India Cement & Construction Materials (vol 1 / issue 25) by CemWeek

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ISSUE 25

CEMENT

JULY - AUGUST 2015

& CONSTRUCTION MATERIALS

FEATURE

Limestone Crushing Plants Customised Solutions from

Larsen & Toubro - B N ARORA

FEATURE

High hopes for Bangladesh cement market FEATURE

Global takeover of Italcementi COMPLETES LOCAL BUSINESS PLANS IN INDIA

News

Analysis

Market Coverage

Interviews

People

CEMENT RESEARCH

CW Research

GLOBAL WHITE CEMENT MARKET & TRADE REPORT WORLDWIDE WHITE CEMENT INDUSTRY, CURRENT AND FUTURE STATE OF THE MARKET SEGMENTS, INDUSTRY TRENDS, GLOBAL MOVEMENT OF PRODUCT AS WELL AS MAJOR SUPPLIERS AND CONSUMER NATIONS PRODUCT DESCRIPTION The Global White Cement Market and Trade Report (GCWMR) examines the worldwide white cement industry, analyzing the current and future state of the market segments, industry trends, global movement of product as well as major suppliers and consumer nations. 5-year projection of global white cement consumption,

2015

UPDATE

WHO IS THIS REPORT FOR? Business development professionals Industry and trading analysts Financial investment institutions Other executives and decisionmakers involved

production and net trade through 2019 Worldwide white cement plant production facilities

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FEATURES

DEPARTMENTS

EDITORIAL LETTER

NUMBERS IN BRIEF

Limestone Crushing Plants Customised Solutions from Larsen & Toubro

High hopes for Bangladesh cement market 15 Global Heidelberg Cement takeover of Italcementi

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The hot summer of the cement business

Cement companies performance 2Q2015

CEMENT

ROBERT MADEIRA CEMWEEK PUBLISHER HEAD OF CW GROUP RESEARCH

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INFRASTRUCTURE & PROJECTS New residential project in Gurgaon

35 PEOPLE 36 REGIONAL UPDATE 38 EQUIPMENT HIGHLIGHTS

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LETTER FROM THE EDITOR

THE HOT SUMMER OF THE CEMENT BUSINESS n the new issue of the India Cement & Construction Materials magazine we cover several industry trends shaping up in the region, triggered by both international and local events. By far the most visible development has been the global takeover of Italcementi by Heidelberg Cement, with a strong impact on the Indian business of the German group. Another key topic of the new ICCM issue is the indepth analysis of the Bangladeshi cement industry, which is facing bright prospects, as long as political commitments made by leading officials are met. Two shots in one, that is how the HeidelbergCement takeover of Italcementi could be described when it comes to analyzing the German group’s new position after the acquisition. For several months, Heidelberg Cement had been considering various local takeover options, in order to meet its aim to increase capacity and market share in India. Rumors and statements on deals about to be completed had already emerged when the news about the global takeover of Cementi came out. The acquisition more than doubles the German company’s production capacity in India and creates the setting for an accelerated growth on the Indian market. The special feature included in the latest issue of ICCM details the deal’s circumstances

JULY - AUGUST 2015

and impact on the Indian cement market. Also in the new issue of the India Cement & Construction Materials magazine you can read an overview of the Bangladeshi cement industry, which has come to enjoy a positive outlook, based on recent and forecasted economic growth, after a period of stagnation and uncertainty triggered by political unrest. The optimism of the industry for the coming years is reinforced by the government’s expressed commitment to actively pursue the completion of urban infrastructure projects including Mass Transit Systems on a priority basis. The real estate market is expected to be a key driver for increased cement demand as rising levels of income will translate into increased real estate transactions. However, as the feature story in the new issue of ICCM outlines, the outcome of the following years is highly dependent on promised foreign support and global market conditions. Speaking of prospects, the new issue of ICCM heralds some significant additions to India’s cement production capacity, as several companies are preparing to add new production facilities to their portfolios. Among them are Burnpur Cement, which inaugurated its new cement plant in Patratu in Ramgarh district in the Indian state of Jharkhand, or Dalmia Cement,

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

which recently commenced operations at its greenfield cement plant in Belgaum district, Karnataka. Future additions include Indian cement company JSW Cement, which is set to invest Rs 2,200 crore to increase its production capacity to 20 million tons over the next three years, or Sajjan Jindal-led JSW group, which plans to cut cement production costs by threefourths, by setting up grinding units closer to markets in contrast to the traditional model of clinker units placed near the source of raw material. And as usual, ICCM provides all the relevant news about the main indicators of the industry for India and the whole region, including the latest facts and figures about cement volumes, energy prices, relevant people in the business, regional developments, equipment and construction projects. Don’t miss out the numbers and the trends laid out in the special sections.

Robert Madeira

PUBLISHER AND HEAD OF RESEARCH

NUMBERS IN BRIEF CEMENT COMPANIES 2Q2015 PERFORMANCE Cement sales keeping in line with regional divergences, highlighting the improved North American market and the recovery of construction activity in India. Cement sales have improved in the second quarter of 2015 on a quarter-on-quarter basis for most cement manufacturers in the Americas and Africa, but the same cannot be said about Middle Eastern and Egyptian companies, where the Ramadan slowed construction activity. In the United States, Eagle Materials reported a jump in cement volumes. If in the first quarter of the year, the Eagle Materials USA sold 0.83 million tons of cement, the figure reached 1.2 million in the second quarter. For its Nigerian operations, Dangote reported that it sold 3.21 million tons of cement, with 3 percent more than in the previous quarter. CEMENT VOLUMES Q2 2015 VS. Q1 2014 CHANGE 50% 40% 30% 20% 0% -10% -20%

Eagle Materials USA

Martin Marietta USA

Caribbean Cement

Dangote

Suez Cement

Pacasmayo

Raysut Cement

Saudi Cement

Source: CW Research

10%

Indian cement companies have been outperforming their previous quarter sales. Notably, India Cement reported a 10 percent quarteron-quarter growth for the quarter, having sold 6.2 million tons of cement during the quarter. Amubja Cement and Shree Cement both experienced growth above 5 percent, while UltraTech went from selling 11.8 million tons of cement in the first quarter of the year, to 11.9 in the second one, recording a one percent growth rate. INDIA CEMENT VOLUMES Q2 2015 VS. Q1 2014 CHANGE 12% 10% 8%

4% 2% 0%

India Cement

AmbujaCement

Shree Cement

ACC Limited

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

UltraTech

JULY - AUGUST 2015

Source: CW Research

FEATURE

LIMESTONE CRUSHING PLANTS CUSTOMISED SOLUTIONS FROM

LARSEN & TOUBRO - B N ARORA

JULY - AUGUST 2015

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

t seems logical to have the same machinery and identical layout for a defined feed, product size and capacity. That would have simplified the lives of design engineers, purchasers and construction engineers. Every time they wanted to set up a new plant with identical parameters in a new location, all they’d need to do is recite the magic mantra of REPEAT… REPEAT!

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

JULY - AUGUST 2015

FEATURE f only it was as easy as that! Nature throws up challenges at every turn. The composition of mineral deposits can vary widely – even every few miles. Add to nature’s variation the changes desired by the customer, and it becomes apparent why there is a need for renewed efforts in selection and orientation of equipment.

LAYOUT TYPE#1 - THE SIMPLEST OF LAYOUTS WOULD BE A HOPPER, A FEEDER AND A CRUSHER

A good layout design can reduce (even eliminate) wastage, facilitate operation and maintenance, and improve productivity and performance at reduced costs. And much more. Here’s where Larsen & Toubro can make a significant difference. L&T is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services, operating in over 30 countries. A strong, customer-focused approach and the constant quest for topclass quality have enabled L&T to attain and sustain leadership in its major lines of business for over seven decades. Right from the mid-sixties, when jaw and hammer crushers ruled, L&T has been designing, manufacturing and supplying limestone crushing plants for the cement industry. The following decades saw L&T amass a wealth of knowledge pertaining to newer products, manufacturing processes, trouble-shooting and, most of all, in system layout designs.

Fig1: Limestone crushing plant showing hopper, apron feeder and impactor

LAYOUT TYPE#2 - WITH A HOPPER, A FEEDER, PRE-SCREENING ARRANGEMENT AND A CRUSHER

L&T wide range of apron feeders, wobblers and impactors complement its efforts in optimising layout designs. With L&T’s customer base now covering nearly all major cement plants in India and many in the GCC and African nations, L&T continues to sharpen its skill of providing specific solutions for the unique ‘crush-to-suit’ requirements of each site. We present here the essence of L&T’s three decades of experience in optimizing equipment selection and designing customized layouts to satisfy both nature’s unpredictability in limestone deposits and the buyer’s appetite for more productive and more efficient operations on a sustained basis. 5

JULY - AUGUST 2015

Fig2: Limestone crushing plant showing hopper, apron feeder, wobbler and impactor

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Layout Type#1 is simple and ideal if the feed material doesn’t have much undersize and the limestone feed quality is relatively homogenous and acceptable. All we need to do in such a case is unload, store, regulate feed and crush limestone to desired size and at desired capacity. Machine selection will match with given size and capacity requirements.

non-homogeneous limestone quality. As limestone feed quality deteriorates, the operator can choose to reject the undersize of wobbler through a reject conveyor by reversing the direction of the reversible conveyor below the wobbler feeder. Layout Type#4 is designed to meet requirements as stated in layouts # 2 and # 3 but

with limestone quality where only smaller size (say 10mm - 20mm) is rejected…well only sometimes. As limestone feed with smaller rejects are handled in the circuit, the operator has the choice to feed the undersize of wobbler to a reject post-screen through a reversible conveyor, which in turn rejects the (-) 10mm / 20mm as per screen deck selection.

Figure 3 – Blasted limestone feed with high percentage of undersize.

Layout Type#2 is the obvious choice where blasted limestone has higher undersize content. Incorporating a pre-screening arrangement is a logical choice to help improve system output, select a lower size crusher and reduce the crusher’s power and wear requirements also. The addition of just one piece of equipment in the circuit is capable of achieving all this. However, one needs to make sure that the pre-screening equipment does not become a bottle-neck by way of maintenance demands. It’s always a challenge to handle large ROM-size limestone boulders while screening out smaller undersize (50mm or 80mm). Experience shows that equipment like wobbler feeders (with strong, solid elliptical shafts, or round shafts with camshaped discs) easily help to achieve this. Conventional screening machines with vibrating mechanisms are likely to demand more maintenance time, leading to system downtime. ‘Layout Type #3 is designed to meet requirements of Layout Type # 2 but with

LAYOUT TYPE#3 – WITH HOPPER, FEEDER, PRE-SCREENING ARRANGEMENT AND A CRUSHER… BUT WITH AN OPTION TO REJECT UNDERSIZE AS AND WHEN REQUIRED.

Fig: Hopper, apron feeder, wobbler and impactor and a reversible belt conveyor below wobbler feeder… to choose its direction of flow towards main conveyor or towards reject conveyor.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

JULY - AUGUST 2015

FEATURE Note – The reject screening arrangement is sometimes desired to be at a separate location for ease of operation and maintenance, and to reduce the earthwork requirements in the limestone crusher house. The layout in such a case gets another customisation to suit the specific requirement.

