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india CemWeek A CemWeek Publication

Cement VOLume 1

issue 11

MARCH / APRIL 2013

& construction Materials

Getting ready for CBI India 2013 conference

India’s power crisis: cement companies at risk? AUTOMATION TECHNOLOGY The digital cement organization

new!

ECONOMIC RECOVERY EXPECTED TO GAIN FOOTING IN 2013 News

|

Analysis

CW Research & Analytics:

ICCM introduces more focus on market insights

|

Market Coverage

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Interviews

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People


CBI CONFERENCE

CEMENT BUSINESS & INDUSTRY INDIA & SOUTH ASIA October 9-10, 2013  Hilton Mumbai International Airport Hotel  Mumbai, India CBI India & South Asia 2013 Conference will focus on the various aspects of India’s cement industry from a business growth & investment perspective. Notably, the programme will take a dual-track business and technical approach to the issues around:

GMI

Market perspective, forecast and competitive outlook

Alternative fuels, new business models

Environmental performance management

Finance and capital markets

Coal as mainstay fuel option and outlook

Efficiency, innovation, new developments

Technology, operations and best practices

GLOBAL

Organized by GMI Global and again with the great support from the India Cement & Construction Materials (ICCM) journal the event is expected to bring together more than 200 cement and lime professionals. GMI is excited to build on the success of CBI India 2012 to expand the scope to include participants from the entire South Asia region this time around.

Register on-line at www.gmiforum.com or email sales@gmiforum.com. You may also call us in the US at +1-203-516-7424 supported by

india CemWeek

CEMENT & CONSTRUCTION MATERIALS


india CemWeek

Cement & construction Materials

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FEATURES 4

DEPARTMENTS

INDIA’S ECONOMIC RECOVERY

2

An overview of the Indian economy

12

AUTOMATION TECHNOLOGY New trends in the construction materials industry

Strength in synergy

3 15

FOCUS 8

36

INDIA’S POWER CRISIS Cement industry challenges

construction & building materials

NUMBERS IN BRIEF Indian cement market at the beginning of 2013

EVENT CBI Brazil & Latin America 2013 Conference highlights

ANALYST RECOMMENDATIONS Highlights of the latest broker recommendations

cement

32

INFRASTRUCTURE & PROJECTS

34

EQUIPMENT UPDATES

Government approves new infrastructure projects Case launches new wheel loader

research 16

EDITOR’S LETTER

22

Cement production expected to grow

24

VOLUME AND PRICING Cement price increases continue

25

PEOPLE Award for Zuari Cement’s Wholetime Director

26

PROJECTS AND EXPANSIONS

28

M&A FINANCE

CW RESEARCH AND ANALYTICS Energy Price Update Coal Market Update India and South Asia Focus

MARKET AND COMPETITION

HeidelbergCement India continues expansion Ultratech negotiates new acquisition

30

UPDATE Haver & Boecker invests in Brazil

31

REGIONAL NEWS

CemWeek rOBERT MADEIRA CemWeek Anthony Fitzgerald CemWeek judy foust BMWeek BMWeek BMWeek

cemweek publisher head of cw group reasearch

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Increased debt of Pakistani cement firms

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letter from the editor

Strength in Synergy he CW Group is excited to announce that we have started the evolution of the format of our magazine to better align it with the CW Group’s core as an industry consultant and research house. To further separate our research thought leadership from that of basic journalism, we decided to add a new section in the magazine called “CW Research & Analytics.” We not only want to keep our readers informed, but to provide a more in-deep analysis of the most relevant industry developments in energy, trading, projects and other topics as well as have our publications evolve more towards bi-monthly research assessments. Over the last years, energy has been probably one of the most analyzed topics in the cement industry. A reliable energy supply is key to the economy and as energy crisis soars in some countries, the construction industry faces one of the most challenging times ahead. India is not exempt from this issue. Far from finding a solution, the country is currently facing a deep energy crisis. Despite the recent slowdown in the economy, India’s energy consumption has soared and suppliers haven’t been able to meet demand. Energy shortages are now more common across the country and the gov-

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MARCH / APRIL 2013

ernment has step up efforts to save energy and find solutions to the problem. In our “India’s Economic Recovery Expected to Commence by 2013” we analyze the recent evolution of India’s economy, the government fiscal policies, the sectors contributing to the country’s GDP and how the near future looks like for the economy.” India’s Power Crisis Challenges and the Cement Industry” article is dedicated to the energy crisis, coal and power supply and its impact in the cement industry. As fuels have increasingly become a global commodity and their prices are likely to remain volatile, the need for energy related information has accelerated. For most people in the industry, recovery is around the corner in some countries, and in other it’s already started. Africa is showing an accelerated grow in capacity, while global trade is picking up from the low volumes seen in 2009.

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Robert Madeira publisher and head of research


numbers IN BRIEF The Indian cement industry conquers new heights in the beginning of 2013 ndian cement consumption topped 21.5 million tons in January 2013, volume that represented a new uninterrupted historical maximum for the month. Between 2009 and 2013, January’s cement consumption grew by a compound annual growth rate of 7.6 percent. The confirmed increase in demand brought a breath of fresh air for the cement companies as the market was still recovering from the sluggish November 2012 (17.1 million tons). November was also the only month of 2012 to notch an inferior YOY level when compared to 2011. Demand for cement in 2013 is expected to surpass last year’s volume following the ramping up of infrastructure and social housing projects. Cement consumption was rated at 234.3 million tons in 2012, 7.5 percent over 2011. The revival of cement consumption offered the proper environment for cement companies to impose new price increases within regional markets, mostly visible in February 2013. As a consequence, rising diesel prices and railway freight costs were passed on to consumers, which led the averaged all India cement price 6 percent above January 2013. The Eastern region continues to bear the highest cement prices, settled at RS 321 per 50 kg bag in February 2013. The region’s cement prices were mostly affected by a shortage in cement supply given the lack of wagons. However, dealers argue that cement prices have already passed the comfort level and that they cannot be sustained unless demand picks up more fervently.

CEMENT PRICES (RS PER 50 KG BAG)

North

Central

East

South

West

350

275

200 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Source: CW Group Analysis

PAN INDIA CEMENT VOLUME (TONS)

25,000,000

2009

2010

2011

2012

2013

17,500,000

10,000,000 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

Source: CW Group Analysis

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feature

India’s Economic Recovery Expected to Commence by 2013 The economic measures implemented by the Indian Government in September 2012 are expected to lead to a recovery of India’s economy starting with 2013

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Economic Overview From 2005 to 2007, India was regarded as one of the fastest-growing economies in the world with a potential GDP growth of 10 percent per year. However, the economy lost its momentum in 2008 as GDP growth dropped to 6.9 percent from a high of 9.99 percent in the previous year. The global financial crisis, along with the government’s fiscal policies, took its toll on India’s economy. Although the economy recovered in 2010, it slumped back again the following year and further in 2012 at a decade low estimated at 4.86 percent. The downward slump is primarily attributed to a widening current account deficit with declining investments and weakening demand for exports. Much of the hesitation from foreign investors stems from the government’s high expenditure along with poor infrastructure. While the government has been implementing economic reforms since September 2012, the uncertainty has made other Asian economies more attractive to foreign investments. Nevertheless, these economic reforms are expected to revive confidence in the economy, and prospects for growth are expected to improve over the next five years. Government Fiscal Policies Crucial to Recovery It was back in 2008 that the stress on the economy became evident. Stimulus packages and tax cuts were estimated at RS 1.86 trillion, equivalent to 3.5 percent of GDP. These measures, along with the government subsidies, dramatically increased government spending. The rising fiscal deficit diverted funds from national savings, which hampered government investments in infrastructure. Considered as building blocks to long-term growth, infrastructure projects stimulate the business environment, attract investments and drive consumer spending. As such, reforms are focused on reducing the fiscal deficit to give more room for government capital expenditures. Among the first measures implemented in 2012 was

INDIA ANNUAL GDP GROWTH 12% Annual GDP Growth

6%

0.00 2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Source: International Monetary Fund, World Economic Outlook Database, October 2012

the 14 percent increase in the price of diesel fuel, which is one of the products heavily subsidized by the government together with fertilizer, kerosene and food. According to the IMF, a significant reduction in government subsidies would consequently reduce the fiscal deficit by approximately two-thirds. In July 2012, the government likewise revived plans to open up the retail sector to foreign investments. Moreover, the cap on foreign investments was eased in cable/ satellite operations, the aviation industry and the pension/insurance sectors. Relaxing regulations on foreign investments will create more jobs and spur much-needed infrastructure development. With these reforms in place, the government is expected to stay on track to meet its fiscal deficit target of 5.3 percent of GDP for the fiscal year 2012-2013 from a revenue and expenditure gap of 5.8 percent

in the previous year. If the government continues to curb expenditure, the deficit is expected to improve further to 3 percent of GDP by 2017. GDP and Workforce Contribution Another concern that needs to be addressed is the imbalance between the sectors’ contribution to GDP versus workforce distribution. Recent data indicate that more than 50 percent of India’s workforce earns income from agriculture and its associated sectors such as fishing, logging and forestry. However, this sector contributed only 14.5 percent to the GDP in 2011. Once again, the disparity is rooted in India’s weak infrastructure development. The contribution of the agricultural sector to GDP continues to shrink because of underinvestment. In the 1980s, agriculture contributed more than 30 percent to GDP. But in the fiscal years 2010-2011 and 20112012, it has gone down to an estimated

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feature GDP & WORKFORCE CONTRIBUTION PER SECTOR (2011)

SERVICES

INDUSTRIES

AGRICULTURE

100%

The biggest challenge that the industry will need to contend with involves rising operating costs, specifically those related to transportation and energy. Increasing prices of diesel fuel and coal will be further aggravated by the steep depreciation of the rupee.

50%

0% GDP

WORKFORCE Source: Census 2011 (population); Central Statistics Office (2010-11 GDP)

14.5 percent and 17.3 percent, respectively. Yet, more than half of the country’s population still depends on agriculture to earn a living. The heavy reliance of India’s workforce on the agriculture sector can also be traced to slow urbanization. According to the most recent census in 2011, 31.16 percent of the country’s population resides in urban areas – a mere 3.35 percentage point increase from a decade ago. A report from McKinsey & Company in 2010 estimates that India spends only $17 per capita in annual capital expenditures compared to China’s $116 and New York City’s $292. Based on the same report, it is estimated that India will need to invest heavily in commercial and residential space, transportation systems, roads and communication over the next 20 years to reap the benefits of an urbanized economy. India is also at a stage when its population has a growing number of people at a productive working age while those at a dependent age are declining. Known as the demographic dividend, it is considered as the stage in the development of a nation that triggers economic growth. However,

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within the year. Under the government’s 12th Five Year Plan (2012-17) period, initiatives would require total cement capacity to reach 480 mtpy. The infrastructure budget for the period is pegged at US$1 trillion, of which US$100 billion alone is allocated for roads and highways.

