinding stations and managing all major Capital Expenditure Projects of both companies.

Mr. Broummana holds a Diploma in Electrical Engineering and a Diploma in Wirtschafts-Ingenieur (MBA) from University of Dortmund - Germany. He has also completed a ‘Program for Executive Development’ at IMD-Lausanne and A ‘ dvanced Management Program’ at Harvard Business School, USA.

news

regional

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

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

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

Theone stricter appli- the mong India surrounding regions, Pakistan is the seeing mostwith activity.

The country’s million tons. cation impacts not only the availability of cement producer association is going through troubled times because of cement pricing policy transportation, but also the logistics costs and energy costs, while Bangladesh imports route During the firstby 11river months of thefrom current incurred. sees the first arrival of clinker Star Cement and five of the seven stock exchange listed companies go for bigger profits. fiscal year, Pakistani cement companies Northern cement units dispatched around sold more than 30.5 million tons, around 2.29 million tons of cement in May 2013, one million tons above the correspond24.3 percent of which were sent by sea to ing period of the last fiscal year. Cement DG Khan boosts profits anticipated tax rate ofmostly 37.4 percent in the ingexports to grab a larger thethis marnotched 7.7 share millionoftons fiscal external markets, to Afghanistan, The Pakistan-based company DG Khan fourth yearwere 2013.dispatched At last ket.year DGversus Khan more Cement, leading manuwhilequarter aroundof2.7fiscal percent thana 7.8 million tons in Cement posted an increase of 34 percent check, the company’s finalunits cashprovided dividendthe facturer, announced thatfirst it plans to the lasthas fiscal year for the 11 months. to India.

The southern in its profits, year-over-year, for fiscal year stood at PKR 3 per share. bring online its 2.6 million ton per year 2013. The company experienced a net Still in Pakistan, both Cherat Cement plant in Hub, Balochistan, in the southincome of PKR 5.5 billion for fiscal year and DG Khan Cement have recently ern region, and to abandon its plan to 38 MaY / JUNe 2013 BMWeek CW Group Coal Week CemWeek INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE 2013, compared to PKR 4.11 billion in fis- announced expansionBMWeek plans. CemWeek This eleinvest a cement plant in Mozambique.

CW Group Coalin Week CemWeek CW Group Coal Week cal year 2012. The reported earnings were vates the chances of a BMWeek price war between lower than estimates due to a higher than the companies, which are both aim- Lucky Cement threatens resignation over pricing policy Meanwhile, members of the All Pakistan Cement Manufacturers Association (APCMA) are in strong disagreement about the association’s policies and cement price determinations. Conflict has escalated to the point that the company Lucky Cement has decided to leave the organization. News of Lucky’s exit from APCMA attracted attention on the Karachi stock market and led to decline in the cement sector’s share prices, affecting multiple companies. However, negotiations to draw Lucky back into the fold are underway.

R

egional news

Pakistan eyes South African market Qamar Zaman, commercial secretary at the High Commission of Pakistan in South Africa, has announced that the INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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In liz ba 20 ar at pu bo

pa Th At Ka th lio Ir lio in

Lu on ed m

regional news country’s cement industry will increase exports to South Africa, confronting allegations that Pakistani cement goods are substandard in quality. On the contrary, Zaman declared that low prices gave his country’s product a competitive edge and that Pakistani cement quality is up to standards.

The controversy arose last year, when the company Lafarge called foul over Pakistani imports, stating that Lucky Cement’s product was of a weak quality and often packaged in incorrect quantities. Lafarge’s allegations argued that substandard cement products were being used for large infrastructure projects in South Africa, including the building of hospitals, government housing, and schools.

Lafarge posts hefty profits in Pakistan Meanwhile, in the first half of 2013, h has turned a profit that is almost six percent higher than the same period of last year.

In spite of higher sales, the cost of goods sold registered a marginal reduction. As a consequence, Lafarge Pakistan posted a hefty rise of more than 19 percent in gross profits, year-over-year, in the first half of 2013. Prior to the profit announcement, a research report by Elixir Securities pointed out that Lafarge Pakistan Cement has been aggressively paying off outstanding debt, beginning in 2011.

This strategy has helped to sharply bring down finance costs to less than

38 SEPTEMBER/OCTOBER 2013

half of the value they registered one year ago. The decline in finance costs was also beyond the expectations of brokerage houses. Thus, Lafarge Pakistan’s earnings per share of PKR 0.66, posted in the first half of 2013, not only trumped the PKR 0.38 EPS reported for the first half of last year, but also brought a pleasant surprise for investors.

