23 October 2019

Table of Contents for Cement & Cement Equipment





Cement & Cement Equipment

On a solid footing

 

Being a pivotal in the economic growth of the country, cement is an essential element for the construction sector and for all infrastructural projects. Owing to increased thrust from the government, the cement sector is expected to witness positive growth in the coming years, with consumption set to increase at a CAGR of around 9 per cent during FY 2017-FY 2020 reports Prerna Sharma.

 

Cement demand in India is expected to increase due to government’s push for large infrastructure projects, leading to 45 million tonnes (MT) of cement needed in the next three to four years. India's cement demand is expected to reach 550-600 Million Tonnes Per Annum (MTPA) by 2025. The housing sector is the biggest demand driver of cement, accounting for about 67 per cent of the total consumption in India. The other major consumers of cement include infrastructure at 13 per cent , commercial construction at 11 per cent and industrial construction at 9 per cent .

 

To meet the rise in demand, cement companies are expected to add 56 MT capacity over the next three years. The cement capacity in India may register a growth of eight per cent by next year end to 395 MT from the current level of 366 MT. It may increase further to 421 MT by the end of 2017. The country's per capita consumption stands at around 190 kg.

 

The Indian cement industry is dominated by a few companies. The top 20 cement companies account for almost 70 per cent of the total cement production of the country. A total of 188 large cement plants together account for 97 per cent of the total installed capacity in the country, with 365 small plants account for the rest. Of these large cement plants, 77 are located in the states of Andhra Pradesh, Rajasthan and Tamil Nadu.

 

PL Muthusekkar, MD,  Nord Drivesystems,  highlighted, “India is the second largest producer of cement in the world. No wonder, India's cement industry is a vital part of its economy, providing employment to more than a million people, directly or indirectly. Indian cement industry has attracted huge investments, both from Indian as well as foreign investors. India has a lot of potential for development in the infrastructure and construction sector and the cement sector is expected to largely benefit from it. Some of the recent major government initiatives such as development of smart cities are expected to provide a major boost to the sector.”

 

As per ICRA research, during Q1 FY2017, cement production stood at 75.64 million MT, a moderate growth of 5.7 per cent over Q1 FY2016. This is higher when compared to 4.6 per cent of production growth reported in FY2016. “Demand growth during FY2017 is likely to be driven by the pick-up in the infrastructure segment, primarily road projects and the housing segment during the next one year; this apart, there is a likelihood of a recovery in the rural demand from H2 FY2017, given the expectations of a better monsoon. With the pace of new capacity addition slowing down we expect capacity utilisation and the supply-demand scenario to record an improvement, especially in FY2018, which should support cement prices and profitability indicators for cement manufacturers," said Sabyasachi Majumdar, Senior-VP, ICRA Ratings.

 

 

INVESTMENT HORIZONS

Riding high on promising growth havens, companies are in full throttle to be a part of this growth bandwagon.

Here’s an account of some of the recent investments witnessed:

  • Kanodia Group has launched its new cement brand ‘Bigcem’ at Ghaziabad, Uttar Pradesh. The product will be targeted at markets in Uttarakhand and Western Uttar Pradesh to start with followed by expansion in Delhi and the National Capital Region. According to Gautam Kanodia, Director, Kanodia Group, the product is expected to give 40 per cent more strength than the general Bureau of Indian Standards standard.
  • Nirma, among the world's largest soda ash manufacturer but a small, regional cement player in the country bagged Lafarge's 11 million tonnes per annum (MTPA) India portfolio recently.
  • Birla Corporation recently acquired Anil Ambani's cement business, a wholly-owned arm of flagship Reliance Infrastructure.
  • Emami group plans to have a national footprint for its cement business in next 5-7 years by setting up plants in Rajasthan and Karnataka. Shortly after venturing into the cement space, the Emami Group is aiming at capacity of 15-20 million tonnes (mt) in the next three to five years, from the existing 2.4 mt, investing Rs.8,500 crore to do so. The cement arm of the diversified group will invest Rs.3,500 crore to build a 5.5 mt per annum (mtpa) clinker unit in Chhattisgarh and two grinding units of 1.5 and 2 mtpa each in Odisha and West Bengal.
  • Shree Cement has signed an MoU with Jharkhand Government to set up a two-million tonne a year grinding unit in SeraikelaKharsawan district involving an investment of Rs.600 crore.
  • FLSmidth has signed a contract with Larsen & Toubro Ltd for engineering, procurement and supply of equipment for a complete cement production line with a capacity of 3,000 tonne per day. The plant will be located in Ariyalur, approx 300 km south of Chennai.