LAYOUT TYPE# 4 –WITH HOPPER, FEEDER, PRE-SCREENING ARRANGEMENT AND A CRUSHER… BUT WITH AN OPTION OF POST SCREENING AND PARTIAL REJECTION AS AND WHEN REQUIRED

Layout Type#5 is designed to meet the unique requirements of a site where: 1. The feed material (high and low quality) needs to be controlled at 40:60 ratio at feeding stage by way of two hoppers and apron feeders 2. The wobbler is required to pre-screen and reduce selection of crusher size 3. Limestone has inconsistent feed quality (even the lumps / boulders have in-built reject clay material) which requires screening after crushing Complex and elaborate though these layouts may be, they help to solve the longterm and very important issues of consis-

Fig6: Hopper, apron feeder, wobbler and impactor and a reversible belt conveyor below wobbler feeder and post reject-screen… for partial rejection as and when required.

Figure 4 - Wobbler feeders presenting a sturdy, easy screening solution (without vibrating mechanism) prior to crushing

JULY - AUGUST 2015

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

tent crushed material quality and optimum operational efficiency of crushing and screening. The examples presented above are only

representative of customization undertaken by Larsen & Toubro. Apart from layout customizations, L&T also customizes the core machinery as and when required to suit specific site conditions

LAYOUT TYPE# 5 – A LAYOUT WITH TWO HOPPERS AND TWO FEEDERS …TO ACHIEVE A BLENDING DURING CRUSHING WITH PRE-SCREENING AND POST SCREENING (OPTIONAL) WITH POST-SCREENING OF ALL CRUSHED MATERIAL.

like heatable Impact Arms and Grinding Paths in Impactor crushers; hydraulic scrapers in wobblers for high moisture and sticky material applications; customized hopper sizes and designs to match dumper-loading cycle times; tailor-made apron feeders for varying dump-loads; stationary civil-mounted or structure/ skid mounted plants for portability and much more. Further, L&T also integrates all utilities like E&I, Control & Automation, Dust Extraction & Suppression, Maintenance Crane & Hoists, and associated Belt Conveyors for transportation suiting to specific site requirements. From the simplest of ‘feed & crush’ circuits to the complex double-feeding and selective reject screening, the key to an effective crushing system remains constant: the one-time customization effort of a layout designer, purchaser and a construction engineer to devise something unique and useful for a specific site that stays…for good!

Fig7: 2 hoppers, 2 apron feeders, 1 wobbler and 1 impactor and output of impactor (crusher) is directed towards a post-screening arrangement.

Larsen & Toubro’s limestone crushing plant with an apron, a wobbler & a compound impactor – 1500 TPH

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

JULY - AUGUST 2015

FEATURE

HIGH HOPES FOR

BANGLADESH CE

JULY - AUGUST 2015

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

EMENT MARKET Local trends favor strong economic growth but require favorable external conditions

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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FEATURE he Bangladesh cement industry has a positive outlook as economic growth is driving both public and private construction in the country, after a period of stagnation and uncertainty triggered by recent political unrest. The optimism of the industry for the coming years is reinforced by the government’s expressed commitment to actively pursue the completion of urban infrastructure projects including Mass Transit Systems on a priority basis. The real estate market is expected to be a key driver for increased cement demand as rising levels of income will translate into increased real estate transactions, both for residential as well as for commercial use. However, the outcome of the following years is highly dependent on promised foreign support, and global market conditions.

The outlook of the local market indicates that demand for cement will be robust over the following years. dividual buyers, while the government and real estate developers account for 35 and 25 percent respectively. In 2014, Bangladesh’s population was of 158.22 million people, a figure expected to reach 159.86 million in 2015 and to climb by 1 percent per year until 2020, when the International Monetary Fund expects it to reach 168.31 million people. Bangladesh is

also one the most densely populated countries in the world. Its population density of nearly 1,100 people per km² presents a major issue concerning affordable housing and shelter. High population density necessitates high-rise residential buildings to accommodate a growing population. Construction activities remained a dynamic source of growth in Bangladesh since the

FIGURE: ECONOMY AND POPULATION (GDP on LH-axis (real national currency, bn); Population on RH-axis (mm)) 170

12,000

165

10,000

160

The outlook of the local market indicates that demand for cement will be robust over the following years. One of the important drivers of the country’s future cement market is the growing population, as 40 percent of the total demand comes from in11

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8,000

155 150

6,000

140 2,000

135

2005

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E

Shah cement factory at Munshigan

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

130

Source: CW Research

145

4,000

Source: static.panoramio.com

POLITICAL TURMOIL REPLACED BY FAVORABLE MARKET CONDITIONS A former British colony and the second most densely populated country in the world, Bangladesh is recovering from highly disputed elections that led to the victory of ruling party Awami League in early 2014. Months of protests, strikes, violence and blockades occurred during the process, climaxing in a boycott of the result by the opposition alliance led by BNP, which cited unfair conditions. Eventually, the Awami League won, despite the EU, US and Commonwealth expressing their concerns about the credibility of the elections. As unrest ceased, the country has been able to continue its economic growth, which was experienced for two decades, with significant hikes in the past five years. Bangladesh’s per capita GDP in 2014 reached USD 3,373, an increase of 38 percent from USD 2,441 in 2009. In addition, in 2014 constructions accounted for 6.6 percent of the GDP, which was a historical high.

early 1990s. Not only has the sector’s value added grown at a faster pace than that of overall GDP, there has been an improvement in the overall quality of construction activities in urban areas. After the conclusion of the elections, the government emphasized its commitment to upgrading

a combination of building new roads and upgrading the existing infrastructure, much of which needs significant upgrades. In order to speed up the development of large-scale infrastructure projects, the government embarked on a number of

FIGURE: APPARENT CEMENT DEMAND & PRODUCTION (2005–2014) MM TONS Apparent consumption

Cement production

2005

2006

2007

2008

2009

the nation’s infrastructure by passing proposals for various infrastructure projects that had been held up by the bureaucracy. Authorities are trying to improve the physical infrastructure in Bangladesh through

2010

2011

2012

2013

2014

high-level diplomatic visits to countries including China and Japan seeking investment for various infrastructure projects. In May 2014, after Sheikh Hasina’s visit to Japan, agreements were concluded

Sheikh Hasina then followed up the visit to Japan with an equally important visit to China. Five deals were signed, including Chinese assistance for the construction of a power plant in Patuakhali and the building of a multi‐lane road tunnel under the Karnaphuli River 3.5 km in length, estimated at Tk 90 billion and expected to be completed by December 2018.

Source: static.panoramio.com

Source: CW Research

on a number of specific projects including the construction of the Ganges Barrage, a multi‐modal tunnel under Jamuna River, a dedicated Railway Bridge over Jamuna River, a multimodal Dhaka Eastern Bypass and the ecological restoration of four rivers around Dhaka. Furthermore, a Memorandum of Understanding was signed between the Japan External Trade Organization and the Bangladesh Export Processing Zones Authority that will reserve important facilities at 5 EPZs in Bangladesh for Japanese investors. Additionally, Japan committed an overseas development assistance package of USD $6 billion over covering the period between 2014 and 2018, which may be the impetus needed for major infrastructure development in Bangladesh.

Meghna Cement Factory

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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FEATURE Based on the relatively large number of announced projects, cement sales will see a significant increased over the next years. The latest CW Research report on the Bangladesh cement market, issued in July 2015, estimates that domestic sales of cement will gain an annual average of 7.5 percent by 2019. The leading domestic players are confident that the production capacity will also grow to almost 40 million tons by 2019..

which is located near the border with India and is able to access limestone reserves that are transported by a conveyer belt from Lafarge’s quarry in the Indian state of Meghalaya. The lack of limestone has, therefore, turned Bangladesh into a market where Portland Composite Cement (PCC) is widely produced, substituting Ordinary Portland Cement (OPC) because of the lower requirement of clinker produced from limestone. The market in Bangladesh

FIGURE: IMPORTS AND EXPORTS (2005–2014) THOUSAND TONS

2005

2006

2007

2008

Exports (ex-clinker)

2009

PRODUCERS FACE FURTHER CHALLENGES DOWN THE ROAD Despite the positive outlook, producers are facing several issues. One of the defining features of the Bangladeshi cement market is the lack of commercially viable limestone reserves in the country, resulting in just one integrated plant: Lafarge Surma,

2010

2011

2012

2013

2014

Source: CW Research

Imports (ex-clinker)

greatly favors PPC, which accounts for an estimated 95 percent of cement produced against 5 percent for OPC.

ment industry has an estimated 40 factories that are currently producing cement, most of them concentrated around the cities of Dhaka and Chittagong. The industry is fragmented with the major players accounting for more than 80 percent share of the market. The rapid increase in cement production capacity over the past few years has created an extremely competitive market with cement manufacturers having to cut prices to retain market share as demand has not kept pace with the capacity additions. When it comes to manufacturers, in the manufacturing process for Portland Composite Cement, clinker accounts for 75 percent and 95 percent in the case of Ordinary Portland cement in Bangladesh. As more than 95 percent of Bangladesh’s cement production capacity is clinker import dependent, companies have had to deal with a $2-3/MT increase, leading to additional pressure on their gross profit margins. Additionally, the price of slag and fly ash saw marginal increases, while the price of gypsum underwent a marginal decrease. In order to maintain their market share and production volumes, manufacturers

Aside from a single integrated facility, the Bangladesh cement industry landscape is dominated by grinding mills, which are all dependent on clinker imports. The ce-

FIGURE: INDICATIVE DOMESTIC CEMENT PRICES (2014-2015)

Crown

Scan Supercrete Powercrete (Heidelberg) (Lafarge) (Lafarge)

JULY - AUGUST 2015

Holcim

Shah

Bashundhara

Seven Rings

Fresh

Akij

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

UltraTech

Source: lafarge-bd.com

Premier

2015

Source: CW Research

2014

Source: static.panoramio.com

Holcim Cement Factory, Narayanganj

The economic outlook for Bangladesh is positive over the next four years, according to CW Research’s latest market report. have had to engage in various discount offers to persuade consumers to increase their purchases. Given the importance of clinker to domestic producers, the government of Bangladesh implemented a supportive duty structure, with a duty of BDT 350/Ton as opposed to a 25 percent duty on cement. Other raw materials including slag, gypsum, and limestone face a duty of 12 percent of invoice value while fly ash faces a duty of 25 percent of invoice value. Another important factor for the domestic cement industry is the uncertainty of the electric power supply in Bangladesh. Power shortages are common in the country, which has forced major players to build captive power plant units, leaving small players at a disadvantage. This shortage has also adversely impacted the country’s overall economic growth and the government’s efforts to reduce poverty rates. To address the matter, authorities pledged to allocate funds

for the construction of new plants, while in June 2015 the Asian Development Bank announced that it would loan Bangladesh USD 75 million for the setting up of a privately owned gas-fired power plant. Should the additional power supply materialize, it will provide the domestic cement players with the confidence to be more competitive. BRIGHT PROSPECTS FOR BANGLADESH CEMENT NEED EXTERNAL SUPPORT The economic outlook for Bangladesh is positive over the next four years, according to CW Research’s latest market report. The GDP growth is expected to grow annually until 2019. However, the forecast is highly dependent on the major trends of the global markets, as growth in the EU, US and the Middle East is of special importance to the Bangladeshi overall economy. The EU and the US are the major export destinations for Bangladeshi garments, and the Middle East is equally important because it is the source of a large amount of investment in

the form of worker remittances. Therefore, as domestic conditions favor economic growth and a positive development of the cement market, the favorable prospects of the cement market will be highly influenced by the conditions of the global economy and the delivery of developmental aid promised by countries and other international institutions. In the optimistic case, should economic revival be quicker than anticipated in the US and EU, additional revenue from exports could help shorten the lead time for the implementation of various infrastructure projects, with a strong impact on the margins of the cement industry.