Pakistan cement exports to India decline The export market in Pakistan is in geographic flux. Cement exports from Pakistan to India have declined by 20.35 percent since 2010. Data provided by the All Pakistan Cement Manufacturers Association show that cement exports to India stood at about 0.78 million tons between 2007 and 2008, a number which declined steadily to reach 0.72 million tons between 2009 and 2010. In 20102011, cement exports to India fell sharply to 0.59 million tons despite negotiation efforts aimed at removing the negative trade list between the two countries.

Exports recorded a slight increase between 2011 and 2012, reaching 0.60 million tons, but declined again between 2012 and 2013, to reach an all-time low of 0.48 million tons. Demand is on the rise in India, particularly in Rajasthan, where the Birla Group is constructing a plant capable of producing 1.5 million tons of cement per year. An increase in Pakistani exports to India could therefore be extremely beneficial to the Pakistani cement industry.

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focus Bangladesh producers boast positive half year results In Bangladesh, five of the seven cement companies listed on the Bangladesh’s Dhaka Stock Exchange reported that their earnings went up in the first half of 2013. The other two cement companies have yet to disclose their earnings. The increased profits are driven by an increase in the number of residential construction projects in rural and sub-urban areas, as well as a by a spike in government spending on construction of bridges, culverts and public buildings.

More than 50 percent of locally-produced cement is used for construction purposes in rural and sub-rural areas. Analysts report that the prospects of the cement industry in a developing country such as Bangladesh are encouraging. The construction sector in Bangladesh has expanded at a compound annual growth rate (CAGR) of 13.55 percent in the last 10 years. However, at present, the per capita consumption of cement in Bangladesh is only 83kg, while it is 174kg and 131kg in India and Pakistan, respectively. This suggests abundant room for growth in the industry.

Pakistan cement sales take dive in August Total cement sales In Pakistan in August 2013 dropped significantly, falling 17 percent month-over-month to around 2.15 million tons from 2.6 million tons in the previous month. Declines were due to the combination of the Eid holidays, Ramazan, and the torrential rainy season. The dispatch decline represented a decrease of 7 percent year-over-year, from 2.2 million tons in August of last year.

Of the market segments, domestic sales seem to have been hardest-hit, with a 19 percent monthly drop to 1.5 million tons, while exports went down by 13 percent.

A cumulative second month FY 2013-14 comparison also shows a 7 percent drop, to 4.7 million tons, from 5.1 million tons during the same period last year.

Though a 57 percent rise in the power tariff is in effect beginning in August 2013, its impact is expected to be more visible in the second quarter of FY14, as August dispatch volumes were produced in July 2013, when the sector was still able to utilize low-cost electricity.

Cement prices at retail level jumped 9 per-

cent in August to PKR 502 per 50 kg bag.

This increase does not add much to the profit margins, as it resulted from a passon of increased costs of taxes and transportation.

Star cements exports clinker to Bangladesh by boat Star Cement, a leading cement brand in the northeast, has become the first Indian cement manufacturer to opt for a riverine route for clinker export to Bangladesh. The company has announced its plan to export 50,000 tons of clinker per month to Bangladesh, after previously running a road-export project. The company expects the riverine route to be more commercially viable than the road route. Star Cement competes in Bangladesh with manufacturers from multiple Southeast Asian countries to supply 99 percent of the clinker requirements for the country.

Holcim Lanka banned from Trincomalee Port In Sri Lanka, the Court of Appeal has issued an Interim Order that prevents Holcim Lanka from conducting any commercial operations relating to packing and

grinding of cement and clinker in the Port of Trincomalee until October 2, 2013.

The court’s decision designated a special licensed economic zone covering 675 square kilometers and including the Trincomalee Port.

Within that economic zone, the Tokyo Super Cement Company plant was given exclusive right to operate a cement packing and grinding plant in the Trincomalee port area. The Tokyo Super Cement Company contends that it has exclusive right to operate in the Trincomalee Port area until the end of 2013, but Holcim Lanka argues that its plant is not within the said economic zone.

Price of raw materials boosts Tokyo Cement profits Sri Lanka-based Tokyo Cement reported year-over-year profit increases of 660 percent, to LKR 611 million in the June 2013 quarter. The strong boost occurred largely on the back of lower raw material costs.

