Displaying items by tag: India
HeidelbergCement India agrees solar deal with Lalganj Power
12 August 2021India: Germany-based HeidelbergCement subsidiary HeidelbergCement India has secured 22GWh-worth of power from Lalganj Power. The energy company will source the electricity from its solar power plants. The deal is expected to reduce the company’s CO2 emissions by 0.4Mt over the life of the contract.
India’s ever-expanding cement capacity
11 August 2021Dalmia Bharat managing director Puneet Dalmia characterised India’s cement industry as one of ‘many regions and many players’ in an interview on 10 August 2021. It is equally an industry of many plants – which are seemingly larger and more numerous by the week.
On 9 August 2021, Orient Cement announced an investment of US$215m to increase its Devapur, Telangana, cement plant’s capacity by 53% to 11.5Mt/yr from 7.5Mt/yr. Another Southeast Indian producer, Ramco Cements, plans to invest a total of US$135m in upgrades in the 2022 financial year; it completed US$53.9m (40%) of the planned investments in the first quarter alone. NCL Industries is planning a US$13.5m expansion of its 2.7Mt/yr Mattapalli, Telangana, cement plant by 33% to 3.6Mt/yr and the establishment of a new 0.66Mt/yr grinding plant at nearby Anakapalle for US$26.9m by 2022. Thus, a single state has at least 5.56Mt/yr-worth of new capacity in the pipeline with US$337m-worth of pending investments. If the central government grants the Telangana government’s 6 August 2021 request to reopen Cement Corporation of India’s Adilabad cement plant in the state, this will be joined by a further 4.0Mt/yr of ‘old’ capacity.
Nationally, investments in on-going cement plant projects total US$1.81bn. What is remarkable here is the continued drive to expand despite existing overcapacity. Puneet Dalmia estimates that Indian capacity utilisation will be 70% in 2021. Despite this, his company plans to increase its installed capacity by 17% to 36.0Mt/yr in the (current) 2022 financial year and by 57% to 48.5Mt/yr with the realisation of all on-going projects by the 2024 financial year, from 30.8Mt in August 2021. By 2030, the group aims to more than triple its installed capacity to over 110Mt/yr. Dalmia says that, if it is to achieve this, it will be not as another South and East Indian regional company, but a ‘pan-India, pure play cement producer.’
Dalmia’s confidence is founded on the belief that overcapacity will abate. His assurance is more than just that of an investor: when, in July 2021, the Department for Promotion of Industry and Internal Trade established an advisory body, the Cement Industry Development Council (CIDC), to help tackle the oversupply issue, it appointed him as chair. Puneet Dalmia predicts that capacity utilisation will rise to 85% ‘within a few years’. Consolidation is key: over the same hazily defined time period, the top five producers’ 57% share of the cement market will rise to 65%, he believes. Rising fuel costs and restrictive limestone mining licencing will deter would-be cement plant start-ups; anticipated carbon costs should clear away a lot of old wood.
Demand is the other half of the coin in India’s attempt to pitch market forces against overcapacity. In the first quarter of the 2022 financial year, cement demand fell by an estimated 20% amid the Covid-19-led collapse of rural housing’s bagged cement uptake. This type of sales roughly accounts for a third of Indian cement consumption. Other construction segments have proved more resilient. Prime Minister Narendra Modi’s government, never infrastructure-shy, chose to resume national projects after India’s Covid-19 lockdown ended on 10 May 2020, keeping them running through subsequent waves of the pandemic. The National Highways Authority of India (NHAI) continued with 480 projects covering 25,000km of road. In Andhra Pradesh, the state government is building 122,000 new homes. Cement producers have been able to corner pent-up demand to shift their stock at a generous margin.
The Confederation of Real Estate Developers' Associations of India (CREDAI) claimed on 9 August 2021 that the price of cement is hampering the realisation of affordable housing targets, and lobbied the government to reduce the goods and services tax on cement to 18% from 28%. In parts of the country, state governments have taken the matter into their own hands. The Kerala government set out to take over 25% of the Keralan cement industry on 5 July 2021. Its plan: increasing cement production, a policy which it is already implementing via state-owned Malabar Cements and Travancore Cements.
Puneet Dalmia claimed on 10 August 2021 that India’s per-capita cement demand is 200kg/yr, corresponding to a total national demand of 276Mt/yr and 60% below the purported global average of 500kg/yr. Given India’s development trajectory, growth is nearly inevitable. Puneet Dalmia is unequivocal in his medium-term prediction: Indian cement revenues will rise at a rate of 9–10% per annum, outstripping forecast gross domestic product (GDP) growth by 2%.
Indian cement’s tale of rebound and growth is borne out in the latest financial reports. UltraTech Cement’s first-quarter sales in the 2021 financial year were US$1.59bn, up by 54% year-on-year from US$1.03bn in the first quarter of the 2020 financial year. Its cement sales rose by 47% in the period to 21.5Mt from 14.6Mt. In its 2021 first-half report, Ambuja Cements recorded year-on-year sales growth of 41%, to US$930m from US$659m, and cement sales growth of 36% to 13.5Mt from 9.95Mt. This is echoed both in the other Indian producers’ reports and internationally: France-based Vicat named India alongside its home country as an area of particular sales growth in the first half of 2021, especially in the second quarter.