India will not be able to take advantage of this window of opportunity if not supported by urbanization and skill development. While the country is recognized to possess the best engineers, managers and scientists, it is also a known fact that majority of its workforce are unskilled or semi-skilled. As such, it is imperative that the government augment its economic reforms with programs geared towards skill development that would tip the balance and employ more workers in the industry and services sector. Potential Growth of the Cement Industry India’s cement industry is the second largest in the world, following China, which accounts for approximately 7-8 percent of global production. As of FY2012-13, total capacity has reached 324 million tons per year (mtpy) with capacity utilization at around 71 percent. Utilization declined from 85 percent in FY2009-10 due to weak demand along with capacity improvements from several players during the period. As the government bids to restore economic growth in FY2013-14 with fiscal reforms and infrastructure development, cement demand is expected to grow 5-8 percent

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Despite the challenges, India Ratings revised its outlook for Indian cement manufacturers from negative in 2012 to stable in 2013. Outlook for the Indian Economy For FY 2013-14, forecasts from various rating agencies and analysts are mixed in view of uncertainty towards the result of government initiatives. While Moody’s Investors Service, Angel Broking and Anand Rathi Financial Services predict the economy will improve, Fitch Ratings warns that a possible downgrade on the country’s sovereign credit rating may come in the next year or two. HSBC revised its growth forecast for the coming fiscal year from 6.9 percent to 6.2 percent in view of the lower GDP growth expected for FY2012-13. Although the government executed economic reforms and pledged to curb inflation and reduce the fiscal deficit, implementation could be hampered by the upcoming 2014 general elections. Reduction of government subsidies would result in resentment from the public. Many fear that the government may resort to populist measures that could hamper much-needed reforms to revive the economy. But even with the implementation of economic reforms, analysts believe it will take at least three more years before India registers an 8 percent growth on a sustained basis. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek

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Coal Week Coal Week


GDP CONTRIBUTION PER SECTOR INDUSTRY

SERVICES

AGRICULTURE

100%

50%

0.0 1950-51

1960-61

1970-71

1980-81

1990-91

2000-01

2010-11

2011-12

* FY 2010-11 & 2011-12 - estimates Source: Central Statistics Office, India

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FOCUS

India’s Power Crisis Challenges and the Cement Industry Overview of Power Generation Despite a slowdown in India’s economy during the past few years, energy demand continues to grow. India is regarded as the fourth-largest energy consumer worldwide, following the U.S., China and Russia. Meeting the country’s energy demand has been an uphill battle for years. Although the government and the private sector have been looking for a resolution, both sectors have been unable to address the supply shortage. For the past decade, the gap between availability and demand ranged from 7 percent to as high as 12 percent.

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Even with the recent installation of new plants, the gap was still estimated above 9 percent for the fiscal years 2010-11 and 2011-12. The stumbling block to a resolution to India’s energy crisis stems from the power sector’s main fuel source. A majority of the power generating plants in the country are coal-fired, accounting for almost 70 percent of electricity generated. For the fiscal year 2011-12, about 67 percent of energy generated was delivered by coal-fired plants. Following far behind were hydro

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power plants at over 14 percent and natural gas plants at 10 percent. Hampering plans to accelerate the installation of more coal-fired plants is the difficulty in sourcing enough coal to meet demand. Coal-Fired Plants No Longer Feasible India’s heavy reliance on coal as a fuel source for the majority of its operating power plants is primarily attributed to the country’s large reserves. Recent government plans revealed that 75 percent of newly installed capacity will be fueled by coal. However, these plans may no longer


ENERGY AVAILABILITY & DEMAND GAP IN INDIA (MWH) 1,000 Availability

Billion Unit (BU)

Demand

500

0

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Source: Central Electricity Authority, Ministry of Power (2002-2012)

be viable due to problems encountered by the local coal industry in meeting requirements. Mismanagement, inept policies and environmental concerns have limited local coal production.

prohibit mining in several protected areas. Moreover, tighter environmental restrictions have led to the closure of several coal mines over the past few years.

Due to the shortage in local coal supply, demand from power producers and other industries has been met by imports. India’s coal demand reached about $730 million tons in FY2011-12, of which 100 million tons came from overseas markets. Demand is expected to grow by 7 percent annually, but local supply is not anticipated to improve as much and the gap will have to be filled by global suppliers. Yet electricity producers are unwilling to increase their coal importation because of heavily regulated power tariffs that prevent passing on such high costs to consumers.

Captive Power Minimizes Risks for Cement Companies As the government prepares to ramp up infrastructure development and spur economic recovery, cement companies are planning for increased production in response to demand anticipated to grow between 5-8 percent in FY20132014 alone. As India’s power crisis looms with no clear resolution in the near term, cement companies that invested in captive power finally see the fruits of their investments. As of 2012, the cement industry had installed about 4,000 MW of captive power capacity with various fuel sources.

The shortage also can be attributed in part to environmental concerns that hinder the exploration of new areas for mining. Large coal reserves are beyond the reach of coal miners as environmental regulators strictly

Power costs constitute about a third of variable costs and in some cases, more than half of a company’s total operating cost. With the rising cost of diesel fuel and coal shortages, captive power plants have prov-

en to be a profitable strategy for major cement companies in India. In 2012, ACC’s coal-fired power plants had an average cost of RS 3.72/kWh versus RS 4.86/kWh from grid power cost. Aside from its captive power plants, ACC generates electricity of about 7.3 MW from its waste heat recovery system. On the other hand, Ultratech has a relatively higher power expense since it has fuel oil and naphtha-based plants in addition to coal plants. Despite the higher cost, Ultratech’s decision to spread the risk of fuel availability may now pay off in view of the current coal supply issue. In light of last year’s coal allocation scam (coalgate), Ultratech’s fuel oil and naphtha plants are excellent risk management strategies to remedy possible coal shortages. Guajarat Ambuja Cement, Grasim Industries and Lafarge India were among the companies whose coal blocks were deallocated, following the results of investigations concerning alleged irregularities in

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FOCUS 2011-12 POWER GENERATION

0.60%

Bhutan Import

14.88%

Hydro

3.68%

Nuclear

0.29%

Diesel

0.13%

Liquid Fuel

10.53%

Natural Gas

3.21%

66.69%

tive to its plans to augment the power grid. Power development plans must now focus on diverting India’s dependence on coal, while at the same time supporting environmental measures that will reduce carbon emissions. The Director of the Renewable and Appropriate Energy Laboratory at the University of California, Daniel Kammen, recently noted that India has the potential to work towards using a combination of solar and wind energy to generate electricity. Kammen added that the Indian government’s coal-intensive plan does not make sense considering that the country’s wind resource has been reassessed to be 30 times more than was previously known. While renewable energy does have a place in India’s energy portfolio, it still plays a minor role as the government insists on capitalizing on its coal reserves regardless of the environmental implications.

Lignite Coal Source: CEA 2012

the allocation of the country’s coal deposits to private companies. Meanwhile, smaller plants such as Madras have developed excess power. Madras sells excess power from its wind turbine plants to the grid for a supplemental income of about RS 120 crore per year. In addition to its wind turbines, Madras invested in captive thermal plants which generate approximately 121 MW. Unlike ACC, which sources 72 percent of its power requirements from captive power, Madras sources all power needs from its captive power plants. Beyond the savings earned by these cement companies, captive power plants ensure an uninterrupted supply of power. With the uncertainty in the power industry, more companies and industries are now looking to set up their own power sources to reduce dependence on an unstable and expensive grid power system. Outlook for India’s Power Situation There is no denying that energy access is a key to the progress and development of any

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nation. It is estimated that 1.4 billion people worldwide had no access to electricity as of 2012. Of the 20 percent of the world’s people who have no electricity, 300 million are in India, representing 25 percent of the country’s population. This demographic alone underscores the government’s need to find a solution to this persistent problem. The coal supply issue now hints at where the government must set its sights rela-

Unless India finds a resolution to its energy crisis in the near term, private companies may need to develop their independence from the power grid if they are to sustain development. And if India is determined to recover its robust economic growth of a decade ago, rather than depending on traditional power technologies that developed nations are now weaning themselves from, it must look towards new technologies that will produce more efficient and sustainable energy for the entire country. BMWeek BMWeek BMWeek

INSTALLED CAPACITY Cement Capacity (in Million Tons)

Captive Power Capacity (in MW)

ACC

30.00

380.00

Ambuja Cements

27.35

410.00

Ultratech Cement

52.00

610.00

Jaypee Group

26.05

230.00

India Cements

15.85

96.00

Dalmia Cement

14.35

104.00

Shree Cement

13.38

260.00

Madras Cement

12.72

402.00

Chettinad Cement

10.50

105.00

Century Textiles

7.80

100.00

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feature

Automation technology and trends in the construction materials industry by Thomas Walther, Siemens Drive Technologies Division

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(Fig. 1) Thanks to the use of Mobile Panels as seen here for the extraction of graywacke in the TreisKarden quarry, mobile sub-systems can be integrated into the plant automation via industrial wireless networks (IWLANs)

Goal: digital factory Future topics such as the “digital factory” show that the changes in automation have not come to a standstill yet. At the heart of the digital factory is the digital planning of production sequences and the saving of the system structure, its devices, sequences and processes on the computer in digital form and to operate them as cost-effectively as possible. Today’s software tools rely on a common interdisciplinary and consistent database, which integrates the various engineering data from mechanics, electronics and automation in one plant structure and intelligently manages modularity, standardization, and library concepts. In the process, the software overcomes the previous boundaries between all of the participating disciplines and combines the mechanical, electrical and control-related system planning for a time-optimized layout and engineering phase and the consistent documentation of a production plant. Regardless of the tools used in the planning process, all of the data is compiled in a digital engineering system and used further in a uniform user interface in the operational process chain; this ensures uniform data management, from planning to production. Such software tools (e.g. the “Life Cycle Engineering and Plant Asset

Management”Comos) also allow automated, standardized working, the reduction of coordination effort, and an increase in the quality of the results with considerably less effort thanks to, for instance, the reduction of transmission errors. Due to the objectoriented structure of the software, it is possible to respond quickly to individual requirements and parts of the application that have already been created can simply be re-used. This ensures current and consistent documentation, which can be called up at any time during the creation and operation of the plant. Automation example in the preparation of bulk materials One of the most modern quarries in Germany can be found in Treis-Karden (on the Mosel river). Based on the example of bulk material extraction, an automation solution from Siemens AG which allows the operator to achieve an unusually high level of productivity is described in the following. Mosel graywacke, which is primarily used as bulk material for road building, is broken up there. The new option gives the operator the capability of producing chippings either for concrete or asphalt. The material flow of the entire system is controlled by a Simatic S7-300. The Simatic ET200S distributed I/O systems, some with IM151 intelligent interface modules, are assigned to the individual units.