 

MEGA TRENDS

Technavio’s market research study identifies the following three emerging trends expected to further propel the global cement mixer market:

 

 

Alternative fuel

Being a primary source of energy in the production of electricity via thermal power plants, approx 65 per cent of the coal produced globally is used by the power industry. The rest is utilised in steel manufacturing and cement industry. With the supply of coal to the cement industry being in the limited capacity, it becomes an expensive affair. In its rescue, pet coke – an alternative fuel – is being adopted globally. It is a solid, carbonaceous residue that is produced either by thermal decomposition of heavy petroleum fractions or cracked stocks.

 

 

Increased use of blended cement

The trend of using blended cement is increasing globally. With the consumers becoming eco-conscious, construction companies and contractors are becoming very selective in terms of adopting the best materials possible which are eco-friendly. Owing to this, some of the construction companies executing projects prefer to blend cement at the construction site using ordinary Portland cement (OPC) and fly ash or ground-granulated blast-furnace slag (GBBS). This selection entirely depends on the commercial and technical factors required for particular construction project.Blended cement is produced by the amalgamation of pozzolanic materials, such as silica fume, fly ash, and slag with cement clinker and gypsum. The mixture enhances the quality of the concrete structure, making it resistant to high-temperature and corrosion. Blended cement is finer as compared to OPC, resulting in reduced permeability of concrete and improved durability. Therefore, the use of blended cement has been increasing rapidly, especially for construction projects.

 

Going green

Developing innovative methods for use in the cement business could minimise the cement market waste and pollution to a large extent. Many options such as energy efficiency, AF, and clinker substitution are anticipated to reduce air pollutants emanating from cement plants. By investing in R&D and involving modeling techniques such as designing of processes, the cement market will minimise air pollution and comply with existing regulations for protection of the environment in the future. In line with this, India has joined hands with Switzerland to reduce energy consumption and develop newer methods in the country for more efficient cement production, which will help India meet its rising demand for cement in the infrastructure sector.

 

 

DEMONETISATION WAVE

“Given that a significant portion of the cement demand is driven by real estate, it is likely to get impacted in the near term. The demand slowdown from the realty sector is expected to be offset to some extent by infrastructure demand, specifically backed by Central Government funding,” Sabyasachi Majumdar, Senior-VP, ICRA Ratings said.“Nonetheless, overall, the demand for the cement sector is expected to be adversely impacted by this development in the next two to three quarters,” Majumdar said.

 

During 7M FY2017, cement production stood at 168.15 million tonnes, a moderate growth of 4.8 per cent over 7M FY2016.Weak demand growth is also expected to result in a decline in prices and profits given the limited ability of the industry to pass on the cost increases (particularly power and fuel costs) given the oversupply situation that is persisting in most regions of the country, Majumdar said.

 

GOVERNMENT EFFORTS

The Government of India is on a mission to revamp the state-run cement factories across India, in order to give a boost to road and realty projects by bringing down their construction costs. Budget 2016-17 had proposed a slew of measures to boost infrastructure investment, as increased spending on infrastructure increases the demand for cement. For 2016-17, the Finance Minister had allocated Rs.2.21 lakh crore for infrastructure sector, which is 22 per cent higher than current year allocation. The government formalised its vision – ‘Housing for All by 2022’, which encompasses building six crore housing units through public-private partnership model. In line with government's vision to develop smart cities as satellite towns of larger cities, the government has allocated Rs.7,296 crore towards Urban Rejuvenation Mission (AMRUT and Mission for Development of 100 Smart Cities). This will augur well for the cement industry as a whole.

 

According to PL Muthusekkar, MD, Nord Drivesystems "Cement demand in India is expected to increase due to government’s push for large infrastructure projects, we expect the cement industry to move upwards, the infrastructure in the country needs a makeover and we believe government will initiate necessary steps to nurture cement industry. "

 

PROMISING PROSPECTS

The eastern states of India are likely to be the newer and virgin markets for cement companies and could contribute to their bottom line in future. In the next 10 years, India could become the main exporter of clinker and gray cement to the Middle East, Africa, and other developing nations of the world. Cement plants near the ports, for instance the plants in Gujarat and Visakhapatnam, will have an added advantage for exports and will logistically be well armed to face stiff competition from cement plants in the interior of the country.

 

A large number of foreign players are also expected to enter the cement sector, owing to the profit margins and steady demand. In future, domestic cement companies could go for global listings either through the FCCB route or the GDR route. With help from the government in terms of friendlier laws, lower taxation, and increased infrastructure spending, the sector will grow and take India’s economy forward along with it.

 

With all such brimming possibilities in the offing, it’s about time cement as well as allied equipment companies start adopting innovative & sustainable measures to reap the benefits of the global growth.

 

KEY PLAYERS

  • ACC
  • AMCL
  • Bharti Cement
  • Dalmia Cement
  • JK Cement
  • Nord Drivesystems
  • Petron Engineering
  • Rossi Gearmotors
  • Sinoma International
  • thyssenkrupp Industries India
  • UltraTech



Leave a Comment

Name  
Email Address
(will not be published)    
Website
Comment