ABOUT THE REPORT CW Research’s “Bangladesh Cement Market Report” is a comprehensive study on the state and outlook of the country’s cement market. The 84-pages report includes detailed view of trends, quantitative statistics, company profiles, demand forecast and many other vital insights for understanding the cement market. For more information, please contact CW Research at sales@cwgrp.com or by phone at +1-702-866-9474.

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FEATURE

GLOBAL TAKEOVER OF COMPLETES LOCAL BUSINESS PLANS IN INDIA

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

erman groupâ&#x20AC;&#x2122;s aim to increase Indian market share and capacity has been fulfilled by the recent deal, after several attempts to acquire Indian cement producers

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FEATURE

India is one of the emerging markets with high growth potential that has been mentioned by HeidelbergCement among the regions that will drive its future growth. With a combined cement capacity of over 11.4 million tons per year in India after the completion of the Italcementi takeover, the German group is optimistic about the prospects of its Indian business, as part of the company’s global operations. The deal comes at a time when acquisitions are the preferred expansion route for large companies, given the increasing challenges in setting up new plants and the expectations of increasing demand. HeidelbergCement entered India in 2006 through a joint venture with Indorama Cement Limited and acquisition of the majority stake in Mysore Cement Limited. It then acquired the balance stake of Indorama Cement in 2008 and merged the operations of the same with Mysore Cement Limited, which increased the output capacity to 3.07 million tons per year. The merged entity was renamed HeidelbergCement India Limited in 2009. Having consolidated its operations, the company completed brownfield expansion of its facilities in Central India in 2013 and cement capacity was increased to 6 million tones per year. Due to infrastructural bottlenecks at the Raigad grinding unit, the plant was sold to JSW Steel Ltd. in January 2014. After the disposal, HeidelbergCement India’s capacity stabilized at 5.4 million tons per year, from the two integrated plants and one grinding unit, located in Damoh (Madhya Pradesh), Jhansi (Uttar Pradesh) and Ammasandra (Karnataka). 17

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HeidelbergCement entered India in 2006 through a joint venture with Indorama Cement Limited and acquisition of the majority stake in Mysore Cement Limited.

Source: naija247news.com

he acquisition of Italcementi by HeidelbergCement more than doubles the latter’s production capacity in India, and creates the setting for an accelerated growth of the German group on the Indian market. The recently announced takeover places HeidelbergCement in the position to control over 3% of the world’s second largest cement producing market, while making it the second largest player on the global cement industry.

Italcementi has been in India since 2000, when entered the market through a joint venture with Zuari Cement. In 2001 it bought the Yerraguntla cement plant, MIXING BUSINESS SYNERGY WITH GEOGRAPHICAL COVERAGE HeidelbergCement and Italcementi are relatively new on the Indian market, and their operations increased at comparable rates over the past years. The locations of their combined production units provide for an extensive coverage of the Indian market, which is likely to further drive business growth. MAP OF INDIA WITH HEIDELBERGCEMENT AND ITALCEMENTI/ZUARI CEMENT UNITS Italcementi (Zuari Cements): • Chennai Grinding Unit. Location: Chennai. Capacity: 1 million ton per year. Clinker sourced from Yerraguntla works. Caters primarily to Tamil Nadu market.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

located in the southern part of Andhra Pradesh State, while in 2006 the group acquired the full control of Zuari Cement. Italcementi further strengthened • Sitapuram Works. Location: Sitapuram. Capacity: 1.2 million ton per year. Production: OPC 43 Grade, 53 Grade and PPC. • Yerraguntla Works. Location: Yerraguntla. Capacity: 4.6 million ton per year. Production: OPC 43 and 53 Grade and PPC and PRIMO Concrete cement HEIDELBERGCEMENTCEMENT: • Damoh Plant. Location: Damoh. Clinker Capacity (Mt):1.220 Mta. Cement Capacity (Mt):1.025 Mta. • Ammasandra Cement Plant. Location: Ammasandra. Capacity: Clinker Capacity (Mt):0.600 Mta. Cement Capacity (Mt):0.700 Mta. • Jhansi Plant. Location: Jhansi. Cement Capacity (Mt):0.500 Mta

its presence with an industrial investment plan, setting up a second line in Yerraguntla, which began its operations in March 2010.

To serve the local markets of Chennai, the company set up a grinding unit in that area, with a capacity of one million ton. Commissioned in May 2011, the grinding

the Karnataka region, it was working at the construction of a grinding center in Sholapur (Maharashtra) and of a maritime terminal in Cochin (Kerala) with a

unit received clinker from its Yerraguntla plant in Kadapa. The group also started additional projects aimed at extending its offer in India: besides the study of a new cement plant with a production capacity of 3 ml tons per year in Gulbarga, in

capacity of 1 ml ton and 0.6 million tons respectively. Italcementi Group invested a total of 200 millions euro in India, raising its annual production capacity to over 6 million tons by 2014, from the two manufacturing units at Sitapuram (Telangana)

Source: CW Research

PLANTS OVERVIEW & CAPACITIES

After the initial 45 percent stake purchase by Heidelberg-Cement in Italcementi for â&#x201A;Ź1.7bn in cash and shares

Capacity in India (mln ton/year) Units

Heidelberg Cement

Italcementi

5.4

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

JULY - AUGUST 2015

FEATURE and Yerraguntla (Andhra Pradesh) and a grinding center in Chennai. A GLOBAL DEAL THAT COMPLETES LOCAL INITIATIVES Before announcing the global Italcementi deal which more than doubled its capacity in India, HeidelbergCement had been

ered the option of buying a 50% stake Reliance Cement that was being offered by the Indian industrial group. The opportunity popped up as Reliance Infrastructure, part of Anil Ambani-led Reliance Group, decided to sell its cement business to fund the acquisition of Pipavav Defence and Offshore Engineering, which it was ac-

in Maharashtra, which is set to be operational by 2017, followed by another similar capacity to be operational by 2018, via a second line in Madhya Pradesh, a new plant in Karnataka or a new plant in Rajasthan.

The deal between HeidelbergCementand Italcementi marks the latest round of consolidation in the global cement and crushed rock industry, while also fulfilling the formerâ&#x20AC;&#x2122;s aim of boosting its presence in India.

Later on in June 2015, market sources indicated that HeidelbergCement was negotiating the takeover of debt-laden Jaiprakash Associatesâ&#x20AC;&#x2122; plant at Sikandarabad in Uttar Pradesh, for around Rs 500 crore. After having divested its cement plants in Gujarat, Madhya Pradesh, Haryana (Panipat) and Jharkhand (Bokaro) to rise around Rs 10,000 crore, Jaiprakash Associates was also selling the Sikandarabad plant, which has a capacity of 1 million tons per year. However, analysts estimated that JP might find it difficult to sell its units in the South, where the market is facing difficulties caused by over-supply.

looking into several options for expanding its footprint on the Indian market. In March 2015, HeidelbergCement consid-

Then, in July 2015, just before announcing the deal with Italcementi, HeidelbergCement also took into consideration the

Source: heidelbergcement.com

quired for US$331m. Reliance Cement has 5 ml tons per year cement plant in Maihar, Madhya Pradesh and plans a similar plant

JULY - AUGUST 2015

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

possibility of acquiring Lafarge’s Eastern India units. According to local sources, the German group had placed one of the highest bids for acquiring Lafarge assets valued at around Rs 6,000 crore, in a race against MP Birla Group’s Birla Corporation and Irish cement company CRH. HeidelbergCement declined to comment on the development. THE NEW CHALLENGER FOR GLOBAL LEADERSHIP The deal between HeidelbergCementand Italcementi marks the latest round of consolidation in the global cement and crushed rock industry, while also fulfilling the former’s aim of boosting its presence in India. As Germany’s largest cement maker is completing the planned steps to take over the Italian group, they are creating the number two group in the cement industry worldwide, with operations in more than 60 countries. HeidelbergCement, which has 45,000 employees in 2,300 locations in more than 40 countries, is present in Northern Europe, Asia and the US. Italcementi, present in 22 countries, is extensively exposed to Southern Europe, while noth groups have businesses in the US. Italcementi made revenues of €4.1bn in 2014 compared with around €13bn in sales at HeidelbergCement. After the initial 45 percent stake purchase by HeidelbergCement in Italcementi for €1.7bn in cash and shares, which is expected to end next year, the German company will launch a takeover offer for the remaining shares at a price equal to €10.60 in cash. The deal values Italcementi’s equity at €3.7bn.

Source: wikimedia.org

Italcementi is 45 per cent owned by the Pesenti family, one of Italy’s biggest industrial dynasties. HeidelbergCement’s largest shareholder with a 25 per cent is the Merckle family. As part of the deal, the Pesenti family will receive around 5 per cent of the combined group, making them the second largest shareholders after Germany’s Merckle family. The transaction comes to reinforce HeidelbergCement’s position next to the other two big global players that dominate the cement industry. INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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CEMENT MARKETS

CW Research

CEMENT VOLUMES

Colombia’s cement demand has seen increases as there is more clarity in midterm fiscal plans for Colombia.

Cement demand in Argentina saw the steepest increase in June 2015, posting a 15.8 percent yearon-year rise in cement sales. So far this year, demand in the South American country has been on the rise, with year-to-date volumes seeing a 9.5 percent expansion in the first half of the year. Strong growth in infrastructure, driven by private investment and public funding, coupled with the sustained pace of private residential building have led to the existing demand. However, the Argentinian cement market has been reported to experience severe cement shortages in various regions of the country. Several cities in Argentina are experiencing cement shortages as vendors claim that plants are not supplying cement due to the high prices of raw materials. Furthermore, cement prices have been on the rise, increasing by an average of 12 percent in July 2015. Though German cement demand rose 10.4 percent year-on-year in June 2015, the increase did not offset the previous months of steep decline. German cement demand is expected to fall this year by about 1.6 percent as cement producers except that the second half of the year will be unable to make up for the poorer development of the first quarter by the end of 2015, reducing the total annual consumption. Germany has seen a lower level of investment in new commercial buildings. However, demand for multi-storey residential buildings is continuously increasing, and the segment’s influence on the cement market is expected to remain positive throughout the rest of the year. Colombia’s cement demand has seen increases as there is more clarity in midterm fiscal plans for Colombia. However, year-to-date growth rates have been easing throughout the first half of the year. In the January-June 2015, overall cement sales of Colombian manufacturers rose 6.1 percent over the year ago period. Cement producers in the country have seen their results in the six-month period impacted by the depreciation of Colombian peso against the US dollar. The Colombian government intends to have a more focused and efficient use of public resources in areas that have higher impact in overall economy. And since construction is one of the most effective measures to stimulate the economy, there is a significant focus on this activity. Perspectives for the residential sector continue to be favorable, driven mainly by social housing programs.