The operation of the plant is visualized via two Simatic Multi Panels. Extensive, partially concealed and difficult to access subsystems with a frequent need for maintenance are the typical application area of wireless Simatic Mobile Panels. Wireless communication was not used in quarries in the past, because it was feared that the radio waves might be subject to interference from the many steel supports, beam constructions, and silos. Two access points, one at the pre-crusher and one near the silos – specify the effective ranges and are currently completely sufficient for operating the Mobile Panel at all relevant points in the system. A third access point is provided for expanding the system The HMI software (Simatic WinCC) for simple and clear visualization runs on both the Multi Panels and on the Mobile Panel. The display and operating options of the Mobile Panel are identical to those of the two stationary panels. The plant operator receives current diagnostic messages from the entire system in this way, allowing him to immediately respond and thus prevent or at least considerably reduce downtimes. The work that previously required two plant operators can now be carried out by just one so that his co-worker can take on other important tasks. This not only increases productivity, but also operational reliability. Another example of modern automation technology in the construction materials industry is the open-air, contact-free level measurement of bulk materials; ultrasound technology is extremely well suited for this. Ultrasound is ideal for these applications because: • the rugged, encapsulated sensors are extremely resistant to shocks and vibrations • their highly active sensor/transmitting surfaces are self-cleaning in environments prone to some dust • the narrow beam angle of each ultrasound sensors can be aligned to a specific level of material

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FEATURE In recent years, radar technology has also gained wide acceptance in measurement technology. It is experiencing considerable growth in applications for bulk materials and has even become the preferred level measurement technology in the cement industry for dust-intensive applications with large measuring ranges. The success of radar devices in extremely dust-intensive applications can be traced back to the use of electromagnetic waves in the microwave spectrum. A 4-wire FMCW radar level measuring transducer, which works with 24 GHz and a very high signal-to-noise ratio, provides expanded signal processing for the continuous monitoring of bulk materials with a measurement distance of up to 100 m. It is therefore ideally suited for measuring where there is an extreme amount of dust such as in cement silos. Further potential areas for developing automation technology Of the following trends, the users of the construction materials industry anticipate additional rationalization possibilities in the near future: • the continuing, progressing decentralization • the continuing advances of Ethernet at the field level • new, low-cost sensors • the increase in wireless communication • the optimization of plant processes (Advanced Process Control) • the increasing use of energy management systems Some of these trends are further explained in the following: Wireless communication with Ethernet in the field level Thanks to wireless communication with programmable controllers, even greater flexibility is achieved, maintenance work is simplified and service and standstill times are reduced. Since the Industrial Ethernet standard Profinet can also be used for wireless communication via Industrial Wireless LAN (IWLAN), new application fields are opening up. Equipment that is

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(Fig. 2) The contact-free level measurement of bulk goods using ultrasound technology in the open, as in this case, or in a dusty and harsh industrial environment allows optimal, uninterrupted and precise checks of quantities and quality

prone to wear, such as contact wires, can be replaced by intelligent communication technology. The use of driver-less transport systems and mobile HMI devices is also made possible by this. In addition to the deterministic data exchange via Profinet, the IWLAN connection can also be used for additional communication tasks via standard services such as TCP/IP. This way, moving machine parts can also be seamlessly integrated into a system. The reliability of wireless communication is essential for this. IWLAN is based on the proven standard IEEE 802.11 and can be used in industrial environments without any problems. Even safety applications in combination with Profisafe can be implemented in IWLAN without additional overhead. Profinet combines the advantages of the proven Profibus and Ethernet standards. Stabilizing quality and saving time With the assistance of software tools such as Neuro-Fuzzy and Model-based Predictive Control (MPC), process parameters can be determined more quickly and thus, for example, the quality of cement mills can be optimized. A neural soft sensor records the process input values and makes a fineness prediction of the quality of the milled material in the cement mill; this occurs in real time. The determina-

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tion of the fineness in the laboratory takes a few minutes and thus the laboratory value is only conditionally available for quick regulating. To reduce process deviations and stabilize the grinding process, a Model-based Predictive Control is used. It has a complete model of the process dynamics with all interconnections. The combination of neural soft sensor and MPC system takes account of the complex character of the grinding process in a special way. The result is a more uniform grinding process, which optimizes the throughput of the mill while retaining the same desired quality. It also makes the plant operator’s work easier. All of these measures must be regularly checked and improved in order to remain competitive, to efficiently operate a system/plant, and to also meet legal requirements. Throughout the entire process chain, described only in part here, from the crushing of the raw material to the end product of a cement mill, it will always be the attentive worker who recognizes further potential areas for savings and who uses them for additional measures. Thus, the appropriate automation technology makes an important contribution toward protecting the environment, efficiently using energy and raw materials,and reducing undesirable emissions.


EVENT Cement Business & Industry (CBI) Brazil & Latin America 2013 Conference

The first CBI Brazil & LatAm 2013 was opened by Conference Co-Chairmen Mr. Adriano Greco and Mr. Robert Madeira. Sao Paulo’s Municipal Secretary for Labor and Entrepreneurship, Corporative Development, Mr. Eliseu Gabriel provided the keynote address on entrepreneurship in Sao Paulo. GMI’s conferences have dual-track sessions that focus on business & finance and technical & engineering topics.

GMI Global kicked 2013 off with a big success – the CBI Brazil & Latin America 2013 Conference in Sao Paulo, Brazil, on February 27-28. With more than 300 delegates registered, an exceptional selection of speakers who are leaders in their fields, and top sponsors from the most influential cement business and manufacturing companies – this was indeed THE Brazilian Cement & Industry Conference of the year! When asked for comment, GMI Global said: “It was wonderful to be in Sao Paulo, Brazil – one of the most exciting and dynamic cement markets, not to mention the country hosting the 2014 World Cup and the 2016 Olympics.”

Business & Finance Highlights: ◆◆ Robert Madeira, Managing Director & Head of Research at the CW Group, discussed “The Good, The Bad, & The Ugly” of the Brazil and Latin American Cement Market. ◆◆ Lorena Mancia, Strategy Manager of Cementos Progreso, reviewed the Challenges and Solutions of the Lime Business from a Central and Latin American Perspective. ◆◆ Rodrigo Lara, Director Presidente of CPX Brasil, spoke on Project Financing: Public and Non-Public Capital, The Challenges in Financing the Brazilian Cement Sector. ◆◆ Claudia Stefanoiu, Senior Analyst at CW Group, provided insight on Cement Trading and concluded that trade in Latin America is still strong. ◆◆ Felipe Bittencourt, Commercial Director of WayCarbon, discussed Carbon Regulations and the Impact on the Cement Sector. ◆◆ Laura Goldner, Senior Analyst at CW Group, shared her insight on Fuel Prices and Outlook – Oil, Petcoke, and Other Petro-Fuels.

CBI Brazil & LatAm 2013 was sponsored by: A TEC GRECO, Loesche, Claudius Peters, Haver & Boecker Latino Americana, Magnesita, Gebr. Pfeiffer, Fives FCB, Densit do Brasil Ltda, LV Latino America, RUD, CEMI Process Technology and Engineering, Scheuch/Tersel, PragoTec, Scantech, IKN, Dynamis, Alstom, Promac Engineering Industries, Thorwesten Vent, PANalytical, FRITZ & MACZIOL group and Martin Engineering. CemWeek also provided key support to CBI Brazil & LatAm 2013. GMI Global is looking ahead and is excited to begin planning for the next CBI Brazil & LatAm Conference. Stay tuned for news on one of the most exciting and dynamic cement business and industry events, which is now held annually.

Technical & Engineering Highlights: ◆◆ Olivier Thomas, Technical & Performance Director at Loesche, presented on Quality Cements Produced with the “Green” Loesche Cement Grinding Plant. ◆◆ Phillip Hempel, Project Manager at Gebr. Pfeiffer, discussed the World’s Biggest VRM by Gebr. Pfeiffer SE: A Landmark Decision in Brazil. ◆◆ Guillermo Etse, Executive Director at Saxum Servicos de Consultoria, reviewed the Key Factors Influencing the Construction Costs of Cement Facilities. ◆◆ Stephan Oehme, Sales & Technology Director at Claudius Peters, provided a presentation on ETA Cooler – Now for Easier Conversions. ◆◆ Clelio Tonneli Filho, Business Manager – Packaging & Filling Systems at Haver Boecker, shared his insights on Innovation in Product and Engineering. ◆◆ Jonathan Forinton, Director of A TEC GRECO America, discussed Technical Developments Enabling Tomorrow’s Operations – Preheater Upgrades/Chlorine Bypass/A TEC Calciners.

To learn more about GMI’s cement industry events, please contact us at: sales@gmiforum.com or +1-203-516-7424 INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

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Energy Price Update

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Dec - 10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

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Source: CW Group Research NATURAL GAS PRICES (US$/MMBTU)

20 Japan LNG

Europe

US

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In Colombia, the strike at the Cerrejón mine temporarily affected coal prices in Europe, a destination for much of the country’s coal exports, but prices pulled back once exports resumed. The strike cost the mine around 3 million metric tons in lost output. Two days after the mine

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1999

In the U.S., the price of thermal coal exports remains in the low $80’s per ton range after reaching a historical high of US$92/ton in the third quarter of 2011. In 2012, thermal coal prices were driven down by high availability and demand for natural gas. The local price of gas, which has historically been more expensive than coal, fell to a 10-year low due primarily to a sudden spike in shale gas production.

150

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Coal demand in Asia seems to be easing, as lower thermal power generation in Japan in February 2013 led to a decrease in coal usage of 9 percent. China, struggling with rising pollution coming mostly from coalfired power plants, could impose stricter environmental regulations that could lead to a further decline in coal consumption. In addition, some countries have taken action to retire inefficient excess capacity. Under these circumstances, the price of coal will likely continue to drift down.

PRICE OF PETCOKE EXPORTED TO INDIA (US$/TON) Rolling 12-month average

1997

Coal Coal prices in Europe and South Africa have fallen back to 2009/2010 levels, reaching rates below the $90/ton mark following worldwide oversupply and weak demand. Australian coal from the port of Newcastle was still above $90/ton at the end of 2012, bolstered by large shipments to some markets in Asia. However, Port Waratah Coal Services (PWCS), one of the main coal handlers at the port, reported a 22 percent decline in shiploaded tons in February vs. the previous month.

