india cement & construction materials (vol 1 / issue 6)

india & construction Materials

may/june 2012indiaCemWeek

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News | Analysis | Market Coverage | Interviews | People

A CemWeek Publication VOLume 1 issue 6

Emphasis on TransporT alTErnaTivEs

incrEasEd inTErEsT & invEsTmEnT

GrowinG markET or FadinG FasT?

Lure of Africa

Cement Exports

Q&a wiTh a. aGarwal Binani cEmEnT

Rising Beyond Borders

Inland Waterways

rOBErT MADEIrAcemweek publisherhead of cw group reasearch

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FEATURES DEPARTMENTS

cement

FOCUS

construction& building materials

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4

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10

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3

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EXPORTS: GROWING OR FADING FAST?Looks at the long-term sustainability of exporting for the industry

THE LURE OF AFRICAExamines the industry’s increased interest and investment in Africa

RISING BEYOND BORDERSA Q&A with Alok Agarwal, Sr. ED of Marketing & Strategy, Binani Cement

EDITOR’S LETTERGolden Opportunities

NUMBERS IN BRIEFCement performance: details and analysis

PROFILESRain Cement: A Self-Sufficient Cement Manufacturer

ANALYST RECOMMENDATIONSHighlights of the latest in broker recommendations

STOCK PERFORMANCEComprehensive data on major cement com-panies in India

MARKET AND COMPETITIONCement stock prices take a hit ahead of CCI report

VOLUME AND PRICINGCement sales slowed in April due to a lack of demand and labor

M&A and FINANCEUltraTech in negotiations to buy limestone mine and cement plant

PROJECTS AND EXPANSIONSWork on Wonder Cement’s new production line underway

PEOPLEResignations of directors at HeidelbergCe-ment and UltraTech

REGIONAL UPDATEUpdate on cement markets in the broader South Asia region

AWAITING THE OUTCOMECement companies await the outcome of the CCI’s year-long investigation

CIVIL ENGINEERS FIND SAVINGS WHERE THE RUBBER MEETS THE ROADA new study shows the effects on fuel con-sumption from pavement deflection under

vehicle tires

PORT EXPANSION NEEDED, BUT IS IT LIKELY?Can the country’s ports handle the projected growth in container operations

INCREASING EMPHASIS ON INLAND WATERWAYSThe push to increase IWT could greatly benefit the industry with regard to transportation

INFRASTRUCTURE & PROJECTSJammu & Kashmir set to get the Patnitop Tunnel road project, the country’s largest

tunnel

EQUIPMENT UPDATESNew products launched by several manu-facturers including Volvo, Caterpillar and XCMG

The CW Group's Global Cement Trade Price Report includes current pricing for cement delivered through the retail channel as well as import and export pricing for major markets around the world.

Worldwide monthly cement prices ■ Major market retail prices ■ Regional retail price indices ■ Covers grey and white products

Regional monthly cement price indices: ■ Mediterranean basin ■ North America & Caribbean ■ East & Southeast Asia ■ And other regions

Global import and export cement prices: ■ Major market trade flows ■ FOB export prices ■ CIF import prices

Annual subscriptions include four quarterly 50+ page reports: ■ Single user: USD2,300 ■ Multi-user (max 3-users): USD3,800 ■ Corporate use: Upon request

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Global market cement prices.Import & export trade prices.All in a single must-have resource.

Global market cement prices.Import & export trade prices.All in a single must-have resource.

agement is becoming increasingly more relevant in the Indian cement industry, and it is why ICCM, and our parent company the CW Group, supports the upcoming GMI Forum’s “Cement Business & Invest-ment (CBI) India 2012” event in Mumbai on October 10 and 11, 2012. This confer-ence, which will bring together global and Indian experts, is a must-attend event that will focus on these important issues and others. We hope that you will join us in sharing the successes of your company.

As always, we welcome your input. If you are interested in contributing to the ICCM magazine with an article or simply want to share your feedback, contact us at [email protected].

In this issue, we turn our attentions to the increased interest by Indian cement manu-facturers in the region of Africa with the feature “The Lure of Africa.” Cement man-ufacturers are adding capacity here rapidly. Whether that will prove to be a risk worth taking, though, only time will tell.

Cement exportation has featured on the minds of a few cement manufac-turers recently as well as of the Indian Work Group on the Cement Industry. It is also a topic we examine more close-ly in the feature story “Exports, Growing or Fading Fast.”