Tokyo Cement reported earnings of LKR 2.01 per share for the quarter. The company is a joint venture between Sri Lanka's St. Anthony's Consolidated Limited and Japan's Nippon Coke and Engineering Co Limited.

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orders & equipment highlights Aumund rebuilds highest elevator in cement works

Aumund rebuilds highest elevator in cement works

orders & EQUIPMENT HIGHLIGHTS new cement production line, including seven Loesche Vertical Roller Mills, is currently being installed at Citeureup, part of Indocement, Indonesia’s secondcement producer. Citeureup comprises nine kiln lines with a total cement capacity of 11.9 million tons per year. This makes it to one of the largest integrated factory complexes in the world. All of the kilns 40 SEPTEMBER/OCTOBER 2013

at the plant utilize dry process and precalciner technology.

Two mills for the grinding of cement raw material will be of the type LM 56.4.

Each will have a capacity of 400 tons per hour at a product fineness of 10% R 90 nanometers. Two further mills of the type LM 28.3 D will be grinding coal and have a capacity of 40 tons per hour at a product.

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Bucket elevator installed 170 meters high at the Himachal Pradesh plant of Ambuja Cement succumbed to the stress of continuous operation caused by raising raw meal to the pre-heater tower 24/7 at a continuous rate of 650 tons per hour.

The elevator is reportedly the highest of its kind installed today and as such, only a few companies possessed the knowhow to deliver a competent replacement service.

Originally, the machine was fitted with a steel cord belt of 1450 mm width and tension rating of 3500 N/mm. After passing the application data through their sophisticated computerised selection program, Aumund decided to offer an alternative based on their own design concept, resulting in a belt width of 1050 mm and with a bucket size of 1000 mm at 430 mm pitch.

Revolvo provides SRB roller bearing solution to Century Cement Abrasive dust present in cement production plants shortens bearings life because particle ingress causes lubricant contamination and ultimately damage.

Century Cement found that the life cycle of the original white metal bearings on its raw mill motor drives has seriously shortened and decided to invest in completely new drive systems if lower maintenance and more cost effective motor bearing solutions could not be found.

Revolvo was able to offer a long term low maintenance cost solution with their SRB split roller bearings, which offer the same grease lubricated benefits of solid roller bearings, but reduced bearing replacement times by 90%. Revolvo SRB split roller bearings are totally split to the shaft, a design that both simplifies and expedites installation and significantly cuts downtime costs in comparison to replacing solid bearings of a similar size.

SRB split bearings allow the shaft to be supported by the lower section of the bearing, whilst the upper section of the housing and bearing outer race can be removed, making bearing inspection fast & simple, without the need to disconnect drives or lift the shaft. This intrinsic feature is especially valuable regarding large rotating machines, where sheer weight and size can be a barrier to fast and effective servicing.

Revolvo provides SRB roller bearing solution to Century Cement

MacGregor, part of Cargotec, has secured a new order for autonomous loading and unloading systems for an 8,700 dwt cement carrier to be built for Japanese ship owner Taiheiyo Kisen Kaisha Ltd. The 109 metters vessel will have four cargo holds, each divided into two compartments. The cement handling system is designed to carry up to three grades of cement in each shipment. During loading operations, the ship’s deck-mounted receiving aeroslide is connected to the shore facilities by flexible bellows; loading can be achieved on either side of the vessel.

The cement is then transferred to two short intermediate aero-slides by means of hydraulically-actuated flow control gates. These transfer the cargo to two reversible horizontal screw conveyors.

One moves the cement forward to holds 1 and 2; the other serves holds 3 and 4.

Maximum level guards indicate when the holds are full, while pneumatically shutoff valves avoid contamination between different grades of cement.

Sloping aeration panels installed on the tank top of each hold are the first elements in the discharge system. Air blown through the panels fluidizes the cement, allowing it to flow towards the centre of the hold, where it feeds into a vertical screw conveyor equipped with two remote-controlled flow control gates.

At deck level, the cement returns to the reversible horizontal screw conveyors and is conveyed to a buffer hopper inside the pump room, located amidships.

From the hopper the blow pump system transfers the cement to a silo ashore via two pipes. Dust collectors are installed on deck.