Source: CW Group Research


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CW Research & Analytics To contact the CW team: inquiries@cwgrp.com

STEAM COAL FOB AVERAGE PRICES (US$/TON) Indonesian HBA 150

Australia Newcastle

Colombia exported

US exported

Table available in the India Cement & Construction Materials journal Print Edition

105

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increase inventories, but weak markets will still limit a rebound in petcoke price. Natural Gas Natural gas prices in North America hit record highs in March in the midst of cooler weather expectations across much of the region and declining supplies in Canada. While natural gas prices in the U.S. hit record lows in 2012, the story in the rest of the world looks different, with ranges of $9 to $10 for Europe and $13 to $18 in Asia.

restarted operations, unknown assailants bombed a key railway used to transport the coal to seaports. Petcoke The price of U.S. petcoke exported to India showed a downward trend from the end of 2011, but slightly recovered in the fourth quarter of 2012. United States, the top petcoke producer and exporter worldwide,

realized record exports of uncalcined fuelgrade petroleum coke during 2011 and the first half of 2012, spurred by higher demand in Asian countries. In China, most local petcoke producers raised prices following a decrease in crude oil processing and steady petcoke sales that kept inventories at a low level, especially around the days of the Chinese New Year celebration. In the short term, refineries will likely

Asian countries are among the biggest importers of liquefied natural gas (LNG) in the world. Japan, the number one importer worldwide, saw its imports jump after the Fukushima incident. With no internal sources of gas, prices have surged. In Argentina, the government announced a 44 percent increase in price to encourage local and foreign investment in the sector, after the country saw a decline in its natural gas reserves produced by low investments in exploration and exploitation. BMWeek

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Coal Update Prices With global coal prices declining over the last twelve months, the price of CIL’s highgrade coal has become less competitive, rising over the cost of imported product and leading large consumers in the country to raise complaints and ask for revisions in the contracted rates of their supply agreements. According to recent statements released by CIL executives, if prices are not brought down, even consumers buying lower-grade coal are likely to start complaining. Earlier this year, CIL announced plans to increase the price of its best-quality coking coal supplied to selected customers, but the hike was put on hold following numerous objections. The increase follows a boost last September in local diesel price that has been hitting coal production cost. Supply and Demand Pricing concerns come as the country has faced recurrent supply issues. CIL is still actively engaged in discussions with power generator NTPC over coal supply and quality issues, and a recent two-day nationwide strike called by trade unions caused a loss in production of about 1 million tons. Furthermore, the company recently announced it may import as much

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as 20 million tons of coal next fiscal year to meet increased orders from local power generators. CIL also announced it has set aside 350 billion rupees ($6.5 billion) to buy and develop coal assets overseas to reinforce local supplies. Money will be invested over the next five years, starting in Mozambique, but CIL is also looking for assets in countries including the U.S., South Africa, Indonesia, Australia and Colombia. Most recently, at the advice of Ministry of Coal, CIL has shown interest in engaging international consultants to evaluate potential improvements in their mines. The company has been under constant govern-

ment pressure to guarantee a steady and uninterrupted coal supply to avoid power blackouts, a symbol of India’s poor infrastructure and a crucial factor in the country’s economic growth. The government on its side has step up efforts to secure supplies, as the gap to meet the country’s coal demand is likely to scale up to 200 MT in 2016-17. In that regard, a technical committee was constituted in March with representatives of CIL, the Ministry of Coal and other institutions. The committee will conceive a Public Private Partnership (PPP) policy framework to increase production of coal. First report is expected within the next month. BMWeek BMWeek BMWeek

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INDIA COAL PRODUCTION (MILLION TONS)

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India and South Asia Focus India’s regional trade footprint narrows considerably in 2012 India exported around 1.9 million tons of Portland cement in 2012, 16.4 percent less than in 2011. Trading activities also were diminished when it came to imports, with only 71.2 percent of 2011’s imported volume being replicated in 2012. Sri Lanka and Nepal Sri Lanka is India’s major cement importer, with around 1.4 million tons of cement traded between the two countries in 2012. India dispatched each ton of cement to Sri Lanka at an average FOB price of around US$56, while at the domestic level Sri Lankan cement companies sold a 50 kg bag of cement in the exchange of RS 878 (approximately US$6.9). Domestic cement prices are controlled by the Consumer Affairs Authority, a situation that caused several cement importers to lobby the authority for price increases in the third quarter of 2012 after they were severely hit by the exchange rate depreciation and the increase in energy prices. Indian cement traders are also wary of the higher cost of logistics and internal transport of consignments from the cement plants to the ports when approaching external markets. A SRI LANKA RETAIL CEMENT PRICE (RS/50 KG BAG OF CEMENT) 1000

Sri Lanka (Rs Price per 50 kg bag)

Table available in the India Cement & Construction Materials journal Print Edition

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particular case is the expected entry into the Sri Lankan cement market of India Cements, which sold its cement products in Chennai for INR 340 in August 2012, while on the Sri Lankan market a bag of cement was sold at only INR 30 more. The expectation of a considerable cement price increase led importers and dealers into enlarging their stocks, a strategy that was mostly visible in September 2012 when the highest imported volume of the year was reached (almost 0.25 million tons). At that time, the authority was already fining dealers for hoarding cement stocks and thus creating an artificial shortage of cement. After several rounds of negotiations, in October 2012, after five months of enforced stability, the cement price was increased by 4.3 percent, followed by another increase in November 2012 of another 5.2 percent. On another end, India reported a sharp decrease of its shipments to Nepal in 2012. After India exported over 1 million tons of Portland cement in 2011 to Nepal, the volume was reduced to a disappointing 0.25 million tons in 2012. An impacting factor for the declining volumes is represented by

Nepal’s efforts to build its domestic cement capacity. The Department of Industry said that around RS 22.5 billion were invested in the last five years for the enhancement of the industry. Pakistan and Bangladesh Pakistan remains India’s most important Portland cement supplier even though on declining volumes. Pakistan exported around 0.43 million tons of Portland cement to India in 2012, while Bangladesh supplemented the market by almost 0.2 million tons. Pakistani cement traders believe their country has the potential to export over one million tons of cement to India if licensing hurdles are eliminated and a new road network is built at the Wahgah border. India offers a challenging environment for external traders given the non-tariff barriers, such as the certification that needs to be obtained from the Bureau of Indian Standards (BIS). Although Pakistani cement companies expressed their intent in mid-2012 to reduce their FOB price by US$9 per ton with the objective to hike exports, the customs-declared FOB price continued its escalating trend by the end of

the year. The majority of Pakistani cement exports are performed via land (train or trucks). Seaborne shipments are a less viable solution given the high inland freight costs that hamper mostly the northern Pakistani cement companies. The trade environment will continue to be defined by increased challenges for the Indian cement companies in 2013. As Pakistani cement companies are fervently looking for licensing approvals in order to enter the Indian cement market, the Indian companies might have to turn their attention once again to exporting capabilities. Sri Lanka remains the hot spot for cement exports, while Nepal could face an increase in imported volumes if domestic cement companies are not able to secure their Nepal Standards (NS) in due time. BMWeek BMWeek BMWeek

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cement market & competition

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arket and competition

Cement production is expected to grow based on strong demand and rise in construction activity. Analysts predict growth in cement sector margins. Pakistan-based cement makers complain of India’s control on exports.

PRODUCTION TO GROW Cement production is likely to grow 4.8 percent in the December-March 2013 period. According to a report released by the Centre for Monitoring Indian Economy (CMIE), the year 2012-13 is expected to end with 6.4 percent growth. Demand for cement is also expected to improve as construction activity picks up in coming months. However, the growth may moderate as the effect of low base wanes. The dispatches are also likely to rise at a similar pace as production. MARGINS TO RISE India’s cement sector margins are expected to expand over the next two years on the back of price increases and improvement in demand. According to a report by Credit Suisse, price increases and improved demand will boost earnings of cement companies. The investment bank has assigned new ratings to cement companies. Credit Suisse has rated ACC as “outperform” with a target price of RS 1,545, while assigning “neutral” ratings to UltraTech Cement and Ambuja Cements with target prices of

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CEMENT MAJORS SHOW INTEREST IN RAIL PROJECTS

CEMENT: MARKET AND COMPETITION

focus India-based cement majors Ultra tech, Prism and Madras Cement have shown interest in port connectivity projects as part of the government’s PPP project. In a meeting between the Railway Board and investors last Saturday, around 45 to 50 companies with 100 delegates were present. Along with the private investors, even railway Public Sector Undertakings (PSUs) such as IRCON, RITES and RVNL were present during the meeting. The railway expects to raise around RS 5,000 crore from the investment in port connectivity projects over the next five years. To begin with, the railway expects investment worth RS 3,800 crore from the private sector for six port connectivity projects, with the Cabinet approving the participative models of rail connectivity.

RS 1,900 and RS 205 respectively. Credit Suisse also initiated coverage of Grasim Industries BSE 0.15 percent with an “outperform” rating and a target price of RS 3,670. EXPORTS CONTROLLED Pakistani cement firms are complaining about India’s controls on exports. The cement makers say that Indian authorities have continued to discourage the entry of finished goods from Pakistan. On average only one truck of Pakistani cement crosses the Wagah border on a daily basis. However, industry sources declared that Indian Customs officials fully facilitate trucks carrying raw material, including gypsum, and that around 50 gypsum trucks enter India from Pakistan’s side of the border daily, as no extra security checks apply to the import of this raw material from Pakistan. There is a huge demand for Pakistani cement in India, and Pakistan has the

capacity to export around 7 million tons of cement. Pakistani cement companies exported 786,672 tons of cement to India during 2007-08, 634,456 tons in 2008-09, 722,967 tons in 2009-10, 320,230 tons in 2010-11, and 605,435 tons in 2011-12. MOVE TOWARDS DECISION A hearing into cement cartel appeals continues as India’s Competition Appellate Tribunal (COMPAT) is set to hear a batch of petitions filed by cement firms seeking a stay on a penalty of RS 6,307 crore imposed by fair trade regulator CCI on the grounds of cartel-like behavior. Firms penalized by competition authorities have contested the sanctions. In June 2011, the CCI had slapped a penalty of RS 6,307 crore on 11 cement makers. The industry body CMA was also fined RS 73 lakh. The cement companies charged with cartelization include Lafarge

India, India Cement, JP Associates, Binani Cement, Ambuja Cement, Madras Cement and J K Cement. INTERIM RELIEF The Supreme Court has granted interim relief to Birla Corporation as it allowed the firm to carry out manual mining at its Chanderia limestone mine in Rajasthan. The Apex Court advised that the Central Building Research Institute conduct a study on the impact of mining without blasting operations on Jodhpur Fort. Following a Jodhpur High Court order, mining operations at Chanderia were suspended from August 20, 2011. At Chanderia, the company has three clinker units. Birla reported a net profit of RS 32.21 crore in Q3FY13 against RS 43.72 crore in the corresponding quarter of the previous fiscal year.

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cement volume and pricing

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olume and pricing

Cement firms hike prices. Price hike to continue owing to increase in cost of gasoline, diesel and rail freight. Analysts say volumes likely to remain flat.

