Displaying items by tag: Orient Cement

India: Orient Cement has entered into a share purchase, subscription and shareholder’s agreement with AMPTechnology and AMPSolar Systems. It will acquire a 26% stake in the latter for around US$0.6m. The Press Trust of India has reported that AMPSolar Systems is establishing a 13.5MW solar power plant in Maharashtra, where Orient Cement operates an integrated cement plant.

Under the current circumstances it’s not surprising to see how much Indian cement production fell in April 2020. Like many other countries, its lockdown measures to combat the coronavirus outbreak suppressed industrial output. Yet seeing an 86% year-on-year fall in the world’s second largest producer is shocking. Cement production declined to 4.1Mt from 29.2Mt. Further data shows, as part of the Indian government’s eight core industries, that steel and cement production suffered the most. Coal, crude oil, natural gas, petroleum refinery products, fertilisers and electricity generation all fell by far less.

Graph 1: Change in Indian cement production year-on-year (%). Source: Office of the Economic Adviser.

By comparison in China monthly cement output only fell around 30% at the peak of its outbreak. The difference is that China implemented a graduated lockdown nationally, with the toughest measures applied in Wuhan, the place the outbreak was first identified. As we reported in April 2020 demand for cement in Wuhan had fallen by around 80% at the time its lockdown ended. Production and demand are different, but India’s experience feels similar except that it’s on a national scale. The last time the country had a dip in cement production recently was in late 2016 when the government introduced its demonetisation measures and dented cement production growth rate (and national productivity) in the process.

UltraTech Cement, Orient Cement, Ambuja Cement, India Cement, Dalmia Bharat, JK Lakshmi Cement, Shree Cement and others all suspended operations to varying degrees in the first phase of the lockdown in late March 2020. Operations of industrial plants in rural areas was then cleared to restart in mid-April 2020, although subject to local permissions and social distancing rules, as the country’s lockdown zones took shape. All of this started to show in company results towards the end of March 2020 as sales started to be hit. The worst is yet to filter through to balance sheets.

March 2020 was a particularly bad time for the government to shut down cement plants because it is normally the month when annual construction work peaks. Cement production usually hits a high around the same time. The monsoon season then follows, reducing demand, giving producers a poor time to restart business. Credit ratings agency Care Ratings has forecast that capacity utilisation will drop to 45% in the 2020 – 2021 financial year. This follows a rate of 65 – 70% over the last six years with the exception of 2019- 2020, which was dragged down to 61% due to lockdown effects. On top of this labour issues are also expected to be a major issue to the sector returning to normality. The mass movement of workers back to their homes made world-wide news as India started its lockdown. Now they have to move back and Care Ratings thinks this is unlikely to complete until after the monsoon season, by September 2020. Hence, it doesn’t expect a partial recovery until the autumn, nor a full recovery until January 2021 at the earliest.

Not everybody is quite as gloomy though. HM Bangur, the managing director at Shree Cement recently told the Business Standard newspaper that he was expecting a rebound following the resumption of production in May 2020. He also reported a capacity utilisation rate of 60% at his company, higher than Care Rating’s prediction above, and he noted a difference between demand in rural areas and smaller cities (higher) compared to bigger cities (lower).

India is now pushing forward with plans to further unlock its containment measures to focus on the economy. However, daily reported news cases of coronavirus surpassed 8000 for the first time on Sunday 31 May 2020. How well its more relaxed lockdown rules will work won’t be seen for a few weeks. While this plays out we’ll end with quote from HM Bangur that will resonate with cement producers everywhere: “sales are imperative.”

India: Both Germany-based HeidelbergCement and Aditya Birla subsidiary UltraTech have responded to the government’s partial lifting of the coronavirus lockdown for rurally-located continuous industries by resuming ‘partial operations in some production facilities.’ Orient Cement subsidiary CK Birla said, “We are in the process of partially resuming our operations at our plants in Karnataka and Maharashtra.” Producers require the permission of the relevant state government to restart plants. In Telangana, where the government has not lifted the lockdown, CK Birla’s facilities remain shut.

The Economic Times newspaper has reported that ‘limited transportation facilities, higher than usual inventory and stricter rules regarding labour safety’ have added a note of caution to resumed operations. Shree Cement managing director Hari Mohan Bangur said, given the continuation of restrictions on construction in cities, “We expect just 10% of normal consumption, with hopes of a gradual increase.”

India: Cement producers and the World Business Council for Sustainable Development (WBCSD) have launched the Indian Cement Sector SDG Roadmap. The planning framework uses the United Nation’s (UN) sustainable development goals (SDG) to set a series of goals in energy and climate, people and communities, the circular economy and natural resource management. It is intended to contribute to the UN’s 2030 Agenda for Sustainable Development.

This initiative has been convened by nine cement companies: ACC, Ambuja Cement, CRH, Dalmia Cement (Bharat), Heidelberg Cement, Shree Cement, Orient Cement, UltraTech Cement, Votorantim Cimentos. It is also partially funded by the Swiss Agency for Development and Cooperation (SDC).

Notable goals from the roadmap include promoting railway and waterway transport networks, improving transport safety, increasing the use of blended cements and encouraging the use of alternative fuels. The framework also plans to increase the number of women in the indsutry workforce at every level from entry to board.