JUNE 2015 YEAR-ON-YEAR CEMENT DEMAND GROWTH (%) 20% 15% 10%

JULY - AUGUST 2015

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Source: CW Research

Morocco

Ecuador

Japan

France

Thailand

Pakistan

Poland

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Saudi Arabia

-10%

Colombia

-5%

Germany

Argentina

CW Research CEMENT MARKETS

Local cement sales in Pakistan have increased despite heavy rains that affected construction activities in many parts of the country. While local demand has been on the rise this first half of the year, exports have followed a downward trend. In January-June 2015, exports of cement from Pakistan fell by more than 20 percent as compared to the same period in 2014, the decline being mainly driven by non-tariff barriers imposed by the Indian authorities and influx of Iranian cement in Afghanistan. According to the All Pakistan Cement Manufacturers Association, the steep decline in exports should be an eye opener for the policy makers. The cement producersâ&#x20AC;&#x2122; association appealed the government to support local manufacturers in winning back the Afghanistan market by giving freight subsidy enabling them to compete with highly subsidized Iranian cement. The Polish cement market is expected to see increases due to the use of EU funds under the Financial Perspective 2014-2020. Under the new program, more than 800 km of roads will be built, with high emphasis on concrete construction in infrastructure projects. However, Polandâ&#x20AC;&#x2122;s cement production and demand have posted modest increases in the first half of the year, increasing by 2.1 percent and 2.5 percent, respectively. But cement consumption is expected to grow more abruptly throughout the rest of the year as various investment programs in the country will kick in. The Saudi Arabian market experienced declines in both production and sales of cement. The decline in the first half of the year was driven by a general slowdown in construction activity, as well as low investments from government projects. Some cement producing companies in Saudi Arabia are considering reducing cement production due to the failure to lift the export ban that was imposed in 2012. Despite the 22 million tons surplus in the Saudi Arabian market, several companies have announced plans to boost capacity, with an additional 8 million tons of annual clinker capacity to be added.

Local cement sales in Pakistan have increased despite heavy rains that affected construction activities in many parts of the country.

In Russia, international sanctions and the depreciation of the ruble drove down infrastructure and construction investments, particularly those coming from the government. As a consequence, cement demand is projected to decline in 2015 and increase slightly in the following years. JUNE 2015 YEAR-ON-YEAR CEMENT PRODUCTION GROWTH (%) 20% 10%

-30%

Source: CW Research

Belarus

China

Japan

Ukraine

Thailand

India

Poland

Colombia

Russia

Saudi Arabia

-20%

Vietnam

-10%

Argentina

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MARKET DATA SNAPSHOT

CW Research

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

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

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TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

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TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

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Source: CW Group analysis estimates MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

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CEMENT ENERGY MARKETS

CW Research

CEMENT ENERGY MARKETS Coal Market Update Global trading volumes decreased to 85.7 million tons in June 2015, declining 0.8 percent in comparison to May 2015. Significant decline in coal trading volumes was observed in South Africa and US, whereas Australia and Indonesia showed minimal changes in trading volumes. China’s demand for thermal coal from countries including Australia and Indonesia is forecast at 157 million tons for the fiscal year ended June 2015, representing a 31% decrease on traded volumes of 229 million tons in the preceding fiscal year.

Australia coal deliveries decreased 0.9 percent MoM in June 2015 to reach approximately 15.8 million tons, down 0.7 percent when compared to June 2014 index.

South Africa exported 4.6 million tons of thermal coal in June 2015, declining 7.1% as compared to June 2014 and decreasing 29.4% from May’s five-month high. The YoY drop could be due to to weakening exports to Europe and Turkey, while the MoM decrease was due to declining exports to India. India continued to be the largest buyer of South African coal during June, with exports to the country climbing 26% YoY, despite a MoM decline of 25%. Australia coal deliveries decreased 0.9 percent MoM in June 2015 to reach approximately 15.8 million tons, down 0.7 percent when compared to June 2014 index. Spot prices for Australian thermal coal are expected to remain under pressure for the remainder of 2015 and into 2016 due to inadequate measures by the industry to cope with overproduction and overcapacity in the market. Chinese government attempts to improve air quality in the country’s cities is making a huge impact on the demand for imported thermal coal from Australia. Indonesia’s exports of thermal coal increased slightly to 33.1million tons in June 2015, increasing 0.1 percent from the previous month and up 13.1 percent when compared to June 2014 volumes. Indonesia is drastically cutting coal output amid persistently weak prices. Coal production in the country dropped 21 percent YoY in the first quarter to 97 million tons. The Indonesian government plans to levy a new tax on thermal coal exports from August 2015. This will affect miners already struggling with weak prices. The government has proposed a 1.5 percent tax on the export value of coal. COAL GLOBAL TRADING (million tons) Indonesia

120

Australia

Russia

South Africa

Colombia

Rest

100 80 60

Jun-15

Apr-15

May-15

Feb-15

Mar-15

Jan-15

Dec-14

Oct-14

Nov-14

Sep-14

Jul-14

Aug-14

Jun-14

Apr-14

May-14

Feb-14

Mar-14

Dec-13

Jan-14

Nov-13

Oct-13

Sep-13

Jul-13

Aug-13

Jun-13

Apr-13

May-13

Feb-13

Mar-13

Jan-13

Dec-12

Oct-12

Nov-12

Sep-12

Aug-12

Jul-12

Jun-12

Source: customs data

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CEMENT ENERGY MARKETS

CW Research

Energy Prices Update COAL: The average coal price for July 2015 closed at $60.09 per ton, decreasing 2 percent as compared to June’s price of $61.49 per ton and down 19 percent as compared to July 2014’s price of $73.76 per ton. The price of thermal coal has fallen almost 10 percent since the start of the year. Physical coal prices in Australia and Europe continued to decline, pushed down by concerns over Chinese demand after a collapse in the country’s stock market.

In the Asia-Pacific region, Australian cargoes for August from the Newcastle terminal were priced at $60.70 a ton, relatively unchanged since the beginning of the month.

According to National Energy Administration, despite a 0.7 percent increase in China’s total energy consumption in the first half of the year, coal use for power generation fell in the period as more oil, natural gas and renewable power were consumed. China’s own coal output fell 5.8 percent to 1.79 billion tons in the first six months of the year. European physical coal prices declined in the first two weeks of July as demand subsided, and imports by major Asian buyers also slowed in line with reduced economic growth in the region. Both demand and the macroeconomic environment have led to increasing downward pressure on thermal coal prices. However, a gradual tightening of supplies is expected to support prices around current levels. In the Asia-Pacific region, Australian cargoes for August from the Newcastle terminal were priced at $60.70 a ton, relatively unchanged since the beginning of the month. The prices were supported by a short-term pick-up in Chinese imports due to high summer demand, but the overall outlook for the region is that of low prices. Although China’s coal imports rose 16.5 percent in the month in June, supported by peak summer demand, they were still down 34 percent YoY as its economy grew at its lowest rate since the 2008-09 global financial. Additionally, demand has been impacted by the government’s new environmental policies to combat pollution. According to customs data, coal imports in South Korea fell 2.5 percent in June from a

STEAM COAL FOB AVERAGE PRICES (US$/TON) US exported

Colombia exported

Australia Newcastle

Indonesian HBA

South Africa Richards Bay

130 120 110 100 90 80 70 60

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Jul-15

May-15

Mar-15

Jan-15

Nov-14

Sep-14

Jul-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

Nov-12

Sep-12

Jul-12

May-12

Mar-12

Jan-12

Nov-11

Sep-11

Jul-11

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

140

CEMENT ENERGY MARKETS

CW Research year earlier. Morgan Stanley said that with China’s and India’s coal imports diminishing, Indonesian miners might turn to other buyers. Meanwhile, Indonesian high-grade thermal coal sold on term contract is still commanding a premium in Japan to Australian supply, even as more Japanese buyers tap the spot market for lower prices. US PETCOKE EXPORT PRICE (US$/ton) Monthly price Rolling 12-month average

80 60

J-15

M-15

A-15

M-15

F-15

J-15

D-14

N-14

O-14

S-14

A-14

J-14

M-14

A-14

M-14

F-14

J-14

D-13

N-13

O-13

S-13

A-13

J-13

Source: customs data

PETCOKE: The increasing demand for petcoke from cement and power industries will result in the global petcoke market rising at a CAGR of 8.9 percent through 2020. The global petcoke market is expected to be worth $24,118 million by 2020, rising from its 2015 value of $15,758 million. India’s petcoke imports increased 57 percent to 0.87 million tons in July 2015 from a year earlier, and 3 percent as compared to June 2015. The country’s coal imports fell 11 percent to 19.3 million tons in July as compared to last year. Reliance Industries Limited has signed a contract with Heurtey Petrochem for the delivery of a process furnace. The contract covers the key design and delivery of a coking oven to the company’s refinery in Jamnagar. The delivery of this furnace is scheduled for the end of 2016. The freight rate for a bulk shipment of 50,000 mt of petcoke on a Supramax vessel from Houston to East Coast of India was recorded at $30-34/ton. Due to higher freight rates, the delivered cost of petcoke is increasing which is affecting the closure of deals. Demand is expected to be quiet in August and September if freight rates remain at higher levels. In order to reduce its air pollution levels and greenhouse gas emissions, the Chinese government is aiming to reduce its usage of coal for energy consumption. However, the country is now increasingly using high sulfur petcoke imported from the US as an alternative to conventional coal in its power plants. Jilin Petrochemical refinery in China has completed the process of shutdown of its delayed coker unit. The coker unit consumed a lot of high energy gasoline and also resulted in a number of production bottlenecks.

India’s petcoke imports increased 57 percent to 0.87 million tons in July 2015 from a year earlier, and 3 percent as compared to June 2015.

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CEMENT ENERGY MARKETS

CW Research

Turkey’s total imports of uncalcined petcoke in June were recorded at 380,734 tons, up 4 percent MoM and 43 percent YoY. The country’s imports of petcoke in the first half of 2015 increased 3 percent YoY to 1.99 million tons. NATURAL GAS: The US Henry Hub spot price traded at $2.75 per MMBTU in July 2015, increasing 1.2 percent MoM, as forecasts for above-normal temperatures boosted demand expectations. Hot weather leads to higher demand for natural gas, as households and offices run their air-conditioning units. According to Commodity Weather Group, forecasts showed more hot weather in the next two weeks compared with prior forecasts.

The US Henry Hub spot price traded at $2.75 per MMBTU in July 2015, increasing 1.2 percent MoM, as forecasts for above-normal temperatures boosted demand expectations.

Price in Europe decreased 4.9 percent MoM, reaching $6.93 per MMBTU in July 2015. According to the International Energy Agency (IEA), lower prices will accelerate global natural gas demand over the next five years following a slowdown in 2013 and 2014. European gas demand has been on a decline since 2008, reflecting industrial sector stagnation and the growth of renewable power generation. The only long-term source for an increase in European gas demand is the power sector and the impact of carbon emissions policies. While this could eventually increase the volumes of gas consumed in Europe, carbon emission prices would have to significantly increase to encourage utilities to switch from burning coal to gas in meaningful volumes. Despite having the world’s second largest gas reserves, Iran has been a consistent net importer of the commodity over the past decade due to heavily subsidized energy prices and low energy efficiency. Iran will need to introduce serious reforms to control the unusually high growth rate of domestic gas demand. The country requires hundreds of billions of dollars to revive its gas industry with significant investment needed to build pipelines from Iran to Europe; including the 1,000-mile pipeline from Iran’s southern fields to its northwestern border.