CEMENT FIRMS HIKE PRICES India base cement firms have hiked prices starting from around RS 10-15 per 50 kg bag. In the eastern region, prices rose by around RS 60-70 per 50 kg bag, while prices in the central and western regions rose by around RS 30 and RS 15-20, respectively, per 50 kg bag. “Demand has improved across the country, mainly driven by the construction of roads and highway projects. Demand from the real estate sector has also improved, mainly in the tier-II cities. With improved demand, capacity utilization of cement plants was at around 85-90 percent,” Vinod Juneja, Managing Director of Binani Cement, said. The construction of roads and real estate projects has led to a sudden pickup in demand after a long lull. The move follows all-round improvement in prices in January and February. PRICE HIKE TO CONTINUE India cement firms may continue to raise prices following the rail freight hike as well as gasoline and diesel price increases in the first week of March. According to manufacturers, they need to hike prices by 6-8

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percent to ease their burden. H. M. Bangur, Managing Director of Shree Cement, said a price hike is inevitable. “Cement companies may increase prices by RS 5-10 per bag as they try to pass on higher freight costs. The recent developments will have a long-term impact on the industry. Prices are likely to soar to the tune of 6-8 percent,” he added. Meanwhile, HeidelbergCement has already raised prices by RS 10 per on a 50-kg bag in some parts of the country. PRICES STABLE IN SOUTH, SINK IN AP Cement prices in the south were relatively stable in the December quarter, whereas the prices of cement in Andhra Pradesh have fallen RS 10-15 per bag. The decline comes amid price increases in other regions. There was continuing price volatility of the building material in the State during the last year. According to K. Ravi, Managing Director, NCL Industries, “Significant capacity additions in the state have been instrumental in driving the prices lower in the state.’’ VOLUMES TO REMAIN FLAT India’s cement volumes are likely to remain flat in the first half of the year, as costs

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push up and margins shrink. Though third quarter gross domestic product (GDP) data does reflect a pickup in manufacturing, this is not reflected in cement volumes. In the first 11 months of FY13, the cement industry has seen growth of 5 percent. Analysts also expect realizations to be weak. Most brokerages have trimmed earnings estimates by 3-5 percent in FY14, as costs have risen.


CEMENT: PEOPLE volume and pricing

P

eople

Zuaire Cement’s Wholetime Director, Mr. Krishna Srivastava, is honored with the top CMO award. French President Francois Hollande visits new Lafarge laboratory in Mumbai. Ultratech shuts unit on account of workers’ unrest.

PROBLEMS FOR AMBUJA The months of January and February were problematic for Ambuja Cements. On January 31, an accident took place in Ambuja’s unit in Bhatapara, Chattisgarh state. A steel construction container collapsed and killed five people. Four officials at Ambuja, including Vice President Sanjay Kumar Badopadhyay, were arrested under laws governing negligence with machinery, endangering life or personal safety and causing death by negligence. To further add to the problems of the company, three weeks after the accident in Bhatapara, another industrial accident took place at the Ambuja cement factory at Rawan in Balodabazar district. Following the Bhatapara incident, some Indian legislators urged the government to make a judicial inquiry. Opposition leaders Ravindra Choubey and Dr. Shakrajit Nayak (Congress) and Devji Bhai Patel (BJP) alleged negligence on the part of Ambuja cement management. Labor Minister Chandrasekhar Sahu responded that legal action had already been initiated against four top officials of Ambuja Cements in connection with the accident.

He said cases have been registered against them under IPC sections for negligence. WORKER UNREST Ultratech Cement had to temporarily shut down its Awarpur plant in Maharashtra on March 3. The unit, which has 3.6 million tons production capacity, was shut down on account of workers’ unrest. “... the operations at the company’s unit viz Awarpur Cement Works, Awarpur, Maharashtra, having a capacity of 3.6 mtpa has been temporarily shut down on account of the stoppage of work by the workers,” Aditya Birla Group’s flagship firm said in a BSE filing. The closure didn’t have a substantial impact on the company’s finances, the filing said. This was the second time in a week that the group was forced to stop production. On February 26, Hindalco Industries had announced a lockout at Silvassa plant in Dadra and Nagar Haveli following continuation of a workers’ strike. Ultratech has 12 integrated cement manufacturing plants in India and is the single largest cement maker in the country with an annual capacity of over 50 million tons.

TOP CMO AWARD Zuari Cement’s Wholetime Director, Mr. Krishna Srivastava, won an award from the CMO (Chief Marketing Officer) Council Asia as one of the “50 Most talented CMO’s of India.” The prestigious award was presented at a glittering ceremony held in Mumbai. The award recipient was chosen by a joint think tank from the CMO council and CMO Asia based on an overall ranking on leadership in the marketing area. Zuari Cement is a part of the Italcementi Group, the fifth-largest cement producer in the world and the biggest in the Mediterranean region. VIP VISIT French President Francois Hollande, along with his senior ministers and other officials of the French government, visited the new Lafarge laboratory in Mumbai during February. The President was shown the company’s new techniques and products around the CDL by Lafarge Chairman and CEO Bruno Lafont. The Lafarge CDL offers innovation to India’s construction industry and new construction techniques developed at its research center in Lyon, France.

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1 rojects and expansions

HIEDELBERG CONTINUES EXPANSION HeidelbergCement India continues to expand. The firm recently announced expansion of cement capacity to 2.7 mtpy from 0.8 mtpy at its Jhansi cement grinding plant in Uttar Pradesh. The firm’s installed capacity now stands at 6 mm tons per year and is only climbing. HeidelbergCement India has increased its installed cement production capacity to 6 mm tons per year, reports the Hindu Business Line. It has recently completed investments of RS 1,500 crore to raise its all-India production capacity. The company announced it has enhanced clinker capacity to 3.1 mtpy from 1.2 mtpy and cement grinding capacity to two mtpy (one mtpy) at Imlai, both in Madhya Pradesh. The company has added a 5,000-ton-perday clinker line at its Narsingarh unit. The company conducted trial runs at the new capacity before production commenced in December. SUNDERNAGAR PLANT Local residents of Sundernagar have expressed misgivings about a proposed cement plant. Residents and environmen-

26 MARCH / APRIL 2013

talists say that the proposed plant could cause widespread environmental damage. The environmentalists are up in arms against the proposed plant, which they fear would cause large-scale environmental degradation and severe health hazards to the dense human settlements, wildlife and vegetation. They complained that the cement plant would destroy the vast tourism potential which is yet to be harnessed in the green valley. As far back as 1995, it had been envisioned to establish a cement plant in the interior of Sundernagar far away from the populated areas. However, Harish India, the company setting up the proposed plant has succeeded in obtaining NOC for the plant at Khatwari on fertile agricultural land, which has sparked off bitter opposition from the farmers. MULLING EXPANSION India Cements is planning to expand capacity at its Rajasthan unit, with a possible investment of RS 650-700 crore. The plan comes in view of the growing demand in Gujarat and Madhya Pradesh. The present capacity of the plant is 1.3 million

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tons, and the company is planning to add one more line with similar capacity. India Cements’ current manufacturing capacity is 15.5 mt with plants in Tamil Nadu, Andhra Pradesh and Rajasthan. “We are examining whether we can expand the capacity at the Rajasthan plant,” N. Srinivasan, Vice Chairman and Managing Director, said. NEW POWER UNIT HeidelbergCement is planning to build a power unit in Madhya Pradesh. The local unit of HeidelbergCement will spend as


CEMENT: projects and expansions

much as RS 1500 crore to build the 12.15 MW power plant, reports Equity Bulls. The firm has approved setting up of a waste heat-recovery based power generation plant at its clickerization unit at Narsingarh, District Damoh (M.P.). The project cost is estimated in the range of RS 1450 million to RS 1500 million, and it is likely to be operational in January 2015. It will substitute an equivalent grid power and thus reduce power cost per ton of clinker and improve profitability. HEARING DELAYED The public hearing on UltraTech’s proposed 2 mm ton plant in Maharastra has been postponed because of reported procedural lapses. Aside from the plant, the firm also wants to build 12 MW captive power plants on a total area of 99 hectare (247 acres) in Ashti and Tarsa. The areas of concern about the plant include irrigated lands being acquired and air pollution threatening green fields and local water bodies, rivers and groundwater resources. “Until now only 1.5 hectare land has been bought for RS 15 lakh per hectare and we proposed to procure more land but it got confounded on the fears of pollution,” UltraTech officials said. Meawhile, the company is also seeking limestone deposits in Odisha, and has asked the local government to fast-track their approval. The company has been kept waiting for nearly seven years since the signing of a memorandum of understanding (MoU) with the Odisha government. “In order to meet requirement of raw material, so far only one PL (prospecting license) over 330 hectares area in Khatkurbahal was granted (Block-A & B) in which 3.7 million ton of limestone had been established. Subsequently, we surrendered 250 hectares (ha) by putting ML (mining lease) application only over 40.59 ha mineralized area. We are continuously approaching steel and mines department for grant of some other areas to start our project activity but nothing has materialized till date,” R. M. Gupta, Senior Executive President, UltraTech Cement, said.

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cement m&a and finance

m

&a and finance

5

1

Ultratech negociates new acquisition. Acc renames one of its subsidiaries. Shiram Group to decide on financial partners. Sinoma International planning new investment

M&A ULTRATECH NEGOTIATING new deal UltraTech Cement is in talks to purchase an incomplete 6.7-million-ton cement plant in Gujarat owned by ABG Cement (ABGCL). According to senior ABG officials, executives of both UltraTech Cement and ABG had three rounds of negotiations. “The company is keen to complete the plant and grow its cement business”, said a senior ABG official. Reportedly, UltraTech has offered around RS 4,660 crore at $130 a ton while ABG is believed to be asking for 5,008 crore at $156 a ton. Axis Capital, the investment banking arm of Axis Bank, is advising UltraTech on the deal. Meanwhile, UltraTech is also seeking funding from IFC. IFC is planning to lend up to $100 million to help fund UltraTech’s expansion of its cement plant located near Rawan village in Tehsil Sigma, Chhattisgarh. The total cost of the project is estimated at $297 million. The project involves expansion of UltraTech’s clinker production capacity, a key component of the company’s strategy for cement capacity expansion in the eastern part of India. According to analysts, UltraTech will be

28 MARCH / APRIL 2013

the frontrunner along with Holcim in reaping the recovery in demand as the company is shortly expected to see new capacity additions because of its acquisition plans. However, the company reported a fall of 5.7 percent in cement dispatch for February 2013 to 3.31 million tons from 3.51 million tons for February 2012, dragging shares. Reportedly, the company’s cement production in the same month also fell to 3.32 million tons from 3.46 million tons during January, registering a decrease of 4.05 percent. ACC RENAMES SUBSIDIARY ACC said it has merged the Vishakapatnam-based Encore Cements & Additives with itself and has renamed it as Vizag Cement Works. Since January 2010, when ACC acquired 100 percent stake in Encore Cements, it had remained a wholly owned

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subsidiary of the company. The acquisition has helped ACC build its presence in Andhra Pradesh and in the coastal areas of Odisha. Reportedly, Vizag Cement Works will be the 18th manufacturing plant for ACC. SHRIRAM GROUP SHORTLISTING POTENTIAL PARTNERS Shriram Group is set to decide between Citi Venture Capital International (CVCI) and Blackstone as financial partners to run its cement business. Shriram initiated a process to sell its stake in Sree Jayajothi Cements in which it holds 70 percent, and had explored options of selling out to global cement behemoths such as Holcim and CRH. Meanwhile, the company also is seeking fresh capital infusion and has had