In addition to our regularly featured departments, we include a Q&A with Alok Agarwal, Senior ED of Market-ing and Strategy of Binani Cement. Mr. Agarwal shares his insights into the com-pany’s expansion efforts abroad as well as domestically.

Global expansion and the move toward risk diversification and capital portfolio man-

ndian business has turned its eye further abroad in search of its next frontier of growth and expansion. It is an inevitable step for many industries,

including cement, that continue to mature and that have witnessed growing domestic competition in an already crowded marketplace. Increasingly, Indian cement companies are either setting up operations or exploring growth opportunities in all corners of the globe.

Many Indian cement manufacturers have already taken the next step of expanding globally, and they will obviously be faced with new challenges. Political dynamics, intricate laws, local tax codes, and differ-ent languages will pose risks to those who venture forth into new regions. However, those manufacturers able to balance the risks and rewards will certainly benefit from this push for increased global invest-ment and trade. Thus, as Indian cement companies continue growing and reaching their potential, golden opportunities are likely to be discovered and embraced. iccm manager

LETTER FROM THE EDITOR

Golden Opportunities

DIaNa HeeB BIvONa

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CEMENT

NUMBERS IN BRIEF

DemAnD AnD suPPlyCement demand improved in February, climbing 10.2 percent to 20.5 million tons, up from 18.6 million tons for the same period in the previous year. Sales growth continued into March, rising 7.3 percent YoY while April YoY demand trended slightly lower at around 6.1 percent. Month over month sales contracted over 14 percent in April, dropping from the roughly 22.6 million tons recorded in March to 19.4 million tons.

Volumes increased 10.2 percent from 20.40 million tons in February 2012 to 22.48 million tons in March 2012, which was also 6.2 percent higher from 21.17 million tons in March 2011. However, output dipped 10.7 percent to 20.07 million tons in April 2012 but did 8.7 percent better than the 18.47 million tons in April 2011.

PRiCesIn the northern region, prices improved by Rs 10 to 15 in April, but declined by Rs 5 in May following muted demand. The ban on sand mining in Rajasthan was noted as a primary cause for the decline.

The central region was hit with a 20 percent freight hike announced by the Indian railways. As a result, cement prices revised upwards by Rs 20 to Rs 25 in April, which was soon followed by another price hike of Rs 5 in May in the wake of frenzied construction work after the recent elections.

The eastern region witnessed a hike of Rs 5 to Rs 10, hovering at Rs 310 in April due to severe logisti-cal problems that affected cement supply at a time of increased demand. The combination of poor trans-portation problems and rising demand led to another round of hikes, bringing cement prices to Rs 315 in May.

With elections around the corner and a spate of infra-structure and housing projects lined up in the western region, demand picked up in Gujarat, causing prices to increase by Rs 25 in April only to be rolled back by Rs 5 in May as a labor shortage and lack of sand affected construction schedules.

The southern region witnessed its first ever hike in many months. While prices revised upwards by Rs 10, production discipline and improved demand may keep prices firm in May.

Soft April Still ShowS YoY growth

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25 2011-12 (tons) 2010-11 (tons) 2009-10 (tons)

AprMarFebJan

ALL-INDIA CEMENT DEMAND

Reported cement volume

15

20

25

AprMarFebJan

ALL-INDIA CEMENT SUPPLY

2011-12 (tons) 2010-11 (tons) 2009-10 (tons)Reported cement volume

250

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350South West East Central North

AprMarFebJan

PRICES (INR / bag)




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FEATURE

The cement export market has shrunk in recent years, declining from a peak of 10 million tons to around 4.6 million tons as domestic demand has barreled ahead. The depreciation of the rupee and a lull in domestic demand has a few manufacturers eyeing export oppor-tunities more seriously, but will the potential obstacles and fickle demand from importing nations prove to challenging for others to follow suit?

GrowinG or FadinG Fast?ExportS

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INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE4




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MaY/JUNe 2012 5

FEATURE

he Indian cement industry has come a long way with regard to exporting. In FY 1989-1990, the industry was exporting only 0.16

million tons, but by FY 2004-2005 the 10 million tons threshold had been crossed. That level appears to also have been the peak as manufacturers have struggled to keep up with domestic demand in India, which has been easier to capture. In the years that have followed, there has been a persistent downward trend in the export of cement and clinker. The question on the minds of many is: Is the trend reversible?