New cement carrier features Macgregor handling system

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orders & equipment highlights FLSmidth VRMs contract signed in Brazil Danish equipment maker FLSmidth has received two new orders from Brazil for a new 3,300 tons per day line and an OK-33 vertical roller mill. The FLSmidth supplied plant at Sete Lagoas is operating well above expected capacity. This helped motivate Companhia De Cimento Da Paraíba’s choice of LSmidth as its supplier for all major equipment for the Pitumba Plant in Paraiba State. The second contract from Cia. De Cimento Itambé, is for a vertical roller mill for cement grinding to be installed at the Balsa Nova Plant in Brazil’s Paraná State.

Otto Marine signs MOU for new building and conversion of cement carriers Otto Marine, a leading offshore marine company which specializes in building complex offshore support vessels has signed a Memorandum of Understanding (“MOU”) for the new building of 5 cement carriers. The cement carriers have capacities in the range of 7,500 deadweight tons (“DWT”) to 15,000 DWT. Conversion works will be carried out in Otto Marine’s shipyard in Batam.

Apart from the firm orders, there is also potential for the Group to secure contracts for the conversion of 2 additional bulk carriers into cement carriers, and a further order for a 3,500 bhp Ocean Towing Tug from the same Indonesian customer.

New Oxytron Silicon Carbide Wear Inserts from Blasch Blasch has launched a series of new wear resistant products that can greatly extend the life of clinker cooler heat exchangers, yielding significant savings. Clinker Cooler heat exchangers are used in the cement industry to cool down exhaust gases from the kiln so that the temperature is low enough to not damage the filter bags. The dust in the filters contains high levels of corrosive and erosive compounds at temperatures exceeding 600 degrees Celsius. Plant operators experience severe wear on the upper inlet side of the tube sheet and within the first few inches of tubing. This may lead to leaks requiring immediate tube replacement or repair, adding substantial cost and downtime. The Blasch Precision Ceramics clinker cooler wear insert is designed to protect the tube end along with and the first 6 to 36 inches of the tube. Generally after this distance, the cooling gas flow has straightened out, or developed to the point that abrasive wear typically drops off.

New Samson Material Feeder on Tracks SAMSON Materials Handling launched the evolution of their Samson Material Feeder - the MF0814T, whose concept has been developed in conjunction with mining and minerals customers. They require the huge holding capacity of up to 50 tons offered by the standard MF0814W, combined with operational durability and accuracy in

discharge control, delivered to operate on the most testing ground conditions. The Samson Material Feeder MF08 series is suitable for heavy duty applications with continuous use, including impact loading from articulated dump trucks and large loading shovels.

Suitable for a material with bulk density up to 2.6 tons per cubic meter and lumps up to 400 mm, the typical materials handled include limestone, coal and coke, raw slag, alternative fuels, clays and shale & heavy mineral ores. The MF0814T is self-propelled and operates via an integrated diesel power supply, offering excellent flexibility on site.

Dal Teknik Makina orders Pfeiffer VRM The Turkish company DAL Teknik Makina has placed an order for a Pfeiffer MPS 3350 B vertical roller mill for raw meal, to be used for the manufacturing of grey cement and white cement. The mill is guaranteed to achieve a raw meal capacity of 200 tons per hour for the production of grey cement. For white cement, the mill will be capable of processing 160 tons per hour of raw material.

HeidelbergCement has commissioned a split Loesche grinding plant at Jhansi in the State of Uttar Pradesh. As a result, current cement capacity of the company in India has been boosted to 6 million tons per year. The Loesche mill type LM 53.3+3 C was guaranteed for 215 tons per hour. Performance tests in March 2013 revealed that the mill was already operating at 235 tons per hour.

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LIMAK Bati Group selects KHD pyroprocess technology for new 3,500 t/d kiln line at Trakya plant, in Turkey LIMAK has, once again, shown confidence in KHD´s advanced technology, by placing an order for the engineering and equipment supply of its new 3,500 t/d clinker production line at the TRAKYA cement plant, located near the town of Pinarhisar, in the Thracian region of Turkey.

The contract with LIMAK Bati Group, awards KHD the order for engineering, equipment

supply, and supervision of erection and commissioning, including on-site training.

The new kiln line will be erected near the existing 1,850 t/d line, which will also be upgraded by KHD in the beginning of 2014.

• PYRORAPID® two-tire rotary kiln, with a diameter of 4.4 m.