The UN Intergovernmental Panel on Climate Change’s demonstration of the impacts of human activity on the climate in a report published on 9 August 2021 might lead an observer to ask “What’s the good?” in all this growth. In the face of the immense benefits cement offers to the lives of Indians, a more pertinent question would be “How best can growth happen?” Ambuja Cement’s aforementioned plan to grind clinker with fly ash is a step in the right direction. Another is Vedanta Aluminium’s proposed fly ash and bauxite residue supply deal, for which it is seeking a cement industry partner. The new Cement Industry Development Council’s remit extends to the coordination of the sector’s efforts towards maximising efficiency and eliminating waste. ACC and Ambuja Cements are participating in parent company Holcim’s Plants of Tomorrow programme, which aims to increase the efficiency of cement production through better plant optimisation, higher plant availability and a safer working environment. Dalmia Bharat has a goal of net zero CO2 cement production by 2040, and a plan for getting there.
Pan-Indian producers are on the rise. Big companies desperate to modernise and implement their models of sustainable growth are blazing a trail. The size gains will be a national marvel - if the promises of sustainability are realised. What will be lost is the Indian cement industry’s festival of local and regional producers. Though still an industry of many regions and many players, its regions are increasingly close together, its players increasingly few.
India: Orient Cement plans to invest US$215m to increase the production capacity of its 7.5Mt/yr Devapur, Telangana, cement plant to 11.5Mt/yr, according to the Hindustan Times newspaper. The company previously expanded the plant’s capacity from 3.0Mt/yr at a cost of US$290m in 2019.
India: Ramco Cements plans to invest US$80.8m in future upgrades to its cement plants before 30 March 2022. In the first quarter of the 2022 financial year, which begun on 1 April 2021, the company invested US$53.9m in upgrades. The Hindustan Times newspaper has reported that realisation of its spending plan would bring the producer’s total upgrade investments for the 2022 financial year to US$135m.
India: The board of directors of Prism Johnson will consider a proposal to raise funds through issue of secured or unsecured, rated, listed, redeemable, taxable non-convertible debentures (NCDs) on 13 August 2021. Any such issue will take place on a private placement basis.
India: Birla Corporation’s revenue rose by 42% year-on-year to US$237m in the quarter of 30 June 2021 from US$167m in the same period in 2020. Sales volumes of cement increased by 38% to 3.35Mt from 2.42Mt. However, it noted that its sales volumes were 8% lower than the same period in 2019. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 40% to US$47.6m from US$34.0m. The cement producer said, “Better management of the lockdown this year, both by the company and the [government] administration, helped mitigate the effects of restrictions imposed in the areas of operations of the company relative to last year.” It added that construction work had continued to be delayed on its new 3.9Mt/yr integrated cement plant in Mukutban, Maharashtra due to the second wave of coronavirus.
Minister lobbies Indian government to reopen Cement Corporation of India plant in Adilabad
06 August 2021India: KT Rama Rao, the Industries and IT Minister, has lobbied the central government to help reopen the Cement Corporation of India (CCI) plant at Adilabad in Telangana. In a letter sent to Mahendra Nath Pandey, the Minister of Heavy Industries, Rao noted that several previous attempts had been made to reopen the unit, according to the Hindu newspaper. He added that the plant continues to hold a mining lease for 48Mt of limestone locally, has a dedicated electricity supply and has water resources. The 4Mt/yr integrated plant was originally built in 1984. Operations stopped in 1996 due to a lack of funds and the site was formerly closed in 2008.
KC Jhanwar appointed as chairman of NCB
04 August 2021India: The National Council for Cement and Building Materials (NCB) has elected KC Jhanwar as its chairman for the year 2021 – 2022. Shri Neeraj Akhoury was elected as the vice-chairman.
KC Jhanwar is currently the managing director of UltraTech Cement and the president of the Cement Manufacturers Association (CMA). He originally joined Aditya Birla Group in 1981 as a management trainee in the cement business. Since then he has worked across finance, operations and general management roles in the cement and chemical sectors. Jhanwar is a chartered accountant by qualification.
Neeraj Akhoury is currently the managing director and chief executive officer of Ambuja Cement and the vice-president of the CMA. He holds over 25 years of experience in the cement and steel sectors. He began his career with Tata Steel in 1993 and later joined the predecessor company to Holcim Group in 1999. Akhoury holds a degree in economics and a Master of Business Administration (MBA) from the University of Liverpool in the UK. He is an alumnus of the Harvard Business School in the US and had studied general management at XLRI business school at Jamshedpur.
Ambuja Cement to upgrade Ropar grinding plant
02 August 2021India: Ambuja Cement plans to spend around US$42m on upgrading its Ropar grinding plant in Punjab. The unit will have its capacity increased by 1.5Mt to 4.5Mt/yr by June 2023. It will install a new vertical roller mill and will produce cement using fly ash. The expansion is part of the company’s aim to reach a cement production capacity of 50Mt/yr.
India: Shree Cement is ready to start building a 3Mt/yr grinding plant at Purulia in Bengal. The project has an investment of around US$80m, according to the Times of India newspaper. The cement producer has already purchased the land for the unit and intends to start work on building it from August 2021. It will be the company’s first production plant in the state.