ChAnGinG exPoRT mARkeTThe face of the export market continues to evolve. Countries that in the past were major importers of Indian cement, such as Iraq, Qatar, the UAE and Yemen, have reduced cement import levels for vari-ous reasons in recent years. Some have increased domestic supply capacity—in some cases dramatically—while others, suffering from the global economic melt-down, have simply watched demand dry up. Fortunately, new export markets like Sri Lanka, the Maldives, and Madagascar have emerged as strong economic growth has spurred frenzied infrastructure spend-ing. Yet even these are facing increasingly intense competition from other regional exporters, such as Pakistan.

Nepal has remained India’s strongest importer of cement over the last few years; however, even those levels have begun to decline. Significant growth in its own domestic cement production capacity has meant less need for cement imports. While it had historically imported around 80 percent of its cement needs from India, Nepal expects to reduce that dramatically in the next two years provided demand remains at current levels. With over 51 percent of India’s total cement exports des-tined for Nepal, the blow will be significant unless new markets can be developed to offset the loss.

Over the last few months, several Indian cement firms have signaled they would like to increase exports. The depreciation of

0.0

30%

60%

201020092008

UAEIraqQatarYemenMadagasgarMaldivesIraqSri LankaNepal

Percentage of Total Exported Cement by Importing Country

0

6

12

2010-20112009-20102008-20092007-20082006-20072005-20062004-2005

Total Cement Export (million tons)

the rupee and the lull in domestic demand has companies like ACC and Bharathi eye-ing potential export markets more closely. Reports indicate that ACC is targeting the Maldives, Mauritius and Bangladesh, and Bharathi Cement, along with UltraTech and Holcim, are exporting to Sri Lanka in growing quantities.

Both Bangladesh and Sri Lanka appear to be promising markets, provided a long-term relationship could be cultivated. Indian cement manufacturers may have the advantage in Bangladesh because of the current demand supply gap within the country, its lack of quality limestone reserves, and its potential proximity to the market. Additionally, Sri Lanka, at least in the short-term, remains promising

given its continued reconstruction efforts following the end of its civil war; howev-er, given the level of recent developments within its own domestic cement sector and plans by several cement manufacturers to build new plants, maintaining a strong export market over the mid- to long-term may prove challenging.

GRoWinG The exPoRT mARkeTWith approximately 300 small and 130 large cement plants operating in India, with an installed capacity of around 234 million tons and aggregate production capacity of roughly 167 million tons, the government finds itself having to import cement from neighboring countries like Pakistan in order to avoid delays in con-struction. Thus, there is a certain irony

Source: Report on the Working Group on Cement Industry for XII Five Year Plan

Sources : ITC calculations based on Ministry of Commerce & Industry statistics




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in seeing India’s import market grow at the same time there is renewed interest in exports, but location has a huge impact on both the country’s import and export mar-kets and their growth.

Cement exports are projected to range from two to three percent of domestic production, according to the most recent report by India’s Working Group on the Cement Industry. More optimistic esti-mates suggest it could reach five percent, but that may be difficult to achieve unless some significant incentives are offered and potential roadblocks are addressed.

Competition from Pakistan and China remains a major concern to the growth of India’s export market, as does the lim-ited number of regional markets available to receive exports. Sri Lanka, Nepal and

Bangladesh are popular, but other markets within the Middle East and parts of Africa are not as competitive given freight costs.

Then there is the always-present issue of neighboring countries like Pakistan that are struggling with what to do with their own overcapacity. In Pakistan, local installed capacity is around 44 million tons, whereas cement demand stands at around 31 million tons, including 30 per-cent export and 70 percent local demand. Pakistani cement operators are therefore in need of somewhere to dump 10 mil-lion tons of surplus stock, and India is an attractive option.

One option for generating more exports for India would be to partner with cement and clinker facilities in other countries to reach additional markets. For instance, a

few years ago, Binani Cement secured a 49 percent stake in a clinker manufactur-ing plant in the Shandong province of Chi-na in order to sell cement in East Africa. Similarly, a portion of the capacity in the company’s Dubai operations could be ear-marked for export.

Another avenue being explored by Bina-ni Cement is through the development of Greenfield projects that would benefit exportation. One example of this is the memorandum of understanding Binani signed with the Gujarat government to set up a 610 MW power plant, a cement fac-tory and a captive jetty.