• PYRO-JET kiln burner for coal and fuel oil.

• PYROFLOOR® clinker cooler equipped with a PYROCRUSHER® System.

The core components of KHD’s new line are: • 4-stage KHD Preheater with PYROCLON-R Low NOX calciner, equipped with PYROTOP® compact mixing chamber, tertiary air duct with dust settling chamber, and PYROBOX calciner firing system for coal dust.

The new calciner with PYROCLON®R will be KHD’s first Low-NOx calciner in Turkey.

LIMAK Group will install their second PYROFLOOR® system, after the Sanliurfa plant, to this new plant in Trakya.

Commissioning of the plant is scheduled for the autumn of 2014.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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Infrastructure & projects

I

nfrastructure & projects umbai will play host to World Trade Center twin towers while Andra Pradesh is to see a new 4 berths port growing at Duggarajupatnam, Nellore district. In the meantime, subway construction works reach milestones in Gujarat, Jaipur and Bangalore.

NEW PROJECTS WTC Twin Towers in Kolkata Promoters of WTC, Mumbai, are planning to erect WTC twin towers in Kolkata.

The promoters have approached the Government of West Bengal to construct twin towers of 20 storeys each. The total cost of the project is estimated to be around INR 180 crore. The proposal is now with the Housing Infrastructure Development Corporation (Hidco) for consideration.

as a feasibility report will be prepared by the Rail India Technical and Economic Service (RITES).

New Residential Projects in Gurgaon India’s largest realty firm DLF has awarded the Australian construction firm Leighton Welspun Contractors to build a luxury housing project in Gurgaon. The pro-

New Port to be Developed in AP A major port is soon to be developed in the Nellore district of Andhra Pradesh by the Vishakhapatnam Port Trust (VPT).

The port will be developed at Duggarajupatnam and involves construction of four berths at a total cost of INR 9,500 crore within a span of 30 years. An initial investment of INR 4, 500 crores has already been outlined for the project implementation. A special purpose vehicle will be developed for setting up the port where-

44 SEPTEMBER/OCTOBER 2013

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ject called ‘The Camellias’ is spread across 16.15 acres and involves construction of 429 apartments and 14 penthouses at a cost of INR 1,450 crore. The construction will begin in the third quarter of 2013 and will be completed by the third quarter of 2017.

Leighton Welspun Contractors is a part of Leighton Group, one of the world’s largest EPC and contract mining organizations.

Meanwhile, IL&FS Engineering and

Construction Company has received a letter of Award worth INR 244.46 crores from Emaar MGF Land Limited to construct 150 residential villas in Gurgaon, Haryana. The project involves construction of civil structure, finishing and low side service works and other miscellaneous works of 150 residential villas. The company plans to complete the construction of the villas in 30 months .

GHMC proposes road works, civic projects The Greater Hyderabad Municipal Corporation (GHMC) has proposed new civic projects worth INR 870 crore in Hyderabad. The new projects involve construction of a flyover at Tolichowki, rail under bridge at Uttamnagar, widening of roads such as the Botanical Garden Road and development of JNTU-Mind Space road and other road projects. The GHMC had bagged the projects under the phase-I (2005-2012) of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). The State-level committee on JNNURM works has already cleared the proposals for these projects and has sent them to the Union Ministry of Urban Development for clearance.

UPDATE ON PROJECTS Gujarat Metro achieves Financial Closure for Phase IA The special purpose vehicle, Metro Link Express for Gandhinagar and Ahmedabad (MEGA) has achieved financial closure

worth INR 4,700 crore for the first phase of the mega metro project in Gujarat.

Leading banks have sanctioned a loan of INR 4, 700 crore of which INR 3,100 crore has been allocated for the Phase 1A line 2 between Motera to Memco. An additional commitment of INR 1,600 crore has also been achieved for the construction of phase 1-B. The total cost of the Gujarat Metro rail project is estimated to be around INR 21,000 crore. The financial closure has led the foundation towards the construction of one of the most modern mass transit systems in the world to the people of the Ahmedabad and Gandhinagar .

CEC to construct Jaipur Metro Phase-I (B) The Jaipur Rail Metro Corporation has selected Continental Engineering Corporation (CEC) to construct the Jaipur Metro project, Phase-I (B). The contract worth INR 507 crore involves construction of 2.7 km underground corridor and two metro stations. The construction is expected to commence on 18 September, 2013.