NATURAL GAS PRICES (US$/MMBtu) 20

Europe

Japan LNG

16 12

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Jul-15

Nov-14

Mar-14

Jul-13

Nov-12

Mar-12

Jul-11

Nov-10

Mar-10

Jul-09

Nov-08

Mar-07

Jul-07

Nov-06

Mar-06

Jul-05

Nov-04

Mar-04

Jul-03

Nov-02

Mar-02

Jul-01

Nov-00

Mar-00

Jul-99

Source: EIA, World Bank

MARKET DATA SNAPSHOT

CW Research

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

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

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

TABLE AVAILABLE IN THE CEMWEEK MAGAZINE PRINT EDITION.

WWW.CEMWEEK.COM/SUBSCRIBE

Source: CW Group analysis estimates LM: latest month Jan 2015 except where specified; MoM: month vs previous month; YoY: month vs same month last year; YTD: year-to-date; YTD%: year-to-date vs previous year

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CEMENT MARKET AND COMPETITION

arket and competition

CEMENT DEMAND IN INDIA PROJECTED TO GROW The cement industry in India is projected to grow between 6.8 and 7 percent in 20152016. Demand is expected to improve gradually in the medium term, in line with infrastructure recovery. In the last fiscal year, Indian cement production increased by 5.6 percent. However, capacity utilization is likely to remain moderate at about 72 percent as demand will pick up, but fresh capacity addition will slow down. Post-monsoon, cement demand in India remained sluggish; output rose 1.8 percent in October 2014 – March 2015 as against 9.7 percent in the April – September 2014 period. Thus far in the current financial year demand has continued to remain subdued in with cement production growing by merely 0.1 percent during Apr-May 2015. PAKISTAN’S CEMENT EXPORTS TO INDIA SEE INCREASE Pakistan’s cement exports to India saw a 2.82 percent increase in FY 2014-2015, up to 0.70 million tons from 0.68 million tons in FY 2013-2014. In June 2015 alone, overall exports touched 0.55 million tons, down 19.77 percent from 0.69 million tons exported in the same month last year. Total dispatches in June stood at 3.27 million tons, up 1.27 percent from 3.23 million tons dispatched in June last year. The overall situation during the fiscal year 20142015 showed a growth of 3.27 percent compared to the last fiscal year as total dispatches increased to 35.4 million tons 29 JULY - AUGUST 2015

against 34.28 million tons from July 2013 to June 2014.

focus

INDIA – AMBUJA CEMENT RECEIVES SHOW-CAUSE NOTICE Ambuja Cement received a show-cause notice for not adhering to the condition of converting at least 50 percent of the clinker into cement in the state at its unit-II in Darlaghat. Ambuja Cements is yet to file its reply to the notice issued to it by the Industry Department only a few days back. “It has come to the notice of the government that Ambuja Cement has been converting only 17 percent clinker into cement at its plant at Darlaghat, which has resulted into the loss of revenue to the government,” said Industry Minister Mukesh Agnihotri. The company has been asked to explain its position as to why it has violated the agreement that it entered into with the government. As per the agreement signed between the government and Ambuja Cement for unit –II, at least 50 percent clinker had to be converted into cement within the state.

PAKISTANI CEMENT MANUFACTURERS OPPOSE TAX MEASURES

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

Pakistani cement manufacturers voiced their opposition to the various tax measures announced in the federal budget for 2015-16. According to cement makers, the measures will hurt their investor sentiments in general and burden cement consumers in particular. “Finance Minister Ishaq Dar should revisit some fiscal measures that will lead to an increase in the cost of doing business and are against the norms of taxation,” said Muhammad Ali Tabba, Chairman of All Pakistan Cement Manufacturers Association. Taxpayers having taxable income of Rs500 million or more would be liable to pay 3% super tax, which is, according to Muhammad Ali Tabba, is discriminatory. Protesting against the increase in import duty from 1 percent to 5 percent on coal, Tabba said while the cement manufacturers were making efforts to reduce the cost of production in order to compete at the global level, the duty hike would increase the business cost.

INDIA’S SAGAR CEMENTS INCREASES CEMENT OUTPUT India’s Sagar Cements reported a 0.82 percent increase in cement production in June. The company produced 1.3 million tons of cement in June 2015, up 0.82 percent as compared to the same month last year. Fur-

thermore, cement dispatches were 0.66 percent higher, increasing to 1.3 million tons. Sagar Cements is one of the most modern mini cement plants in the state of Andhra Pradesh. The plant is based on Dry Process Rotary Kiln Technology that is used in ‘Standard Quality’ cement companies. DANGOTE CEMENT REVISES SPENDING PLANS Nigerian cement maker Dangote Cement revised its spending plans for 2015 from $700 million to $1 billion. The move comes after the group commissioned two new plants in June. Dangote embarked on an expansion outside Nigeria, investing more than $5 billion over the past few years. According to the company, the contribution to sales outside its dominant Nigerian home market grew to 14 percent of total revenue by June 30 from 3 percent a year ago. Dangote Cement commissioned operations in Ethiopia and Zambia last month. It expects to begin production in Tanzania in September. ULTRATECH FORESEES BIGGER MARKET IN BANGLADESH Bangladesh is a promising market for

UltraTech, the company planning on strengthening its presence in the country through collaboration with Select Marketing, a company focused on promoting industrial products to major institutional and corporate business houses in Bangladesh. Bangladesh’s GDP has been growing by more than 6 percent on average in the past decade, and it is likely that demand for cement will grow by ten percent in the coming year. UltraTech Cement has entered the Bangladeshi market by buying the majority share in Emirates Cements Bangladesh. PAKISTANI COMPANY SEEKS STRATEGIC GAIN OVER COMPETITORS Bestway Cement CEO Zameer Mohammed Choudrey has stated that the company he manages is now the largest in Pakistan, with a capacity that surpasses 8 million tons of cement per year. In April, the company purchased 75.86 percent of Lafarge Pakistan Cement. The company now controls Lafarge’s 2.4 million tons per year capacity. The acquisition enables Bestway to offer a wider range of products and brands, thus gaining a competitive advantage over its competitors.

Source: www.vicat.com

roads. Manufacturers are ready to provide cement at lower prices for bulk purchases by the road contractors. The price could vary from Rs 250 to 260 a bag compared to Rs 320-350 sold in the retail market. Initial costs for a cement road are about 20 percent higher compared to bitumen roads, but cement roads require less maintenance works. India’s Ring Road, located in Nagpur, is set to be renovated extensively as the state public works department will begin converting the Ring Road from existing tar to cement concrete. The bridges on the 45km Ring Road will be inspected before the commencement of cement concrete road project. Initially, project costing around Rs 293 crore will be executed. Engineers from the state public works department continue to push the concept of cement concrete instead of tar roads.

Sagar Cements

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CEMENT M&A AND FINANCE

&a and finance

INDIA: ULTRATECH CEMENT PLANS TO RAISE FUNDS FOR LOAN REFINANCING Indian cement maker Ultratech Cement seeks to raise about Rs 9,000 crore through private placement for repayment of existing loans and capital expenditure. The company will seek shareholders’ approval to raise the capital at its Annual General Meeting scheduled next month. “In order to augment resources for ongoing capital expenditure and/or repayment/prepayment of existing loans and/ or for general corporate purposes, the company may offer or invite subscription for secured/unsecured redeemable NCDs, in one or more series/tranches on private placement basis, issuable/redeemable at discount/par/ premium,” the company said. Ultratech Cement reported a 6 percent fall in its consolidated net profit at Rs 591 crore for the first quarter ended June 30 2015, against Rs 628 crore a year-ago. LOANS OF INDIA’S BINANI CEMENT RESTRUCTURED Lenders to the debt-ridden Indian cement maker Binani Cement restructured loans of Rs 3,000 crore, throwing in an additional term loan of Rs 300 crore. The joint lenders’ forum (JLF) also sanctioned a working capital limit of R192 crore for the company. Central Bank of India leads the 18-bank term loan and the 14-bank working capital consortium. Binani Cement has four cement manufacturing plants, of which two production facilities are located outside India, with a global manu31

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facturing capacity of 11.25 million tons per year. In FY14, the company produced about 5 million tons of cement, lower than 5.7 million tons in FY13 while the sales dropped 9.6 percent to 5.1 million tons. The company attributed the fall in sales partly to poor demand in the wake of limited infrastructure and real estate activity. In FY13, the company’s parent, Binani Industries, decided to divest 40 percent of its stake in Binani Cement with the objective of “improving the cash flow position of (Binani Industries), reducing the interest cost significantly by retiring some of its debts”. The divestment did not materialize due to “poor investment sentiments and political uncertainties that prevailed in the country”. The cement sector continues to remain under pressure with analysts predicting that Q1FY16 will not fare any better. INDIA’S AMBUJA CEMENTS EXPECT TO SEE DECLINE IN PROFIT Indian cement maker Ambuja Cements is expected to post a 37 percent decline in profit in the second quarter of the year. Ambuja Cements’s Q2 is expected to be subdued as profit after tax is seen falling 37 percent year-on-year to Rs 258 crore on poor realization and lower revenue. Total income from operations is likely to fall 8 percent to Rs 2,490 crore in June quarter compared to Rs 2,720.1 crore in the yearago period due to lower sales volumes. Cement volumes are expected to inch up by 1 percent to 5.85 million tons.

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focus INDIA’S ULTRATECH CEMENTS BOOSTED CEMENT SALES Indian cement manufacturer Ultratech Cements posted a 6 percent decline in consolidated net profit in the quarter ended June 30, 2015. The company’s consolidated net profit during the quarter stood at Rs 591 crore. The Aditya Birla Group firm had posted net profit of Rs 628 crore in the year-ago period. Consolidated net sales increased by 6 percent to Rs 6,372 crore in April-June quarter of 201516. Cement and clinker sales stood at 12.14 million tons, up from 11.7 million tons. “Energy costs improved by 7 percent. The reduction in fuel prices was partially offset by the increase in railway freight. Input prices remained stable, except for the rise in royalty for Limestone and levies under the Mines and Minerals (Development & Regulation) (MMDR) Amendment Act, 2015,” the company said. Ultratech commissioned a 15 MW Waste Heat Recovery System taking the company’s total power generation capacity from waste heat recovery to 48 MW.