The Indian Working Group on the Cement Industry has proposed several recommen-dations in the most recent five year plan (2012-2017) in order to increase the com-petitiveness of India’s cement in the global market. These proposed incentives include:

■ Changing the rail freight classification from the current 150 to 140.

■ A 50 percent freight subsidy for cement/clinker logistical costs up to the port/jetty from the manufacturing unit—an attractive subsidy consider-ing most plants are located inland.

■ An exemption for cement/clinker exports with regard to customs/port/bunker charges.

■ Encourage more investment in pri-vate ports/jetties and allow for those investments in such assets to be depre-ciated at a higher rate.

■ Exemption from the royalty on lime-stone for cement exports.

0

6,000

12,000

May-12Jan-12Jan-11Jan-10Jan-09Jan-08Jan-07

DRY BULK GOODS SHIPPING RATES (AVERAGE MONTHLY BDI)




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MaY/JUNe 2012 7

FEATURE

“...the likelihood of other companies

focusing their attentions on growing that

market seems negligible at present.”

■ Include the royalty of limestone in the Duty Drawback Rates. (It should be noted that the royalty on limestone constitutes roughly 3.5% of cement and 5% of clinker value.) An exemp-tion, or even inclusion, in the Draw-back would go a long way toward boosting the cement industry’s com-petitiveness abroad.

uP in The AiRIn theory, the potential for India to tap into cement markets in neighboring regions is strong thanks to the sector’s world-class cement quality, utilization of the lat-est technology, convenient location, and large-scale limestone and coal deposits. The high costs associated with export-ing such a low value/high volume product remain a concern that the recommenda-tions of the Working Group may help to address. Likewise, freight costs are trend-ing low, although if that changes, the rush to export may cool.

Other issues may also surface, ranging from logistical to demand concerns. For example, by diverting supplies away from the domestic market, would manufactur-ers potentially risk the ire of customers already complaining of higher prices? In addition, how would the current shortage of terminals affect manufacturers’ ability to increase exports? Then there is the prob-lem that most cement companies do not have effective port access.

All of these are valid concerns that must be addressed, if the export market is to grow as projected. Until that time, the export market may be viable for a select few, but the likelihood of other companies focus-ing their attentions on growing that mar-ket seems negligible at present.

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cbiADVERTISING

“A new forum is needed in India to criti-cally look at the industry’s issues. Not just as the ‘conference engines’ do today, but as industry analysts and technologists to build a real and insightful dialog, from the CEO down. The CBI event is set to become a forum of choice to hone compet-itive insights, form new business relation-ships and shape the industry agenda,” said Mr. Robert Madeira, Managing Director and Head of Research at the CW Group, the parent of CemWeek and owner of the India Cement & Construction Materials journal.

The two day interactive program, which is organized by US-based GMI Global, sup-ported by CemWeek and India Cement & Construction Materials, will cover key aspects of India’s cement industry. Ses-sions will center on the principal issues facing the Indian cement sector today and in the future. In particular, industry lead-ers will take a closer look at the evolution and direction of the market, balance views on the ever critical fuel sourcing situation, new policies and legislation, infrastructure plans, and technology maximization.

hArNESSiNg thE potENtiAl CEMENt iNVEStMENt iN iNDiA AND BEYoND

THE SHIFT FROM WEST TO EAST:

The conference will also take a closer look at Indian’s growing role in the internation-al markets as companies expand globally through acquisitions, greenfield units and exports as well as technological updates and best-practices.

CBI India attendees will include not only cement companies but also inves-tors, bankers and advisors, fuel traders and suppliers, engineering organizations, among many other constituents. The con-ference will include over 25 presentations by industry experts and government offi-cials, a CEO led panel discussion, various networking breaks, an exhibition, lunches, cocktail reception, and a gala dinner.

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Conference registrations are now open at an early bird discount. Please e-mail to [email protected] or call +1-203-516-7424 for more information.

round 200 CEOs and industry stakeholders will assemble in Mumbai, India, to attend the 1st Cement Business & Industry India (CBI India) 2012 Conference on the 10th and 11th of Octo-ber 2012. This is an international event with a unique focus on India’s cement sector that will

emphasize the critical executive, investment, technology and fuel issues facing the sector.