FINANCE advanced talks with global private equity majors CVCI and Blackstone to raise RS 538 crore for its cement business. Senior Shriram Group officials confirmed they were in “wide-ranging talks” with various PE players to raise this sum for deployment in the cement company, which it acquired in February 2012. Reportedly, the company also had discussions with global cement majors such as Italcementi Group, Holcim and CRH for a strategic partnership. TEMASEK HOLDINGS AND BARING ASIA RUNNING FOR STAKE Temasek Holdings and Baring Asia are reportedly in the running for a slice of Lafarge India. According to news reports, Lafarge India plans to shed a minority stake of 20-30 percent to raise RS 1,325 crore and fund its RS 6,000-crore expansion plans. . Reportedly, Lafarge is also restructuring its global operations through a series of asset sales to pare down its debt to 10 billion euro from 12.2 billion euro after a 2007 purchase of Orascom led to the loss of its investment-grade credit rating last year. SINOMA’S POTENTIAL ACQUISITION Sinoma International is planning to invest $ 25.18 million for the establishment of a wholly owned subsidiary of China National Materials International (Hong Kong) Limited LNV Technology in India. The entity will be made through equity acquisitions and capital increase According to news reports, Sinoma International

SANGHI’S SALES INCREASE India-based Sanghi Industries reported an increase in profits of 614.90 percent to RS 21.59 crore in the quarter that ended December 2012. This is against RS 3.02 crore during the quarter that ended December 2011. The company said that its sales rose 26.07 percent to RS 286.34 crore in the quarter that ended December 2012 as against RS 227.12 crore during the quarter that ended in December 2011. CMA PUSHING FOR EXCISE REDUCTION The Cement Manufacturers’ Association (CMA) has demanded excise-duty reduction for building material to 6-8 percent of the existing 12 percent in the ensuing budget. “To encourage cement industry and to bring it at par with other core and infrastructure industries, the excise duty rate should be rationalised from 12 percent to 6-8 percent. The excise duty rates on cement are one of the highest and next only to luxury goods like cars,” CMA, the representative body of the cement manufacturers, said. “Another core industry attracts around five percent duty. Therefore, for growth of the cement industry, the government may kindly reduce excise duty on cement and clinker,” the association further added. ACC, AMBUJA SHAREHOLDERS APPROVE ROYALTY TO HOLCIM Shareholders of ACC and Ambuja Cements approved the payment of technology fees to their parent company Holcim. According to Ambuja Cements’ regulatory filing, shareholders of Ambuja Cements

approved the resolution for payment of technology fees to be effective from January 2013 to Holcim Technology with 71.84 percent of votes cast in favor of the resolution. The companies have been paying a certain part of their annual sales to Holcim Support and Holcim Services Group as fee for accessing its technology and support.

CEMENT: m&a and finance

said that, with the huge market potential of India’s cement works, the acquisition of LNVT will further enhance the level of internationalization of the company’s assets and operations to achieve a breakthrough in the Indian market Moreover, it will enhance the company’s influence and accelerate realization of the strategic objectives of the Indian market.

Meanwhile, the stock analyst firm Angel Broking downgraded its rating for Ambuja Cements to “neutral” from “buy” on concerns about its future growth prospects. The analyst firm said that the cement maker’s growth is likely to be constrained if the company fails to add adequate capacity. The firm says Ambuja’s growth is likely to be constrained in calendar years 2014 and 2015 if the company fails to add adequate production capacity, according to analysts. INDIA CEMENTS PROFITS DECLINE India Cements reported a lower profit in the quarter ended December 31, 2012. The company netted RS 26.12 crore for the period, down from RS 56.31 crore in the corresponding quarter of the previous year. However, the company did manage to maintain EBIDTA at RS.196 crore (RS.197 crore) during the quarter under review. After registering lower profits, N. Srinivasan, Vice-Chairman and Managing Director, said, “Maintaining the EBIDTA margin in a difficult condition is in itself a big achievement.’’ POTENTIAL SALES BOOST BINANI SHARE PRICES Binani Industries saw its shares rise after reports surfaced it was looking to sell off a 40 percent stake in its cement unit. According to news reports, the company is planning to raise capital to cut debt and expand cement capacities. Shares in the company were trading at RS 123.30, up RS 13.45, or 12.24 percent, at the Bombay Stock Exchange (BSE) on Wednesday, 20 February, at 12:01 p.m. the company’s stocks were trading down 21.66 percent from a 52-week high of RS 157.40 and above 28.04 percent over the 52-week low of RS 96.30.

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update Haver & Boecker invests in Brazil Haver & Boecker held a dedication ceremony for an expansion of the company building in Monte Mor near São Paulo, Brazil, on March 1. The expansion included more than 1,500 square meters of office space for the growing share of engineering services. The company also used this occasion to announce the creation of Haver & Boecker Holdings Americas to support technical, financial and communications for all branches in Latin America and North America. The holding company will be headed by Adrián Gamburgo, who was director of HBL for several years. Rodrigo Campos becomes the managing director for the branch in Brazil.

This annual award recognizes brands and marketers who have achieved extraordinary success from innovative and effective marketing practices, with regard to the particular circumstances of different industries, budgets and diversity of marketing programs.

Additives can be used, however, to further improve the CO2 balance of products based on Portland cement. These alternative substances are by-products from steel manufacturing or coal-fired power plants, and serve as source materials for composite cements. Portland cement clinker is partly replaced, for example, by blast furnace slag, fly ash, or silica fume, whereby the specific use of these additives often even improves the properties of the cement product. However, this is only possible to a certain extent because of the limited availability of high-quality raw materials. In an effort to tap the further potential for CO2 reduction, HTC has been working on the development of alternative binders that work more or less without conventional clinker for several years. Since the beginning of 2010, new staff has been hired at the HTC Global research centre in Leimen, Germany, to develop concepts for alternative clinker. A previous internal study from 2009 systematically analysed all of the concepts known at the time.

TernaCem - a new alternative binder concept The cement industry is the source of about 5 percent of the global anthropogenic CO2 emissions. On average, the production of one tonne of cement clinker generates around 800 kg of CO2. By using alternative fuels such as tires, meat and bone meal, or sewage sludge, among other measures, HeidelbergCement has succeeded in reducing the specific CO2 emissions.

One of the most promising concepts in this study was a calcium sulfoaluminate-belite binder (CSAB). Calcium sulfoaluminate (CSA) cements have been produced for use in building chemicals for a long time, especially in China. They are mainly used in screeds, tile glues, and special products. A characteristic feature is that they form ettringite very quickly and therefore exhibit a very high early strength. Experiments have already been performed with a view

Zuari Cement wins the Zee Business Brand Excellence Award for Marketing Communications The Zee Business Brand Excellence Award, which is endorsed by the World Brand Congress & Asian Confederation of Businesses, was given to Zuari Cement. The award is based on an evaluation by jury members on marketing communication activities done in 2012. The last edition of World Brand Congress focused on the central theme “Brand reputation – Present & Future.”

30 MARCH / APRIL 2013

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to use these cements for construction purposes, but their durability has not yet been sufficient. “If we combine CSA cements and their high early strength with belite (dicalcium silicate), the slow-reacting clinker phase in classic Portland cements, it might be possible to combine the advantages of both systems in one cement. The ettringite formation is responsible for the early strength, while belite hydration – as with Portland cement – leads to calcium silicate hydrates, which form a permanent and durable structure.” says Dr. Wolfgang Dienemann, Director of Global Research & Development HTC. In 2010, the researchers at HTC started investigating the cement chemistry of CSAB under various process conditions. Dienemann: “For the first time, we looked more closely at the ternesite clinker phase, which was considered to be non-reactive until now. This phase does not react with pure water, but if the pore solution contains aluminium, there occurs an immediate chemical reaction and a solid structure is formed.” HTC registered two patents for the manufacturing of clinker containing ternesite (Belite Calciumsulfoaluminate Ternesite - BCT) in the late summer of 2012, and four patents for applications using ternesite containing clinker in various binder systems (= cement types). The advantages of ternesite containing clinker are obvious: Because of its chemical continued on page 41


regional news

Pakistani cement firms burdened by debt servicing. Pakistan attempts to take action against cement cartel. Pakistan exports rise due to market struggles at home. Nepal bans two cement plants for alleged violation of standards. Nepal plants significantly increase clinker capacity. INCREASED DEBT Pakistan-based cement makers are increasingly being burdened by debt servicing as a major component of cement industry cost. Even after three interest-rate cuts in the last year, the effective bank markup for this sector is still well above 12 percent. Experts said that though exports have declined, there exists a promising potential in export markets. Renewed development trends are shown in the Middle East and East African markets. Projected sales to India are expected to grow, while Bangladesh and Sri Lanka have been steady markets for export of clinker. Demand for cement is also expected to improve in Afghanistan and Iraq. CEMENT CARTEL REVEALED Pakistan’s Ministry of Industries wrote a letter to the Competition Commission of Pakistan (CCP) on December 31, 2012, asking the antitrust watchdog to take action against a cartel of cement manufacturers who presumably made billions

of rupees by raising cement prices in 2011 and 2012 without any justification. However, sources say the letter was withdrawn by Industries Secretary Shafqat Naghmi and the top political leadership and that the CCP was asked not to take any action. Secretary Naghmi and cement manufacturers declined to make any comments. RISING CEMENT EXPORTS Pakistan cement exports rose 15.4 percent in February 2013, but local sales only inched up by approximately 1.2 percent. According to a report made in February 2013, the cement units in the northern part of the country sold 1.556 million tons of cement for the domestic market and exported 0.444 million tons of cement, most of it to Afghanistan and other destinations through sea. The southern-based mills provided the domestic market with 0.397 million tons of cement, while their exports were 0.209 million tons.

PLANTS BANNED The Nepal government has banned production at one plant each of Shree Cements and Ambe Cement for allegedly defrauding customers. Nepalese officials said the two plants had been breaching the stipulated standard in production. The Department of Quality Control and Measurement sealed and banned production at the two cement factories pending further investigation since the factories allegedly were found not abiding by the standard during recent monitoring. CLINKER CAPACITY INCREASED Nepal-based plants are increasingly using their self-produced clinker for cement production. Siddhartha, Bridge and Supreme now produce over 90 percent of the clinker they require. This indicates that the country is slowly moving towards self-reliance on clinker, the major raw material for cement production. Argakhachi Cement is set to increase its production capacity by 400 tons a day in the next four months.