Center gives financial nod to Bangalore Metro Phase II The Expenditure Finance Committee (EFC) of the Union Government has given a clearance of INR 26,405.14 crore for the construction of the second phase of Bangalore Metro. The project executed by the Bangalore Metro Rail Corporation (BMRCL) involves construction of six lines with a total length of 72 km.

The phase II involves a construction of

arterial line from Gottigere to Nagavara and a second new line from RV Road to Bommasandra (both in south Bangalore) whereas the other four lines are extensions from phase I. The construction of the second phase is expected to be complete within 5-6 years from the date of approval by the Government of India.

COMPLETED PROJECTS Widened Salem-Ulunderpet road eases traffic Reliance Infrastructure (RInfra) has completed the widening of Salem-Ulundurpet road in Tamil Nadu. The widening of the Salem-Ulundurpet road has cut travel time by half between Salem and Ulundurpet. The project was awarded to RInfra by the NHAI to operate and maintain for a concession period of 25 years, and was completed at a cost of INR 1,061 crore. The completed road now provides a safe, hassle free and smooth driving experience to motorist who can now travel on the 136 km stretch in less than two hours.

INFRASTRUCTURE AND CONSTRUCTION PROJECTS/EXPANSION TABLE NAME OF PROJECT

DATE/TYPE

COST IN INR

LOCATION

WTC Twin Towers in Kolkata

September 2013/New Project

180 crore

Kolkata

New Port in Andhra Pradesh

11 September 2013/ New Project

9,500 crore

Vishakhapatnam

New Residential Projects in Gurgaon

13 September 2013/New Project

1,650 crore (total)

Gurgaon

GHMC proposes road works, civic projects

September 2013/New Project

870 crore

Hyderabad

Gujarat Metro achieves Financial Closure

30 August 2013/Update

4,700 crore

Gujarat

CEC to construct Jaipur Metro Phase-I

13 September 2013/Update

507 crore

Jaipur

Center gives financial nod to Bangalore Metro Phase II

September/Update

26, 405.14 crore

Bangalore

Widened Salem-Ulunderpet road eases traffic

10 September 2013/Complete

1, 061 crore

Tamil Nadu

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analyst recommendations AMBUJA CEMENT ICICI Securities Ltd. has recommended a ‘BUY’ rating for UltraTech Cement with a target price of INR 2,040, upgrading it from INR 1,750. The recommendation came as a result of the company’s deal with Jaypee group. UltraTech recently acquired Jaypee’s 4.8 million tons cement plant in Gujarat, which the analyst expects will increase UltraTech’s presence in the key western Indian markets apart from increasing its capacity to nearly 59 million tons. On a similar note, Motilal Oswal has also recommended a ‘BUY’ rating for UltraTech, with a target price of INR 2,076 upgrading it from CMP of INR 1,732.

SHREE CEMENT Motilal Oswal has maintained a ‘BUY’ rating for Shree Cement at a target price of INR 5,400, upgrading it from the CMP of INR 3,898. The recommendation comes on account of the company’s new Greenfield expansion, which the analyst expects will help Shree Cement to diversify its market mix to reach eastern and central regions, and at the same time help it to expand systematically, as per market demand. The company is generating absolute EBITDA similar to ACC/Ambuja Cements, on approximately 60 percent of the volumes, and has managed to sustain its competitive advantages of cost leadership, superior profitability and consistent periodic scale-up in market share.

AMBUJA CEMENTS Angel Broking has maintained ‘NEUTRAL’ rating for Ambuja Cements with a target price of INR 167, reducing it from the previous target price of INR 171. The rating comes as Ambuja Cements posted a weak performance on the operational front with a 5.7 percent YoY decline on the realization front and 3 percent YoY decrease in volumes. The weak performance has been attributed to the demand slowdown in the northern and the western regions of the country. The ownership restructuring deal announced in July by Holcim for its India operations has only added to the woes of Ambuja, as the deal

46 SEPTEMBER/OCTOBER 2013

appears to be favoring the promoter company Holcim over the minority shareholders of Ambuja Cements.

