JSW Cements' 20 MPTA Target

JSW Cement Ltd., a part of $11 billion JSW Group led by Sajjan Jindal, is on track to expand it's capacity to 20 million tonnes per annum (mtpa) from the current 12.5 mtpa, and launch an initial public offering (IPO). The capital raised through the IPO will be used to expand capacity further as the company aims to be one of the top three cement manufacturers in the country. The likely date of launch of the IPO is expected to be in 2019.

The strength of JSW Group is execution and hence the firm intends to scale up to 20 mtpa organically.

JSW Cement Ltd, is planning to expand the manufacturing capacity of its Dolvi facility in Maharashtra from 1 million tonne (mt) per annum to 2.2 mt by February.  Other expansions include the 2.4 mt Salboni plant in West Bengal commissioned in July and ongoing capacity addition of 2.4 mt at Vijayanagar, Karnataka, and 1.2 mt in Jajpur, Odisha.

Earlier this year, the company has acquired a stake of up to 54.4 per cent in Shiva Cement. The cement industries' expectation of a large uptick in demand continues to keep the valuation of cement assets high and hence JSW is not aggressively pursuing any acquisition. What it continues to pursue aggressively is the acquisition of limestone mines.

Hathi Cement

Saurashtra Cement Limited

Covering four continents - Asia, Europe, North America and Africa, the Mehta Group has business interests in Cement and Building Materials, Trade and Financial Services & International Trade, Packaging, Carbon Dioxide, Sugar, Engineering, Horticulture & Floriculture, Consultancy, Electrical Cables, Hospitality, Entertainment Sports and Agro Chemicals.

Saurashtra Cement Limited, the flagship company of the Mehta Group, established in 1956 produces and markets cement under the brand name "HATHI". The company manufacturers Portland Pozzolana Cement (PPC), Ordinary Portland Cement (OPC 53 grade, 43 grade), SRPC types of cement and clinker. The company's products comply with world class quality standards.

Saurashtra Cement Limited's plant at Ranavav, located in Gujarat state has a capacity of 1.5 MTPA. The plant is a modern energy efficient dry process plant comparable to today's global standards and uses state-of-the-art machinery from reputed global companies. The plant offers locational advantages because of its proximity to the Porbandar and Veraval/Okha ports, rail network and is close to National and State highways. Saurashtra Cement Limited thus has a competitive in the domestic markets and also access to large export markets in the Africa, Middle East countries, Sri Lanka etc. by the economical sea route.

Saurashtra Cement Limited due to its ready access to ports has an advantage in marketing its products in the western coastal belt using coastal shipping lines.

Dalmia Cements' Eastern Reach

Dalmia Cement, the fourth largest cement manufacturer in India, is planning to strengthen its presence in the Eastern region to tap rapid growth potential.

Driven by housing and rejuvenated infrastructure development, the company with a total installed capacity of 25 million tonnes per annum (MTPA), is keeping its options open for enhancing production capacity with an aim to meet demand growth in eastern India.

In the eastern region, Dalmia Bharat has a capacity of 12.9 MTPA and is second in the region after Holcim, which has 14.8 MTPA capacity.

While in south, the company has a capacity of 12.1 MTPA and stands fifth in terms of production capacity.

Big government spending on infra projects, rural demand and low cost housing are the drivers the company expects to contribute to an increase in cement demand in coming years.

Dalmia Bharat Ltd along with its subsidiaries has 11 plants in 8 states with around 11.2 per cent market share in the FY 2016-17.

It has brands spread over regions - Dalmia DSP, Dalmia, Dalmia Ultra, Vajram, Dalmia Superroof, Konark, and Dalmia SRPC.

Cement Demand Projection

Driven by strong government focus on housing and infrastructure development, consumption of cement is estimated to grow from 265 million tonnes per annum (mtpa) in fiscal year 2017 (FY17) to 322 mtpa in FY20.

Housing is the biggest driver of cement demand in India. It accounts for nearly 60-65% of total cement consumption. Overall, cement demand is likely to increase by 7-9% per annum.

JK Cements Expansion Plans

JK Cement, part of the JK Organisation conglomerate, plans to invest up to Rs 1,500 crore in the next 3-4 years to hike production capacity of grey cement by over 30 per cent to 14 million tonnes per annum. The actual value of investments would depend on whether the company expands capacity through greenfield or brownfield investments.

The company is likely to add one plant in Panna, Madhya Pradesh, which would be a greenfield project. JK Cement is evaluating expansion opportunities at its Rajasthan-based Mangrol plant. In 2014, JK Cement had invested in expanding capacity at Mangrol and split-grinding unit at Jhajjar.

The company will either set up new units or expand the production capacity of existing plants to tap growth opportunities in the grey cement segment, with demand primarily expected to come from the government's push for big infrastructure projects. Projects like smart cities, Sagarmala and housing for all are being taken up and all the growth and demand augurs well for the cement industry. Addition demand drivers for the cement industry are an expected rise in rural housing and good monsoon.

Reducing Global Carbon Dioxide Emissions

Cement Manufacture and CO2 Emissions

The construction sector is a major contributor to global carbon dioxide emissions. Though this is well known, it appears difficult to reduce the scale of construction activities, especially as it is a established route to bring about more equitable conditions in developing countries like India as against developed countries.