HEIDELBERGCEMENT INDIA POSTS DECLINE IN PROFIT HeidelbergCement India posted a 71.73 percent decline in net profit in the quarter ended June 30. The company’s net profit amounted to Rs 3.35 crore. The total income from operations, however, increased to Rs 43.89 crore from Rs 41.05 crore in the year-ago period. The total expenses of the company increased to Rs 41.05 crore compared with Rs 36.68 crore in the corresponding quarter of previous fiscal. INDIA’S ACC POSTS DECLINE IN CEMENT SALES Indian cement maker ACC posted a 45 percent decline in consolidated net profit at Rs. 133.5 crore for the second quarter that ended on June 30, 2015. The company attributed the decline to challenging market conditions and subdued demand. Total consolidated income fell by a marginal 1.5 percent to Rs. 3,015.3 crore in April-June quarter from Rs. 3,059.9 crore in the same quarter of fiscal year 2014. “Overall construction activity remained dull with weak expenditure on infrastructure and housing

sectors leading to lackluster demand for cement. Surplus capacity in the industry heightened competition and made cement prices volatile,” ACC said. Sales fell 2.4 percent to 6.2 million tons, down from 6.35 million in the year ago period. DANGOTE CEMENT HAS BEEN CIRCLING ITALCEMENTI HeidelbergCement rushed to buy control of Italcementi as an African rival also showed interest in the Italian cement maker. Dangote Cement had been circling Italcementi, but did not make a formal offer. Though Carl Franklin, head of investor relations at Dangote, did not confirm that the company was seeking to buy Italcementi, he said that “as a large company we examine all options for growth”. HeidelbergCement agreed to purchase 45 percent of Italcementi and bid for the rest in a deal that values its smaller Italian rival at EUR 6.7 billion. The talks between HeidelbergCement and Italcementi were reported to have begun only four months ago. The stake was previously owned by Italy’s Pesenti fami-

ly, which sold it for EUR 10.6 per share. The German cement manufacturer will make a tender offer at the same per-share price for the remaining 55 percent of the Italian company. The transaction came one week after Holcim and Lafarge finalized their USD40 billion merger. HeidelbergCement is currently the world’s no. 4 cement producer, with a EUR 12.6 billion revenue during the last year. The Italcementi acquisition helps the company to expand its presence in Europe, Northern Africa and the Middle East. JAIPRAKASH ASSOCIATES RUMORED TO SELL CEMENT PLANT JP Associates is said to sell one of its cement units to HeidelbergCement India in order to reduce its overall debt. Responding to the news circulating around the topic, JP Associates has released a statement saying that the news is merely market speculations and that it refuses to comment. Company representatives said that they will promptly inform of any event or information that would result in the selling of any of its units.

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CEMENT PROJECTS AND EXPANSIONS

rojects and expansions

NEW CEMENT PLANT STARTS OPERATIONS IN INDIA Indian cement manufacturer Burnpur Cement inaugurated its new cement plant in Patratu in Ramgarh district in the Indian state of Jharkhand. The plant will be able to produce up to 800 tons of cement per day, its limestone mines being located at Benti Begda near the site of its plan. The company completed its financial closure of term loan for the Patratu project with a consortium of banks led by State Bank of India (SBI) and comprising State Bank of Hyderabad, United Bank of India and Central bank of India. The new cement plant, built with an investment of Rs 200 crore, brings the company to a total production capacity of 1,000 tons per day with its existing unit at Asansol, West Bengal. INDIA’S DALMIA CEMENT LAUNCHES PRODUCTION AT NEW UNIT India’s Dalmia Cement Bharat entered the Kolhapur market as part of its expansion in Maharashtra. Dalmia Cement recently commenced operations at its greenfield cement plant in Belgaum district, Karnataka which will cater to the growing demand in Maharashtra, Goa and Karnataka. The Maharashtra market accounts for 10-12 percent of the total India cement market and has been growing at 3-4 percent over the last one year. The Rs 1,300 crore plant has an annual production capacity of 2.5 million tons of cement and is the company’s eleventh manufacturing unit. "DCBL estimates that cement sales in Maharashtra will reach 1 lakh million tonnes by 2020 and in order to tap 33 JULY - AUGUST 2015

this opportunity, we are targeting to appoint over 600 dealers in the state of which 170 are in Kolhapur. We will now have a presence across 10 cities including Mumbai, Pune, Thane, Kolhapur, Satara, Ahmednagar etc in the state and are looking to strengthen our market share from 5% to 6% in the next three years,” said Mahendera Singhi, Group CEO, Dalmia Cement Bharat. INDIA’S JSW CEMENT INVESTS TO BOOST PRODUCTION CAPACITY Indian cement company JSW Cement is set to invest Rs 2,200 crore to increase its production capacity to 20 million tons over the next three years. JSW Cement is expanding its slag based cement capacity from 6.4 million tons per year to 20 million tons per year. “We are planning to go into areas other than South India such as into East and West India especially in West Bengal, Odisha and in Maharashtra that would include both the green field and brown field investments. Certain approvals are being awaited and we expect them to come during the monsoon period after that we will start the construction activities,” said a senior company official. Furthermore, JSW Cement is evaluating projects from acquisition point of view for clinker capacity that would increase their clinker capacity by another 1 million ton. Some of the areas identified in West Bengal and Odisha where the company has acquired land are Salboni in West Bengal and Cuttack and Bhubaneshwar in Odisha where approvals are expected soon. The company is confident of demand revival in the next one and half years on the back

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of revival in infrastructure and construction activity which is slowly picking up after the government initiated policy changes to remove crucial hurdles. SANGHI INDUSTRIES LAUNCHED NEW CEMENT GRINDING UNIT IN INDIA Sanghi Industries’ new grinding unit in India was inaugurated. Woth a 1.2 million tons per year capacity, the unit boost the company’s cement production capacity to 4.1 million tons. The company has invested around Rs. 125 crore in the new facility. "Inauguration of the grinding unit by Gujarat Chief Minister is a testimony to the fact that Sanghi Industries is considered as one of the leading corporate which has contributed to the industrial growth in Kutch and Gujarat,” said Ravi Sanghi, Chairman & Managing Director, Sanghi Industries. The company started works for a 15 MW waste heat recovery system that Sanghi Industries proposes to set up to recycle waste heat of cement plant to be converted into power. Sanghi had signed a Memorandum of Understanding (MoU) with a Chinese company for this project in May 2015.

CEMENT VOLUME & PRICING

olume and pricing

PAKISTAN SEES ITS CEMENT SALES DECLINE Cement sales in Pakistan in July 2015, the first month of the 2015/16 fiscal, amounted to 2.2 million tons, down 33 percent from the previous month. The plunge in overall sales came as domestic demand dropped 36 percent to 1.74 million tons, while exports fell 17 percent to 0.5 million tons. In the northern region, exports fell 27 percent, but increased 6 percent in the southern region. Though the fall was expected, it was forecasted to drop to a lesser extent. The decline is driven by Ramazan when demand usually stood slow. Other reasons behind the decline in sales included the low number of working days due to Eid holidays and a reduction in exports because of anti-dumping duty imposed by South Africa on Pakistani cement companies.

posed to be allowed as a deduction against income up to 50pc of taxable income, or Rs1 million. The government has encouraged the organized and corporatized sector to make investment in the housing sector. In order to reduce cost of construction, it is proposed that supply of bricks and crushed stone may be exempted from sales tax for three years up to June 30, 2018. FIRM CEMENT PRICES IN THE INDIAN MARKET DESPITE MONSOON Despite the arrival of the monsoon, cement prices in the Indian market remain stable as rates have corrected sharply in the recent months and there is very little

room left for further correction. Last year, cement prices were an average Rs 300 per 50 kg bag, and are currently rated around Rs 270 levels. While there will be some correction in prices going forward, this year they will be less as cement companies are already operating at squeezed margins. Cement prices have corrected sharply before monsoon while demand has not yet revived. While cement companies may look at cutting prices from next month, the quantum is likely to be low. Demand is expected to revive from the second half of this financial year as rural economy is expected to perform well with healthy monsoon in the country.

BUILDERS IN PAKISTAN WANT CHEAPER CEMENT Builders in Pakistan want steps to be taken for the reduction of cement prices in the country. Although the Association of Builders and Developers’ (ABAD) welcomed the steps taken in the budget 201516 to promote the construction sector, they find it “surprisingly silent on proposing steps to make cement cheaper.” The minimum tax on builders is proposed to be exempted till June 30, 2018 which comes as a relief to the housing sector. Mark-up on housing loans obtained by individuals from banks and other institutional lenders for construction or purchase of a house is proINDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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CEMENT PEOPLE

eople

DIRECTOR OF INDIA’S ULTRATECH CEMENT RESIGNS India’s UltraTech Cement announced that its Non-executive Director Adesh Gupta resigned from the Board of the Company. The move came into effect on June 30, 2015. Adesh Gupta cited time commitment for pursuing professional and personal engagements as reasons for his stepping down. NEW CEO FOR LAFARGE INDIA The Indian arm of the French Lafarge has promoted Ujiwal Batria to the position of chief executive officer of the company as of June 22, 2015, according to a press release of the company. Martin Kriegner has

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formerly occupied the position, now being named area manager for Central Europe of LafargeHolcim. Priori ro begin Lafarge India’s CEO, Batria acted as managing director of the company, having worked with Lafarge for 16 years SRINIVASAN RESIGNS FROM INDIA CEMENTS CAPITAL BOARD N. Srinivasan resigned from the board of financial services company India Cements Capital (ICCL), reports Deccan Herald. ICCL is part of the India Cements group. “N Srinivasan and T S Raghupathy have resigned as directors of the company with effect from March 30, 2015,” said the company in a statement. ICCL is part of Chen-

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nai-based business house of India Cements with Srinivasan serving as the Chairman. Srinivasan is also the Managing Director of India Cements.

focus INDIA: 33 PERCENT SALARY HIKE FOR CEMENT WORKERS The representative body for cement makers in India has announced a salary hike for cement workers which will be implemented over next two years in the country. As per the settlement, additional Rs 6,000 would be given to cement workers in two instalments of Rs 3,000 each in April 2014 and September 2016, which translates into a 33% hike in salary. It also provides for enhanced Dearness Allowance. The arrears for 16 months will be paid in two instalments. CMA represents 20 cement companies in India; it covers around 66 percent of total annual cement production capacity in the country. The Vice Chairman and MD of India Cements said “The current settlement is unique in today’s scenario since it is perhaps the only nationwide settlement reached for workers of a major organised industry in the private sector.”

REGIONAL NEWS

anti-dumping duty imposed by South Africa on Pakistani cement companies. NEPAL APPROVES INVESTMENT FROM HONGSHI HOLDINGS Nepal has endorsed a USD 360m Foreign Direct Investment proposal made by China’s Hongshi Holdings to establish a cement plant in Nepal in partnership with Nepal’s Shiva Cement. This is the largest FDI pledge yet from China, according to the government officials. China’s Hongshi Holdings and Nepal’s Shiva Cement reached an agreement in March 2015 to set up a cement plant in Nepal. Officials at the IBN said this is the third-largest FDI in cement plants in Nepal. As per the agreement, Hongshi Holdings will invest 70%

Source: dhenoble.com

egional news in the project, while the Shiva Cement will invest the remaining amount. According to Nepal’s Cement Manufacturers’ Association, there are more than 40 (mainly mini) cement plants in the country and domestic products only account for 85% of domestic consumption. DANGOTE TO START CONSTRUCTION OF NEPAL CEMENT PLANT IN THE FALL Dangote Cement Nepal has said that it will start the construction of a plant in Makawanpur as soon as all of the preparatory works, licensing and permissions are complete. D V G Edwin, executive director of Dangote Group, said that the company would also acquire a license for an additional mine by then. Dangote Cement Nepal plans to start production within three years with an investment of US$550m. It will be Dangote’s 15th cement plant and will have 6000t/day of production capacity. Meanwhile, Dangote Group has provided US$1m of to Nepal’s Disaster Relief Fund. The support was provided through Dangote Foundation, the corporate social responsibility arm of Dangote Group. Zouera Youssoufou, managing director of the foundation, handed over the cheque to prime minister Sushil Koirala on 17 June 2015. According to company officials, Aliko Dangote, chairman of Dangote Foundation, has also sent a message of sympathy to the government and assured the foundation that support in the rehabilitation of earthquake victims would be provided.