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CONSTRUCTION materials

I

nfrastructure & projects

Government approval comes through for several state infrastructure projects. Housing projects on the horizon in Mumbai and Gujurat. Clearance is given for the construction of India’s second seabridge, the Mumbai Trans Harbour Link (MTHL) project in Mumbai. NEW PROJECTS PWD to execute road projects in Kerala The Public Works Department (PWD) is to execute road development projects across Kerala in the next three years. The cost of the project is estimated to be RS 10,600 crore and involves construction of Phase-II of the Kerala State Transport Project (KSTP) worth RS 2, 005 crore, the RS 3,500 crore Thiruvananthapuram model road development project involving seven cities and construction of 1,204 km road network worth RS 5,100 crore. The PWD has already spent RS 1,359.62 crore for road development in Kerala. Godrej Properties to launch new commercial project in Mumbai Godrej Properties, the real estate arm of Godrej Group, is going to launch a commercial project at Bandra-Kurla Complex (BKC) in Mumbai. The project involves construction of a commercial building at a cost of RS 2,000-2,500 crore and will be spread across 1.3 million square feet. The commercial building is one of the largest real estate projects launched in the city and will feature flexible floor plates, elevated landscaped terraces and accurate art pro-

32 MARCH / APRIL 2013

gram. Godrej Properties expects to complete the construction of the building by 2015. Government clears 3000 km new road projects across six states The Union Government cleared 3000 km of new projects to the country’s six prime states. The projects will be executed at Gujarat, Maharashtra, Madhya Pradesh and Uttar Pradesh and two North Eastern States. The cost of constructing the roads is not yet disclosed, but the government plans to award the projects in the first half of 2013 starting April 1. Government approves strategic Indo-China border roads The Union Government has sanctioned the construction of strategic border roads in the Indo-China region. The project involves construction of 27 strategic border roads at a cost of RS 1, 937 crore. Of the 27 roads, 15 are being constructed by the Border Roads Organization, eight by Central Public Works Department, two by the National Project Construction Corporation and two by the Himachal Pradesh Public Works Department. Once complete, the road projects are expected to speed up the operational requirements of the Indo Tibetan Border Police.

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Central government approves funds for road networks in Assam The Central Government has approved RS 820 crore for developing road networks in Assam. The project is being implemented under the PradhanMantri Gram SadakYojana (PMGSY) and involves construction of 689 km of roads and 347 bridges. The construction of the network is being implemented in two phases and will cover 398 habitations across Assam. It is expected to start from the end of March. Four-laning of NH-21 in Punjab and Himachal Pradesh Infrastructure Developer IL&FS Engineering and Construction received orders


Construction materials: infrastructure & projects

Infrastructure and Construction Projects/Expansion Table

COST IN INR

LOCATION

1 March 2013/New project

NAME OF PROJECT

10, 600 crore

Kerala

March 2013/ New Project

2,000-2,500 crore

Mumbai

March 2013/New Project

n/a

Gujarat, Maharashtra, Madhya Pradesh and Uttar Pradesh

27 February 2013/ New Project

1, 937 crore

Indo-China Region

21 February 2013/ New Project

820 crore

Assam

12 March 2013/New Project

1, 436 crore

Punjab and Himachal Pradesh

27 February 2013/New Project

4,500 crore

National Capital Region (NCR)

March 2013/ New Project

732 crore

Orissa

6 March 2013/ Update

500 crore

Thane-Kalyan (Maharashtra)

28 February 2013/ New Project

500 crore

Andhra Pradesh and West Bengal

1 March 2013/ New Project

7,500 crore

Tamil Nadu

3/8/2013/ Update

n/a

across India

8 March 2013/ Update

8,500 crore

Maharashtra

3/11/2013/Complete

worth RS 1,436 crore for four-laning of KiratpurNerChowk section of NH-21 in Punjab and Himachal Pradesh. The project also includes construction of 67.3 km of roads, minor bridges, major tunnels, toll plaza, flyover, bus bays, truck lay byes and so on.

Maharashtra

be spent for land acquisition, rehabilitation and pre-construction activities. Once complete, the project will improve infrastructure in Orissa and will reduce the time and cost of travel for traffic plying the BhubanDubari-Chandikhole route.

Chintels to launch new projects in NCR Gurgaon-based Real estate developer Chintels India is planning to invest RS 4,500 crore by the year 2023 to develop residential and commercial projects. The project is a part of Chintels Metropolis and Chintels Cosmopolis and involves construction projects spread across 400 acres of self-owned land in New Gurgaon and adjoining parts of Delhi.

AP and WB to get two new ports The states of Andhra Pradesh and West Bengal are all set to get two new ports. The new ports will add capacity of 100 million tons. The ports are a part of the government’s endeavor to boost infrastructure investments and remove infrastructure bottlenecks that hamper the country’s economy. The government will allow builders of highways and ports to raise as much as RS 500 crore for the construction of the ports next year.

Central government gives nod to highway widening project in Orissa The Union Government approved a fund of RS 732 crore for the widening of a section of National Highway 200 in Orissa. The project involves four-laning of the Bhuban-Dubari-Chandikole section of National Highway-200 in Orissa under the NHDP Phase III on Design, Build, Finance, Operate and Transfer (DBFOT) basis. Out of the RS 732 crore, RS 80.22 crore would

Tuticorin port to get a new outer harbor The Union Government announced that the V O Chidambarnar (VOC) Port at Tuticorin in Tamil Nadu will get a new outer harbor that will add 42 million tons of capacity. The new harbor will be developed at the VOC port through publicprivate partnership (PPP) at an estimated cost of RS 7,500 crore. Once complete, the harbor will increase competitiveness of

the port and increase export-import trade of Tamil Nadu as well as benefit garment manufacturers. update on PROJECTS Tata Housing launches Phase II of its luxury housing complex After the successful launch of Phase I of its landmark residential development complex on the Thane-Kalyan road in Mumbai, Tata Housing Development announced the launch of the second phase of its luxury residential development complex – Amantra. The project was first launched in October 2011 at a cost of RS 1,000 crore. The second phase of the complex involves construction of a residential complex comprising 565 two- and three-BHK units at a cost of RS 500 crore with prices starting at RS 5,800 per square foot. MoEFokays held-up highway projects The Ministry of Environment and Forests (MoEF) has given its green light for NHAI to construct highway projects without even attaining forest clearance. MoEF grants the concession only for projects involving roads, transmission lines and pipeline projects. The clearance comes in the wake of NHAI’s opposition to MoEF keeping 17 highway projects in abeyance for its clearance. BMC begins work on DamangangaPinjal link water project The Brihanmumbai Municipal Corporation (BMC) has started work on the RS

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construction materials

E

quipment updates

Case launches new wheel loader Case Construction Equipment introduced its new wheel loader, the Case 521F. The new loader offers customers a 12 percent increase in fuel efficiency, faster acceleration and quicker cycle times over the previous E Series model. The new model features a selective catalytic reduction (SCR) technology which results in lower temperatures in the exhaust system and meets Tier 4 interim emissions standards based on the application tasks and power demands. Doosan launches new excavators for MEA Doosan Construction Equipment has launched two new heavy crawler excavators designed for the Middle East and Africa (MEA) markets. The new large-class excavators – the 48-ton DX480LCA and the 51-ton DX520LCA – are designed to be leaders in their respective weight classes. The DX480LCA involves a combination of power with extra reach and stability that allows it to accomplish long cycles and pulling work, whereas the DX520LCA offers exceptional stability and lifting capabilities.

higher maximum lifting capacity of 3.8 tons compared to 3.5 tons for the TR35160. The new model provides a maximum lifting height of 15.7 m. It is the smallest model among Bobcat’s telehandlers but is equally adept for rough terrain applications in the building, civil engineering and industrial markets. Western Star launches new allwheel drive truck Western Star Truck Sales, a subsidiary of Daimler Trucks North America, has launched a new all-wheel drive (AWD)

Bobcat introduces new rotary Telehandler Bobcat has introduced a new rotary Telehandler – the TR38160. The new Telehandler replaces the company’s previous TR35160 model and offers a

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truck – the 4700 set-back (SB). The new model is suited for construction and utility applications requiring a lightweight truck with rugged, off-road traction, and features a 110-inch BBC and a 42-degree wheel cut that provides excellent maneuverability on tight job sites. The new AWD truck also features a body builder-friendly design for ease of upfit and reduced body installation time. Caterpillar introduces new fourwheel-drive backhoe Caterpillar announced the launch of its


construction materials: EQUIPMENT UPDATES

new four-wheel-drive backhoe. The new backhoe, the 450F, offers 5 percent more gross horsepower than its predecessors and is designed for big city markets. The 450F offers lower noise and excels in applications that require bucket thumbs or hammers. The new backhoe will be available in the market in second quarter of 2013. Wacker Neuson launches new compact excavator Wacker Neuson has introduced a new 3.5-ton compact excavator. The new compact excavator – the 3503 – features an angle blade that allows easy and efficient backfilling. The new blade option allows the operator to push the material easily to the side of the excavator. It also features one of the smoothest and most powerful hydraulic systems in its class, making it even more versatile. With a maximum digging depth of 10 feet 7 inches, the 3503 also features a canopy or heated cab option that offers both comfort as well as visibility to the operator. JCB to introduce new 4CX Wastemaser backhoe loader at Bauma JCB is all set to unveil its brand-new 4CX Wastemaster backhoe loader at Bauma 2013. The new backhoe loader will add to the company’s well-established range of products for the waste and recycling industry. The new loader is a tailor-made model for arduous waste environments and will deliver unprecedented levels of efficiency, versatility and cost savings. Zoomlion to unveil 8-ton tower crane Chinese crane manufacturer Zoomlion is going to launch its new eight-ton topless tower crane at Bauma in April. The new topless tower crane – the 8ZT180 – has a maximum under hook height of 53 meters and can lift 1.8 tons at its maximum radius of 65 meters. Designed with European technology, the crane’s 30kW hoist can lift 1.9 tons at a speed of 80 meters a minute.

Raising the bar: High-speed valve bottomer ad*starKON SX Combining production speed, high-precision bottom closure and fast format change, the latest Starlinger AD*STAR conversion line model offers converters a technological head start in poly-woven block bottom sack production. Great Converting Performance The keyword that can be used in describing the product is efficiency. In converting, high production efficiency means quick material roll change and format change, little machine downtime and a low waste rate. All these criteria have been taken into account in the development of the new ad*starKON SX, a highly efficient, fast and reliable conversion line for the patented AD*STAR sacks made of coated polypropylene tape fabric. Designed for standard production, open mouth, 2-ply, pocket valve and BOPP laminated AD*STAR sacks, the conversion line runs a production speed of up to 85 sacks/minute. The pin-free continuous sack transport system and the precise bottom forming section ensure reliable bottom and top closure without harming the fabric. Fabric width variations? Quick sack format change? No worries! Even if the width of the tape fabric on a roll used for sack production varies, the ad*starKON SX is capable of converting it into perfect block bottom valve sacks. An integrated fabric-width monitoring system continuously checks the fabric width and automatically adjusts width variations, ensuring constant high-quality bottom geometry. This not only prevents unnecessary machine stops, but also significantly reduces the number of rejects. Also, changing the sack format is now easier: The new sack format is defined on the main control panel and carried out automatically on the machine by key press. Highest production efficiency, 24/7 “Compared to other conversion lines for this application, it is extremely flexible and easy to handle,” says Herman Adrigan, Starlinger Sales Director. “With its high degree of automatization and special features, the ad*starKON SX handles the critical steps in block bottom sack conversion perfectly, and sack converters like its uncomplicated mode of operation.” Since July 2012, when the first ad*starKON SX was delivered, 12 lines have left the Starlinger factories in Austria.