JAIPRAKASH ASSOCIATES ICICI Securities Ltd. has maintained a ‘BUY’ rating for Jaiprakash Associates with a target price of INR 50, upgrading it from the CMP of INR 39. The rating has come after the company reached an agreement to sell its 4.8 MT Gujarat cement plant to UltraTech at INR 3,800 crore. The

cement deal is likely to reduce the company’s standalone and consolidated debt, a major concern of the investors by 6-7 percent. Meanwhile, Emkay Global Financial Services Ltd. has retained ‘HOLD’ rating for Jaiprakash Associates with a target price of INR 45, slightly increasing it from CMP of INR 40. The analyst cut its TP to INR 45 (from earlier Rs INR) owing to the company’s lower cement realizations and higher interest costs, driven by debt refinancing plans.

RATINGS CHAnGES Company

Rating

Target Price

Current Price

12 Sept, 2013 ICICI Securities Limited

Ultratech Cement

BUY

2,040

1,750

13 Sept, 2013 Motilal Oswal

Ultratech Cement

BUY

2,076

1,732

10 Sept, 2013 Motilal Oswal

Shree Cement

BUY

5,400

3,898

02 Sept, 2013 Angel Broking

Ambuja Cement

NEUTRAL

167

167

12 Sept, 2013 ICICI Securities Limited

Jaiprakash Associates

BUY

50

39

Emkay Global Financial Services

Jaiprakash Associates

HOLD

45

40

Date

29 July, 2013

Broker

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Most popular on CemWeek.com most popular stories from CemWeek featuring India-related coverage, and the Global column shows the global events that gathered the most attention worldwide during the period. Visit CemWeek.com to access the full stories.

INDIA 1

GLOBAL

India: Reliance Cement is handed allotment letter for plant at Purulia’s RaghunathpurJaypee Cement launches new ad campaign

1

Dangote Cement scores in Senegal land dispute

2

Trinidad Cement sounds off on potential takeover bid

3

Bolivia’s Itacamba to build new production facility in province German Busch de Santa Cruz

2

India: Madras Cement CSR funds for Engineer College contested

3

India: Pollution Board orders closure of India Cements unit

4

Ambuja’s ACC purchase may hit snag

4

South Kyrgyz Cement Plant gives Kyzyl-Kiya region second chance

5

India cement makers look at exports to boost sales

5

HeidelbergCement mulls offer for Nasicecement

6

India’s JP shares rise on rumors it is close to stake sale

6

7

Irish CRH set to buy controlling stake in India’s Sree Jayajothi Cements

industry 7

Lafarge to continue asset disposals to trim debt

8

Ambuja Cements MD defends Holcim deal

9

India: JK Cement to invest in kiln expansion and packaging unit

10

Jaypee cement unit to sell off Gujarat based assets

11

Emami to invest in cement plant in India’s Bengal

12

Jaypee Group to sell assets in light of debt cutting operation

13

India: New cement plant to rise in Jammu and Kashmir

14

India cement shares slide in August

15

Wrinkles in Ambuja, ACC deal in India

15

16

India’s ACC looking to build plant in Kharagpur

16

Semen Indonesia ordered to build cement plant

17

India: CCI plants up for sale

17

Morocco cement industry suffering from low demand

18

Binani Cement launches new advertising campaign

18

Cementos Argos: No cement cartel in Colombia

19

19

Tanzania’s Tanga Cement launches project for second kiln

20

20

Saudi cement prices fell

8 9

Russia: Parus Capital Fund acquires stake in Gornozavodskcement

10 11

More Italcementi units at risk of closure

12

Pakistan cement sales slow down in July

13

Tajik, Chinese JV plant to begin operations soon

14

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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CBI CONFERENCE

CEMENT BUSINESS & INDUSTRY INDIA & SOUTH ASIA October 9-10, 2013

Hilton Mumbai International Airport Hotel

Mumbai, India

CBI India & South Asia 2013 Conference will focus on the various aspects of India’s cement industry from a business growth & investment perspective. Notably, the programme will take a dual-track business and technical approach to the issues around: ♦

Market perspective, forecast and competitive outlook

♦

Alternative fuels, new business models

♦

Environmental performance management

♦

Finance and capital markets

♦

Coal as mainstay fuel option and outlook

♦ ♦

GMI

Technology, operations and best practices

GLOBAL

Organized by GMI Global and again with the great support from the India Cement & Construction Materials (ICCM) journal the event is expected to bring together more than 200 cement and lime professionals. GMI is excited to build on the success of CBI India 2012 to expand the scope to include participants from the entire South Asia region this time around.

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

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

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CEMENT & CONSTRUCTION MATERIALS