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REGIONAL NEWS PAKISTAN: CEMENT EXPORTS DECLINE The steep decline in Pakistan’s cement exports from the northern region should be an eye opener for the policy makers, according to the All Pakistan Cement Manufacturers Association. Pakistan’s export to both Afghanistan and by-sea routes suffered. The decline in exports to Afghanistan was due to influx of Iranian cement and slowdown in economic activity. The cement producers’ association appealed the government to support local manufacturers in winning back the Afghanistan market by giving freight subsidy enabling them to compete with highly subsidized Iranian cement. Cement prices are likely to increase after Eid due to increase in duty on imported coal, imposition of GIDC and increase in electricity tariff.

CEMENT DEMAND IN INDIA PROJECTED TO GROW The cement industry in India is projected to grow between 6.8 and 7 percent in 2015/16. Demand is expected to improve gradually in the medium term, in line with infrastructure recovery. Last fiscal year, Indian cement production increased by 5.6 percent. However, capacity utilization is likely to remain moderate at about 72 percent as demand will pick up, but fresh capacity addition will slow down. Post-monsoon, cement demand in India remained sluggish; output rose 1.8 percent in October 2014 – March 2015 as against 9.7 percent in the April – September 2014 period. Thus far in the current financial year the demand has continued to remain subdued in with cement production growing by merely 0.1 percent during Apr-May 2015.

TOUGH YEAR FOR NORTH INDIAN CEMENT MARKET IN FY16 The north Indian cement market is expected to have a tough year this fiscal, the market accounting for 31 percent of the country’s cement demand in the previous fiscal year. Both retail and institutional demand are struggling to grow. The seasonally strong April-June quarter has been poor and given the lack of government tenders, scope of a meaningful improvement in the remaining part of the year is limited. In FY16, the market is expected to grow by about 3-4 percent, the rate being dependent on higher execution of infrastructure projects. North India has an installed capacity of 87 million tons as of the end of FY15 with Rajasthan accounting for 54 percent. Shree Cement is the market leader, followed by UltraTech, Jaypee and Ambuja. Other relatively large producers are Binani Cement, JK Cement and JK Lakshmi. North India is facing growth challenges, on account of infrastructure recovery remaining elusive and rural demand deteriorating significantly in the last one year due to poor rainfall, low subsidies, wage growth and paltry MSP hikes.

Sourec: i.ytimg.com

PAKISTAN’S CEMENT EXPORTS TO INDIA SEE INCREASE Pakistan’s cement exports to India saw a 2.82 percent increase in FY 14-15. Exports increased from 0.68 million tons in FY 1314 to 0.70 million tons. In June 2015 alone, overall exports touched 0.55 million tons, down 19.77 percent from 0.69 million tons exported in the same month last year. To-

tal dispatches in June stood at 3.27 million tons, up 1.27 percent from 3.23 million tons dispatched in June last year. The overall situation during fiscal year 14-15 showed a growth of 3.27 percent compared to the last fiscal year as total dispatches increased to 35.4 million tons against 34.28 million tons from July 2013 to June 2014.

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ORDERS & EQUIPMENT HIGHLIGHTS

NEW LIQUID RING VACUUM PUMPS LAUNCHED Edwards has introduced new liquid ring pumps specifically designed for fly ash handling. The new range of SHR single stage liquid ring pumps provides the optimum vacuum solution for fly ash handling, particularly in India, where the high ash content of the coal commonly used produces vast quantities of ash to be removed during the combustion process. â&#x20AC;&#x153;The latest addition to our LRP range completes our liquid ring pump offering for the power sector, and complements the sister twostage pumps already operating on over 40 GW of generating capacity in India. Our installed base is supported by the strong local presence we have in India, with a

network of skilled local service capability,â&#x20AC;? said Phil Rawlinson, Global Market Sector Manager, Power for Edwards. SAHYADRI INDUSTRIES TO INSTALL NAFS UNIT Sahyadri Industries is looking to invest Rs 140 crore to set up an ultra-modern non-asbestos flat sheets integrated plant at Vijaywada. The MoU to this effect was signed between Sahyadri Industries Ltd and the Andhra Pradesh state government in Mayt 2015. According to the report, Sahyadri Industries Limited Chairman Jayesh Patel said that the Vijaywada plant will be set up at an investment of Rs 140 crore and produce NAFS with an annual installed manufacturing capacity of 100,000 tonne. The

Source: wikipedia.org

rders & equipment capacity expansion is expected to take the company's total installed capacity of NAFS to more than 200,000 ton per annum. "SIL's green building products will play a part in building the upcoming Smart Capital City of Andhra Pradesh. The unit will get its

focus

FLSMIDTH EXPECTS A NEW YEAR OF DECLINE FLSmidth expects a new year of decline mainly due to a lack of investment in the mining industry. New orders fell as much as 15 percent to DKK 17.8 billion in 2014 after a final quarter that did not reach expectations. After a sharp decline in turnover to DKK 5.8 billion, the company expects a new year of decline. Revenue is expected to reach DKK 19-21 billion, but with improved profitability to 9-10 percent from 7.7 percent in 2014. The management seeks to optimize business, while demand is falling. The company is well prepared for a challenging 2015, after which the company expects to improve its market position.

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ORDERS & EQUIPMENT HIGHLIGHTS principal raw materials like cement and flyash from within the state. Almost 25,000 tonne of fly-ash will be consumed helping the state's power plants dispose off the waste in a useful manner," Sahyadri Industries Ltd Managing Director Satyen Patel said.

FLSMIDTH TO SUPPLY NEW CEMENT PLANT IN PAKISTAN FLSmidth will supply a new cement plant in Pakistan as it signed a EUR 57 million contract with D.G. Khan Cement Compa-

ny. D.G. Khan Cement is part of the Nishat Group, one of the largest conglomerates in the country. FLSmidth will supply engineering and equipment for a 8,500 tons per day green field cement plant in Pakistan. The plant will be located in Hub in the province of Baluchistan approximately 30 km northwest of Karachi, Pakistan. "Pakistan is a very important market for FLSmidth and we are extremely pleased that D.G. Khan Cement Company Ltd. again has chosen FLSmidth as their supplier. This underlines our valuable long-term ties with D.G. Khan Cement Company Ltd. as well as our strong foothold in Pakistan where we expect to see more activity following new government development programs,â&#x20AC;? said President of the Cement Division Per Mejnert Kristensen.

Sourec: flsmidth.com

KHD TO SUPPLY SLAG GRINDING MILLS TO JSW CEMENT Humboldt Wedag India and Humbold Wedag, two subsidiaries of KHD Humboldt Wedag, have won contracts valued between EUR 55-65 million for the supply and maintenance of eight slag grinding mills. JSW Cement, an Indian cement manufacturer, placed the order for the KHD equipment. Each of the eight mills has two significant components, namely two KHD roller presses with a total ca-

pacity of 180 tons per hour. The projects will be booked as order intake as soon as the pre-conditions for project executions are fulfilled. KHD is represented in multiple growing markets, like India, Russia and the Asia-Pacific region.The German equipment manufacturer has been providing high quality equipment and services to cement producers for more than 150 year. KHD is a leader in environmentally friendly and energy-efficient product for grinding and pyro processing section of cement plants.

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INFRASTRUCTURE & PROJECTS

INDIAN CEMENT MANUFACTURERS PUSH FOR CONCRETE ROADS Cement manufacturers in India are asking local governments to use cement in road construction instead of the traditional bitumen in a bid to boost cement demand, reports My Digital FC. Cement makers are driven by low capacity utilizations. According to the Cement Manufacturers Association, using cement will imply savings due to the near zero maintenance costs and longer life of the roads. Manufacturers are ready to provide cement at lower prices for bulk purchases by the road contractors. The price could vary from Rs 250 to 260 a bag compared to Rs 320-350 sold in the retail market. Initial costs for a cement road are about 20 percent higher compared to

bitumen roads, but cement roads require less maintenance works. PAKISTAN: WASTE HEAT RECOVERY PLANT OPENED Bestway Cement has invested nearly Rs. 1.7 billion to set up two waste heat recovery power plants. According to Sir Anar, the company’s Chairman, the investment follows the company’s acquisition of Lafarge Pakistan for USD 329 last year. The two heat waste recovery power plants will serve Bestway’s cement operations with a 13.5 megawatts combined capacities. According to a statement released by the company, the waste head recovery plants will enable Bestway Cement to reduce its reliance on external sources of power.

INDIA’S RING ROAD TO BE CONVERTED TO CEMENT CONCRETE India’s Ring Road, located in Nagpur, is set to be renovated extensively as the state public works department will begin converting the Ring Road from existing tar to cement concrete. The bridges on the 45km Ring Road will be inspected before the commencement of cement concrete road project. Initially, project costing around Rs 293 crore will be executed. Engineers from the state public works department continue to push the concept of cement concrete instead of tar roads. SONG GIANH CEMENT STRENGTHENS ITS POSITION Vietnamese cement maker Song Gianh

Source: siteresources.worldbank.org

nfrastructure & projects

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INFRASTRUCTURE & PROJECTS and the company began exporting to several countries including Bangladesh, Indonesia and Australia.

West Bengal and Odisha, taking its cement capacity up by more than 14 million tons to 20 million tons by 2020.

INDIA’S JSW CEMENT CUTS CEMENT PRODUCTION COSTS JSW Cement, a unit of Sajjan Jindal-led JSW group, plans to cut cement production costs by three-fourths. The Indian cement maker will set up grinding units closer to markets in contrast to the traditional model of clinker units placed near the source of raw material. According to the plan, the new units will use clinker imported from countries that have a surplus, thus allowing JSW Cement to add 1 tons capacity at about Rs. 180 crore, against Rs. 840 crore required to set up a similar capacity under the traditional model. JSW will establish such units on the country’s east coast in

PAKISTAN ORDERS CRACKDOWN ON SUBSTANDARD BUILDING MATERIALS In Pakistan, Punjab Minister Shahbaz Sharif wants a crackdown against the sellers of substandard construction material with special regard to the road building. “Indiscriminate actions should immediately be taken against those elements involved in smuggling of substandard coal-tar and subsequently using it in construction and repair of roads,” he said. According to the report, no leniency will be shown to those using substandard and cheap coal-tar in the construction of roads and stern action will be taken against them under the law after registration of cases.