In the manufacture of Portland cement, limestone and  key inputs like clay are heated together in huge kilns to very high temperatures (approx. 1,450 degrees C), so that the components fuse without melting to give cement clinker. This part of the process releases the most amount of CO2. The carbon dioxide comes both from the burning of the fuel needed to create that temperature and also due to the breakdown of limestone into calcium oxide and carbon dioxide. The former process accounts for 40% of CO2 emissions while, the latter part accounts for 60% of the CO2 emissions in manufacture of cement. The best thing to do would be to substitute CO2-intensive clinker with one of less CO2 emissions.

Currently in India, fly ash which is a waste bye-product in the burning of coal for producing energy, is used in the manufacture of blended cement or Portland pozzolana cement. However, this is used in lower proportions and only where available so, is ineffective in reducing emissions to a more reasonable level.

One method of effectively reducing global carbon dioxide emissions is the use of Limestone Calcined Clay Cement or the LC3 technology. A research collaboration between India and Switzerland on a new cement material that can reduce carbon dioxide emissions in the manufacturing process is set to take off into implementation.

Emami Cements

Emami Cement Company's Expansion Plans

Emami Double Bull Cement, manufactured by Emami Cement Limited has a current total cement capacity of 4 MTPA through the mother clinker plant in Chhattisgarh and a grinding unit at Panagarh, West Bengal. Emami Cement has ambitious plans to up its market share to 10% in all the regions of its sales operations by March 2019.

For this to happen, the company expects to take up its production capacity to 6 MTPA (Million Tons Per Annum) from the current operational production capacity of 3.2 MTPA. To achieve the production targets, the company would also be ready with its new grinding unit of another 2 MTPA in Jajpur, Odisha.

Mr. Vivek Chawla, is the CEO of Emami Cement Limited. Emami cement's areas  of sales operation include Chattisgarh, West Bengal, Jharkhand, Bihar, Odisha, Eastern Madhya Pradesh and Vidarbha regions. As a part of their expansion plan, they have recently acquired two limestone mines in Rajasthan and Andhra Pradesh.

Emami Cement Limited is a part of the Rs 50,000 cr Emami Group of Companies, which has leadership presence in other diversified industries such as FMCG, paper and newsprint, edible oil & bio–diesel, hospital, real estate, ball point tips, pharma retail, book & leisure stores, contemporary art and solar power.

Cement Prices Under Pressure

Monsoon and GST suppresses demand. 

 

Post implementation of GST suppressed demand from both retail housing and infrastructure projects and the fall-out was a dip in all-India cement prices. Last month alone the all-India average price of a 50 kg bag fell to ₹300. To add to the cement industry's woes was seasonal rains and flooding in most of the large cement-consuming states which also impacted demand to a large degree.

Cement prices have declined by four per cent as cement companies passed on the benefit of lower tax under the GST regime to consumers.

While the demand scenario is likely to remain negative in the current month owing to festivities and an inauspicious period to start new ventures, demand for cement is expected to pick-up in the second half of this month with the revival in rural demand due to a favourable monsoon and acceleration in infrastructure development.

The upcoming assembly elections in Gujarat, Madhya Pradesh, Rajasthan and Karnataka in the next 12-18 months is expected to drive demand due to pre-poll spending.

Cement prices in the north India including Rajasthan, Jammu and Kashmir, Himachal Pradesh, Punjab, Uttarkhand and Haryana fell for the fourth consecutive month due to the monsoon and cement dealers transition from VAT to GST.

Dip in average cement price were as under:

Andhra Pradesh and Telengana down Rs.20-25 a bag to Rs.285-290.
Karnataka and Kerala down Rs.10-12 a bag to 330-335.
Maharastra, Gujarat and Goa down Rs.12-15 a bag to Rs.295-300. 

India Cements' Market Expansion Plans

India Cements To Concentrate On Speciality Cements 

While other cement companies are waiting for the Government to step in with infrastructure investment as a stimulus to to revive growth, Chennai-based cement major India Cements is planning at achieving better capacity utilisation by tapping the northern, eastern and western markets during the current financial year.

At the company’s 71st AGM, Mr. N.Srinivasan, vice-chairman & managing director stated that India Cements was taking steps to diversify product portfolio to improve capacity utilisation. The company is already producing oil well cement and has plans to bid for tenders for supplying sleeper cement. It would also continue the export of cement to Sri Lanka under the company’s brand name which is well established there. He also stated the the company would focus on reducing debt, introduce speciality cements and boost exports, in line with the company’s plans to turn the focus back on core businesses and exit non-core businesses.

He further stated that the cement industry was facing a situation of excess capacity, with south India in particular facing maximum surplus capacity. While there was sporadic growth in non-southern states, he added, not all regions have seen growth at a reasonable level. However, now that prices had stabilised, there was a distinct possibility of improvement in cement demand all over India. This, along with various schemes and projects taken up for implementation by the Centre and states, and an long expected expansionary Union Budget, could improve capacity utilisation.

Mr. N.Srinivasan also pointed out that due to the increasing cost of inputs, cement companies were facing. Mergers and Acquisitions by bigger players were also likely to gain pace, though on a smaller than expected scale and with focus on gaining strategic and operational competitive advantages. He added that Financially stressed companies were selling assets. And in some cases, regulations imposed by the Competition Commission of India had forced cement companies to sell their assets.