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analyst recommendations ratings changes

ACC Karvy Stock Broking has recommended a “BUY” rating for ACC with a target price of RS 1,602, upgrading it from a current market price (CMP) of RS 1, 258. The recommendation is based on the expectation of improving return ratios triggered by a pickup in demand and prices over the next six months. The company registered a 10 percent increase in its sales volume but saw a decline of 24 percent in its EBITDA because of a surge in operating costs in 4QCY12. However, Karvy estimates that improved demand for cement will help the company to register its realization growths. HEIDELBERG CEMENT With the commissioning of a new plant expected to drive the sales volume of the company at CAGR of approximately 29 percent during CY12-14E to 4.8 MT in CY14E, ICICI Securities recommends “BUY” for HeidelbergCement with a target price of RS 69. Meanwhile, Anand Rathi Shares and Stock Brokers (ARSSBL) maintained its ”HOLD” rating but earlier downgraded its target price to RS 51 from RS 58 owing to company’s EBITDA loss of RS 90 per ton as against the expected profit of RS 250. The upcoming expansion and a pickup in infra activities are seen as the key drivers in the next leg of growth. AMBUJA CEMENT (ACEM IN) Networth Stock Broking has maintained an “ACCUMULATE” rating on the stock with a target price of RS 217, upgrading it from CMP of RS 190 owing to a better demand scenario over the next few years and 80 percent exposure to high-growth northern and western regions, resulting in the realization and a volume CAGR of 5 percent and 7 percent over CY12-14E. Religare Securities has also retained its “BUY” rating recommendation for ACEM IN and recommends to buy into the stock as it expects a recovery in Q1CY13 on improved pricing and demand. Motilal Oswal Securities has downgraded its recommendation to “NEUTRAL”’ on Ambuja

36 MARCH / APRIL 2013

Date

Broker

Company

Rating

Target Price (Rs)

Current Market Price (Rs)

ACC

Buy

1602

1258

11-Feb-13

Karvy Stock Broking

8-Feb-13

Religare

Ambuja Cement

Buy

240

230

11-Feb-13

Networth Stock Broking

Ambuja Cement

Accumulate

217

190

26-Feb-13

Motilal Oswal

Ambuja Cement

Neutral

202

200

15-Feb-13

Kotak Securities

India Cements

Accumulate

92

80

15-Feb-13

Karvy Stock Broking

India Cements

Buy

125

83

8-Feb-13

Religare

JK Lakshmi Cement

Buy

185

165

13-Feb-13

SPA Securities

Mangalam Cement

Buy

193

143

13-Feb-13

ICICI Securities

Heidelberg Cement

Buy

69

69

13-Feb-13

Anand Rathi Shares and Stock Brokers

Heidelberg Cement

Hold

51

44

14-Feb-13

Anand Rathi Shares and Stock Brokers

Madras Cements

Hold

255

242

14-Feb-13

ICICI Securities

Madras Cements

Buy

284

242

Cement stock on likely operational underperformance. The downgrade is based on lack of timely capacity addition, dilution of profitability and introduction of royalty fees to Holcim. INDIA CEMENTS India Cements reported strong revenue growth led by an improvement in volumes and marginal improvement in cement prices. The company reported revenue growth of 15 percent YOY for Q3FY13. Based on the current upside, Kotak Securities has upgraded the company’s stock rating to “ACCUMULATE” from “REDUCE” earlier with a target price of RS 92 from the CMP of RS 80. Karvy Stock Broking has also maintained its “BUY” rating for India Cements with a target price of RS 125 from CMP of RS 83 owing to the company’s outperformance in standalone sales, EBITDA and adjusted Profit-After-Tax. The recommendation comes as the company’s EBITDA came in 22 percent ahead of Karvy’s estimates and 10 percent ahead of street estimates, along with double-digit growth of 11 percent in sales volume, which according to Karvy was mostly driven by strong demand in the southern region.

CW Group Coal Week CemWeek BMWeek INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE CemWeek CW Group Coal Week BMWeek CemWeek BMWeek CW Group Coal Week

JK LAKSHMI CEMENT Religare Securities has recommended a “BUY” rating on JK’s stock, with a target price of RS 185. The recommendation comes as JKLC posted results better than those of its peers. JKLC’s Q3FY13 results were better than estimated. The company expanded its EBIDTA/tn to RS 781/ tn as against the estimated RS 732/tn, led by lower-than-expected power and fuel costs and lower petcoke prices and other expenses. According to Religare, the company’s growth fundamentals – on-track expansion plans and increased capacity – are expected to remain intact over the next two years. MADRAS CEMENTS (MCL) ICICI Securities has maintained a “BUY” rating for Madras Cements with a revised target price of RS 284/share (earlier RS 275/share) from CMP of RS 242. Anand Rathi Shares and Stock Brokers (ARSSBL) maintained its “HOLD” rating for Madras Cements with a target price of RS 255 from CMP of RS 242. Both the recommendations are based on the company’s superprofitability. The company reported a 17.7 percent YOY growth in its revenues, driv-


en by robust 9.8 percent YOY growth in volumes. ICICI Securities estimates that MCL’s limited (~10 percent) exposure to the troubled market of Andhra Pradesh, efficient cost structure as opposed to its peers in the industry and robust cashflow generation make MCL an attractive investment proposition. MANGALAM CEMENT SPA Securities has upgraded its recommendation to “BUY” from the earlier “HOLD” rating for Mangalam Cement with a target price of RS 193, upgrading it from CMP of RS 143. The upgraded recommendation is based on the view of upcoming plans of the company to increase its clinker and cement capacity by 0.50 mt and 1.25 mt by April 2013 and Oct. 2013, respectively, through setting up a new grinding unit of 1.25 mtpa in Morak (Rajasthan) that is all set to go on stream by April 13 and October 2013. Despite posting a sharp decline of 10.8 percent YOY in volumes and 13.1 percent in EBITDA/tn, the company’s capacity expansion plans lined along with self-sufficiency in power and usage of petcoke as a fuel will enable Mangalam Cement to continue its growth momentum in the coming months. BMWeek CemWeek CW Group Coal Week BMWeek BMWeek

CemWeek CemWeek

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Coal Week Coal Week

continued from page 37: Infrastructure/Projects

continued from page 35: Updates

8,500 crore Pinjal Water Supply project. The project is a part of the DamangangaPinjal link project, which involves construction of a dam across the Damanganga in Bhugad village bordering Valsad district of Gujarat and Nashik. In 2010, the Mumbai Metropolitan Regional Development Authority (MMRDA)MMRDA had announced that it would develop the project, but it recently pulled out from the construction as it was able to draw tap water from other sources.

composition and manufacturing at lower temperatures, the new product generates up to 30 per cent less CO2 than normal Portland cement clinker. There is also an improvement in energy efficiency, as the burning temperature is 150 to 200°C lower and the fuel consumption is reduced by about 10 per cent. The electricity costs for the manufacturing process are likewise lowered by about 15 per cent, because less energy is required, particularly for the grinding process.

COMPLETED PROJECTS Eastern Freeway Project (EFP) to become operational India’s longest elevated road, the muchawaited Eastern Freeway Project (EFP), is expected to open up to the public in May. The construction work on the project has been fully completed, and it will be open to traffic on May 1. The 16.4 km high-speed corridor was constructed by the MMRDA to connect South Mumbai to North Mumbai, and is expected to ease traffic congestion towards other districts of

Dr. Wolfgang Dienemann also states: “Since the addition of high-quality aluminium carriers such as bauxite is very expensive, we are currently experimenting in alternative trials with the addition of waste materials containing aluminium, e.g. brown coal fly ash and other slags. In addition, the use of other industrial by-products, such as FGD gypsum, could also be considered.” The first large-scale trial is planned for this year in one of the German HeidelbergCement plants, where the new products are to be manufactured for the first time with the existing plant technology. BMWeek CemWeek BMWeek BMWeek

INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

CemWeek CemWeek

37 BMWeek MARCH / CemWeek APRIL 2013CW Group CemWeek CW Group BMWeek CemWeek BMWeek CW Group

CW Group CW Group CW Group

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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 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 Temasek, Baring Holdings in the running for Lafarge India stake

1 Algeria: New cement unit planned in Bechar

2 India cement majors express interest in rail projects

2 Kenya specialists visit UK’s Dunbar plant

3 Zuari’s K. Srivastava seen as ‘Top CMO’

3 Cementos Portland confirms talks for sale of Lemona unit

4 HeidelbergCement to build power unit in India

4 HeidelbergCement building plant in Georgia

5 India: ACC absorbs Encore Cement

5 Iraqi cement firms call for government protection

6 India Cements looking to expand Rajahstan unit

6 Serbia: Turkey’s Gimas looking build new plant

7 India urged to conduct deeper probe into Ambuja accident

7 Cement executive kidnapped in Libya

8 India cement production seen rising this fiscal

8 Cemex sees US market driving profits

9 India: HeidelbergCement continues expansion

9 Egypt mulls imposing export duties on cement

10 Report: Three firms jockeying for Lafarge India stake

10 Holcim unveils plan to take over Cementos de Hispania

11 Shiva Cement unit gets award in India

11 Semen Indonesia set to build new plant

12 Pakistan firms complain of India controls on exports

12 CW Group: World ex-China cement manufacturing utilization bottoms in 2012, volume growth lowered through 2017

13 Ultratech shutters Awapur unit 14 Angel Broking downgrades rating for Ambuja Cements 15 India’s ACC launches new products 16 India: Sanghi Cement sales rise on robust sales 17 India: Residents against proposed plant in Sundernagar 18 India Ratings says cement prices set to increase 19 Himachal Pradesh may allow firms to exceed completion dates 20 Ultratech Cement commissions new clinker unit

13 Russia cement production hits record in 2012 14 Nigeria: Flour Mills to build cement plant 15 Proposed Bio Bio plant in Peru remains stalled 16 HeidelbergCement unveils invesment plans in Africa 17 Cement plant incident kills four in China 18 Kazakhstan to have new cement plant by 2014 19 Spain’s Cementos Molins looking at Bolivia 20 Vietnam cement industry sees tough times


RESEARCH

The CW Group publishes a series of unique data-rich reports on a periodic basis for the global cement sector. These must-have reports for cement traders, analysts, investors, equipment vendors are indispensable in understanding changing market conditions, monitor the latest cement prices, stay up to date on new cement capacity projects among many other key outlook and competitive dimensions. The reports are available on an annual subscription basis. Contact us at sales@cwgrp.com to learn more. Global Cement Market Data Service

Global Cement Retail Price Report

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Global Cement Volume Forecast Report

Cement Plant & Capacity Monitor

Statistical update on key cement markets worldwide

Comprehensive report on local retail cement prices worldwide

Detailed data and chart report on cement prices

Current and outlook for cement volumes

Tracking new cement plants and expansions

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We know the cement industry well. Let us guide you. For more information please contact us at inquiries@cwgrp.com or on +1-702-430-17 48 848 N. Rainbow Blvd., Box #1658, Las Vegas NV, 89107, USA

India Cement & Construction Materials (vol 1 / issue 11)  

We are thrilled with the release of the March / April issue of ICCM. The magazine is evolving to a format more oriented to reflect our consu...

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