Sourec: jsw.in

Cement strengthened its position in the domestic market, as well as foreign markets. The company has undertaken restructuring efforts of its business. Song Gianh Cement started construction of its plant in 2003 under a VND 3 billion investment, with equipment supplied by Polysius. After three years under construction, the plant commenced operations 2006. However, the company faced severe competition from other cement manufacturers in the country. Furthermore, raw materials supply became more scares. Facing these challenges, the company decided in 2011 to switch operating model from SOEs into joint stock company. In 2014, the company reached 1.4 million tons of clinker annual production capacity and 1.3 million tons per year of cement production capacity. Revenue amounted to VND 1.4 billion,

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ANALYST RECOMMENDATIONS ULTRATECH CEMENT Brokerage house Emkay Global Financial Services has recommended HOLD rating on the Ultratech Cement stock. First quarter performance was largely in-line with estimates, but sharp increase in stock price in last month leave little room for further upside. Analysts recommend buyers to wait for better entry points. The company is best placed to benefit from improvement in demand, with underutilized capacities in Gujarat and capacity expansions over the last one year, which may help it to generate superior profits in an upcycle. Its ability to control operating cost is reflected by the changing fuel mix based on cost benefits which will continue to yield positive results in future too. However, sharp run-up in stock price in last one month (up 20%) leaves little room for further upside in the analysts’ view. Though the brokerage house continues to prefer the stock, stretched valuations make it downgrade the rating to Hold from Buy. AMBUJA CEMENTS s2analytics.com recommends SELL on Ambuja Cements, which had a sharp upside rally, almost a V-shaped rally and then a V-shaped decline. Then it has been pausing for seven to eight days and that is not a good chart. A rally that did not sustain with a trading range that is pushing on the downside makes for a short sell, according to brokers. The company’s second quarter profit after tax fell 45 percent year-on-year to Rs 226.4 crore, impacted by lower operational performance and additional depreciation charge of Rs 22 crore. Topline met street expectations but bottom-line and operational performance was lower than expectations. Profit was estimated at Rs 258 crore on revenue of Rs 2,490 crore for the quarter, according to the average of estimates of analysts. Total income from operations declined 8 percent during the same period, dented by slow growth in cement sales volumes and decrease in selling price by approximate-

ly 10 percent. Ambuja Cements sold 5.88 million tons of cement during the quarter, a growth of 1.6 percent compared to 5.79 million tons sold in the year-ago period due to muted cement demand. The company said mixed macro-economic indicators are pointing towards sluggish growth in cement demand in short term. With the onset of monsoon, cement demand is expected to remain subdued in the next quarter, it added. J.K. CEMENT Edelweiss is bullish on J. K. Cement and has recommended BUY rating on the stock with a target price of Rs 890, in its research report dated August 3, 2015. While grey cement volumes rose 4% YoY, achievements disappointed—down 7% QoQ, with weak prices in North region and Maharashtra. However, the impact was offset by low cost, primarily freight (down 4% QoQ due to benefits of split grinding unit) and other expenses (up just 2% YoY). While expected commissioning of the railway siding in Q2FY16 may potentially further reduce freight cost, factoring weak cement prices in Q2FY16, Edelweiss analysts revise down their FY16E EBITDA for this segment 16%. White segment volume and EBITDA growth remained tepid at 5% YoY each. However, they are expected to gather pace in ensuing quarters; ACC Chandan Taparia of Anand Rathi Securities recommends selling ACC with a downside target towards Rs 1,340. "We have seen

strong bounce back in the market from the lower levels but ACC is not participating in the entire rally,” says the analyst. The market has seen liquidation of long position in last three trading session which is also suggesting that bulls are not comfortable in the counter. The stock has failed to sustain immediate hurdle of Rs 1,410 and all set to go down towards immediate support of Rs 1,345-1,340 zone. The brokerage house recommends selling this stock with a stop of Rs 1,415 and expecting downside target towards Rs 1,340 level. RAMCO CEMENTS Deven Choksey of KR Choksey Shares & Securities is bullish on The Ramco Cements and recommends holding the stock with a view of at least two-three years. According to the analyst, the quarterly numbers for cement sector probably might disappoint on some counts, but on the cost front most of the cement companies should be showing better performance this particular quarter. For investors looking at a pure play regional cement, companies like The Ramco Cements could be probably a relatively better choice. While the input cost and energy cost are getting lower, the transporters' cost is also coming down. At the same time the capacity utilisation is improving, so all-in-all put together it is working out to be a favorable formula for most of the cement companies and some of them in particular where they could end up reporting better numbers possibly going forward. The analyst remains bullish on The Ramco Cements and at the same time would like to hold it for at least twothree years from now on.

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

JULY - AUGUST 2015

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

INDIA

GLOBAL

1. New CEO for Lafarge India

1. Cement plant in Kazakhstan gets new life

2. Lafarge to purchase stake in Lafarge India

2. Dangote seeking to invest in Malawi

3. Director of India’s UltraTech Cement resigns

3. KHD to supply slag grinding mills to JSW Cement

4. CRH – bidder for Lafarge assets in eastern India

4. Michel André elected president of French Unicem

5. Nestle India burns Maggi noodles into fuel at cement plants

5. Buzzi Unicem proposes waste fuel use

6. Jaiprakash Associates rumored to sell cement plant

6. Cimpor invests in new plant in Mozambique

7. Indian cement industry witnesses consolidation

7. Eurocement to upgrade all plants to modern dry process

8. India’s Dalmia Cement commences operations at greenfield cement plant

8. Lafarge plants in Romania taken over by Irish CRH

9. New cement plants starts operations in India

9. CRH moves for South Korea’s number two cement market player

10. ACC resumes limestone mining in Odisha, India

10. Heidelberg Cement buys stake in Italcementi

11. India’s Dalmia Cement launches production at new unit

11. Holcim wants limestone mine expansion in Germany

12. Sri Lanka Cement Corporation on the verge of closure

12. Acquisition of Lafarge North America’s Davenport cement plant concluded

13. India: Rural cement demand to grow

13. BUA Group to start production at new Nigerian plant

14. RDF in the Philippines to supply alternative fuel to cement plants

14. Dangote explains why it chose Nepal as next market for expansion

15. India’s Sanghi Industries installs new cement mill

15. Egypt raises the number of new cement licenses

16. Indian cement sector to improve in FY17

16. HeidelbergCement considers buying stake of Kyzylkumcement

17. Vietnam’s Lam Thach cement plant halts production

17. Turkish firm to build cement plant in Mozambique

18. Lafarge China launches tender offer

18. Kurdistan Cement inaugurates new unit

19. India: Cement sector remains under pressure

19. Dangote announces further investment in Cameroon

20. India’s Ultratech Cements boosted cement sales

20. Lafarge appoints new CEO in Central Europe

43 JULY - AUGUST 2015

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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

CONFERENCES WHERE THE CW GROUP WILL BE PRESENTING

WEBINARS HOSTED BY CW RESEARCH

Cement Business & Industry India 2015

September 3 - 4, 2015

Mumbai, India

Cement Trade Prices: 2Q2015 update and outlook

Cement Trade Prices 2Q2015

Future of Slag in India’s Cement Sector

September 3, 2015

Mumbai, India

August 25, 2015 at 2:00 PM GMT

SFS India 2015

September 4, 2015

Mumbai, India

Global Cement Volume Forecast Report: 2H2015

AshTrade India 2015

September 4, 2015

Mumbai, India

World Paper & Pulp India 2015

September 8 - 9, 2015

Mumbai, India

Slag & AshTrade Americas

September 30 October 1, 2015

Rio de Janeiro, Brazil

CBI Brazil & LatAm 2016

February 24 - 25, 2016

Sao Paolo, Brazil

9-10 Março 2016

São Paulo, Brasil

CW Research

WEBINAR

INDIA 2015

Global Cement Volume Forecast Report: 2H2015

update and outlook

WORLD PAPER & PULP

2015

BrasCon 2016

September 28, 2015 at 2:00 PM GMT

For questions or inquiries please contact Liviu Dinu, Market Services & Marketing Consultant at the CW Group at ld@cwgrp.com

For more information please visit http://research.cwgrp.com/meetings

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

JULY - AUGUST 2015

A CEMENT AND LIME INDUSTRY CONFERENCE AND EXHIBITION BY

EXHIBIT & SPONSOR OPTIONS LOCAL CONTACT

SEPTEMBER 3-4, 2015 • VITS HOTEL • MUMBAI, INDIA

PAST PARTICIPANT COUNTRIES

SRIRAM GANAPATHI Sr. Conference and Events Executive (India) sg@gmiforum.com +91 9969297536

GLOBAL CONTACT SIMONA IONESCU Client Service & Development Associate si@gmiforum.com +40723 676 906

PAST PARTICIPATING COMPANIES ABG Cement • ACC Limited • Aditya Birla Group • AIPMA • Alley-Cassetty Companies • Alliance Polysacks • Alternative Resource Partners • Ambit Capital • Ambuja Cement • Amrit Cement Industries • ASEC Trading • ATS Conveyors • Beroe Consulting • BEUMER Group • Bharathi Cement Corporation • Biltech Building Elements • Binani Industries • BQB InfraTechnorium • Browz • Burundi Cement (BUCECO) • Cachapuz • Cement Manufacturers Association (CMA) • Chettinad Cement • Chryso • Cimpor • Cimprogetti • Claudius Peters • Credit Suisse • CRH India • CTTL • CW Group • Dalmia Cement • DPTS Enterprises • Dron Energy • Emerald World Resources • Evonik Degussa India • Fly Ash Association of India (FAAI) • Fives FCB • FLSmidth • Golder Associates • Gujarat Siddhee Cement • Heidelberg Cement Group • HGH Systemes Infrarouges • Hi-Bond Cement India • Hirmi Cement Works • Holcim • International Finance Corporation (IFC) • Indian Institutes of Technology (IIT) • I-maritime • India Cements • Indian Concrete Institute • Indus Marketing Engineers • InGlobal Resources • Intelesco Solutions • IPIRTI • Italcementi Group • J.K.Cement • Jaypee Group • JK Sons • Jyotech • KHD • KJS Concrete • Lafarge • Lakshmi Cement • Larsen & Toubro • Loesche • Lytag • Madras Cement • Magnesita Refractories • Mapei • MASA India (MASA Group) • Maverick Consulting • McKinsey & Co • Merrill Lynch • Middle East Green Energies • Ministry of Mines Afghanistan • Ministry of Mines and Petroleum • Mitsui • Mjunction Services • Mondi Oman • Murli Cement • MyHome Industries • National Council for Cement and Building Materials • Neptune India • OM Consultants (AIPMA) • Orient Cement • Phillip Capital India • Plant Supervision • Prism Cement • Promac India • PricewaterhouseCooper • Quality Circle Forum Of India (QCFI) • Qualical • RAMCO - Enterprise Process Solution • Ready Mixed Concrete Manufactureres Association (RMCMA) • Refratechnik • Reliance Industries • Rexnord • RMC India • RNB Cements • RNCOS Business Consultancy • SABIA • Sagar Cements • SAIF • Sanghi Industries • Satna Cement Works • Saurashtra Cement • SB Engineers • Segezha Packing • SFK • Sharjah Cement • Shree Cement • Shri Digvijay Cement • Societa Impianti Calce (SIC) • SKF India • Somi Conveyor Beltings • Starlinger & Co • String Automation • Takraf • Tata Strategic Management Group • Tenova Mining & Minerals • The Crescent Group • The Energy and Resources Institute • Timken India Limited • Ultratech Cement • Union Cement • Vasavadatta Cement • Vicat • Vyankatesh Chemical Industries • W.R. Grace and Company • World Business Council for Sustainable Development (WBCSD) • Zawawi Minerals • Zuari Cement

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