India: A report by the Cement Sustainability Initiative (CSI) shows that the local cement sector is on track to meet its 2030 targets from the low carbon technology roadmap (LCTR). Direct CO₂ emission intensity fell by 5% in 2017 in the Indian cement sector compared to the 2010 baseline. CO₂ emission intensity, including onsite or captive power plant (CPP) power generation, was reduced by 6.8% compared to the 2010 baseline. The alternative fuels thermal substitution rate (TSR) increased by 5 times from 2010 to 2017. The sector consumed more than 1.2Mt of alternative fuels in 2017.

“Sustainability is a journey, not a destination. In our globalised and interconnected world, no one can solve alone the challenges ahead of us and the only opportunity to succeed is through collaborative partnerships, where the common interests of all are considered as more important than the sum of individual interests. This is exactly the spirit that has animated the CSI’s low carbon journey since 1999. This flagship project - with its members - has developed, implemented and shared collective solutions for measuring, reporting and improving its greenhouse gas reduction performance, year after year,” said Philippe Fonta, managing director CSI.

The CSI and the International Energy Agency (IEA) worked with nine local CSI member companies - ACC, Ambuja Cements, CRH, Dalmia Cement (Bharat), HeidelbergCement, Orient Cement, Shree Cement, UltraTech and Votorantim Cimentos - to carry out the status review on the sector’s performance trends, continuous implementation measures and notable achievements based on the milestones set in the 2013 LCTR. The Status Review Report was developed in consultation with Confederation of Indian Industry (CII), with support from International Finance Corporation (IFC) and the Cement Manufacturers Association (CMA).

The findings of the report show that the direct CO₂ emission intensity was reduced by 32kgCO₂/t cement to 588kgCO₂/t cement in 2017 mainly due to an increased use of alternative fuel and blended cement production, coupled with a reduction in clinker replacement factor. However, the study also shows that significant efforts will be needed to meet the 2050 objectives of 40% reduction. The CO₂ emission intensity (including onsite or CPP power generation) has reduced by 49kgCO₂/t cement to 670kgCO₂/t cement in 2017 compared to the baseline year. The report has highlighted the adoption of waste heat recovery (WHR) systems by local cement plants.

The alternative fuels TSR increased to 3% in 2017 from 0.6% in 2010. More than 60 cement plants in India have reported continual usage of alternative fuels, with 24% of the total alternative fuels consumed as biomass. The share of blended cements used in the total quantity of cement manufactured increased to 73% in 2017 from 68% in 2010, largely due to the market’s growing acceptance of blended cement, emerging awareness of sustainability concepts, the availability of fly ash from thermal power plants and the use of advanced technology. The production of Pozzolana Portland Cement grew to 65% in 2017 from 61% in 2010. The share of Portland Slag Cement in cement production remained flat, at less than 10%, over the same period. The clinker factor reduced to 0.71 in 2017 from 0.74 in 2010.

In August 2018 the Global Cement and Concrete Association (GCCA) said it was taking over the work previously done by the CSI from 1 January 2019.

India: Orient Cement plans to upgrade its Devapur in Adilabad District, Telangana. It will invest US$290m towards more than doubling the unit’s cement production capacity to 7.5Mt/yr from 3Mt/yr, according to the Press Trust of India. The cement producer obtained first stage clearance from the Ministry of Environment, Forest and Climate Change to expand the existing integrated cement plant. However, final clearance from the Ministry is still awaited.

India: The Singareni Thermal Power Plant based in Pegadapalli in Telangana is supplying around 4000t/day of fly ash to local cement producers including Orient Cement, Kesoram Cement and others companies. The 1200MW coal power is part of the Singareni Collieries Company, according to the Hindu newspaper. The management of the plant believes that they achieved a record in 2017 – 18 by utilising over 91% of the fly and bottom ash generated by the power plant.

India: Orient Cement has cancelled a deal to buy three cement plants from Jaiprakash Associates. The companies signed an agreement in May 2017 to buy a 74% stake in Bhilai Jaypee Cement for US$225m and the acquisition of the Nigrie cement grinding plant in Singrauli, Madhya Pradesh from Jaiprakash Power Ventures for US$77m. Orient Cement said that the terms of the agreement allowed either party to terminate it if it did not complete within 12 months.

Bhilai Jaypee Cement, a joint venture between Jaiprakash Associates and the Steel Authority of India Limited (SAIL), has a 2.2Mt/yr integrated Portland slag cement plant in Satna Madhya, Madhya Pradesh and a grinding plant in Bhilai, Chhattisgarh.

India: Orient Cement has paid US$46,000 in compensation to the families of two workers who were electrocuted at the Chittapur cement plant. The move follows tension in the local community, according to the New Indian Express newspaper. The cement producer has also agreed to offer employment to the members of both families and to grant pensions to the widows of the workers.

India: Orient Cement has signed a deal with Jaiprakash Associates to buy three cement plants from it for US$302m. The arrangement, which was originally announced in October 2016, includes a deal to buy a 74% stake in Bhilai Jaypee Cement for US$225m and the acquisition of the Nigrie cement grinding plant in Singrauli, Madhya Pradesh from Jaiprakash Power Ventures for US$77m, according to the Hindu newspaper. Bhilai Jaypee Cement, a joint venture between Jaiprakash Associates and the Steel Authority of India Limited (SAIL), has a 2.2Mt/yr integrated Portland slag cement plant in Satna Madhya, Madhya Pradesh and a grinding plant in Bhilai, Chhattisgarh.

The transaction will be funded by Orient Cement through a mix of internal accruals, debt and equity funding. The acquisitions will increase Orient Cement’s production capacity to 10.2Mt/yr from 8Mt/yr and it will grant it access to the central and eastern regions of the country.