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CEMENT

cement business & industryMuMbai, india. OctOber 10-11, 2012. the LeeLa MuMbai hOteL

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UPDATE

This is not the first time that the cement industry has come under fire for claims of cartelization. The cement industry has been accused of cartelization many times in the past two decades, but the primary complaint leveled against cement compa-nies, and management in particular, this time is that they under-utilized capacity to artificially create a cement shortage, thus hiking prices in a booming construction and infrastructure market.

lonG sTAnDinG AlleGATionsThese allegations of cartelization reach back to 2008 when the Serious Fraud

Indian cement companies await the final report from the CCI regarding its year-long investigation into cartelization claims. Investors, fearing strong financial penalties, contributed to industry-wide falling stock prices in April—a trend that is likely to continue into May.

AwAitiNg thE outCoME

Investigation Office (SFIO) first investi-gated allegations against ACC, UltraTech and Ambuja. However, the SFIO hand-off to the CCI appears to have been triggered by alleged production cuts by manufac-turers that occurred between January and March 2011. Many companies during that time reportedly raised prices by as much as Rs 40 to 50/bag, but then in the months that followed, when demand particularly in the southern region weakened, prices remained high. The situation prompted a closer look by government officials, and the Ministry of Corporate Affairs (MCA) submitted a report in September 2011

recommending further action against companies it considered to be in collu-sion with regard to production and sup-ply manipulation. By that time, the list of manufacturers accused of cartelization had grown significantly.

CARTelizATion ClAims DenieDManagement at ACC, UltraTech and Ambuja, which together represent 50 per-cent of the cement market, have denied they had any hand in cartelization. They are quick to point out that cement pricing is simply part of the industry dynamic and that cuts in production were the result of low off-take. Given the capital intensive-ness of the industry, cement manufac-turers argue that it does not make sense for them to operate at 50 to 60 percent capacity utilization and that they were forced to do so because demand was low, resulting in production cuts.

The CCI completed its year-long investiga-tion in April 2012 and confirmed it found evidence of cartelization with regard to several issues. A final report is expected in May. Financial as well as criminal penal-ties against cement manufacturers are pos-sible. Under the Competition Act, the CCI can impose a penalty of up to ten percent of average turnover of the past three years. Industry watchers estimate penalties will likely run between six and seven percent of total revenue for the period under investi-gation. If this occurs, it could potentially equal up to 50 percent of annual profits, which in turn will noticeably affect mar-ket caps. On news that a final report was expected, stock prices in April for cement manufacturers fell across the board, in some cases by as much as eight percent.

Additionally, managers could face signifi-cant individual penalties. Under the Com-panies Act, managers found guilty could lose their Board positions and under the India Penal Code could face charges of criminal conspiracy, fraud or cheating, all of which carry potential jail time.

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The Competition Commission of India (CCI) ended hearings in March involving nearly 40 cement companies accused of carteli-zation. Now, all await the final report in a case that is likely to have significant ramifications not just for individual cement manufactur-ers but for the industry as a whole.

Competition Commission investigation:




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FEATURE

thE lurE of

AfriCA




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More and more Indian cement firms are turning their eyes to Africa in search of growth opportunities. While the region is not unexplored territory for many Indian companies, it is providing new potential avenues for expansion for cement manufacturers. Still, it is not an easy-to-navigate opportu-nity as domestic companies and many other foreign oper-ators continue to add capacity at a rapid rate.

Cape Town, South Africa




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MaY/JUNe 2012 13

FEATURE

ocal Indian companies are look-ing abroad for opportunities. Bolstered by the growing econo-my, more cash in hand, increased

competition and an often-crowded indus-try, more companies are looking outside of India to grow operations and to diversify holdings. While in the past the govern-ment has not been as supportive of Indi-an companies investing outside its borders with regard to capital and foreign exchange resources, this has begun to change as offi-cials have begun to recognize the growth potential such investments will have for India’s own domestic market. To that end, the government has under-taken a slew of revisions that liberalize the norms of direct investment for Indi-ans abroad and has sent a positive message regarding investing abroad. Addition-ally, through the Department of Industri-al Policy and Promotion (DIPP), specific regional areas have been identified where the government will actively assist Indian companies with asset purchases and com-pany buyouts. These areas include South-east Asia, Eastern Europe and Africa.

Outbound FDI has mirrored the growing interest in investing abroad. In 2010-11, outward FDI was US$43.92 billion, which was significantly higher than the US$17.98 billion in 2009-10 and US$17.14 billion in 2008-09. While outward FDI did decline in 2010-11 to US$30.86 billion, early signs indicate Indian companies are continu-ing to invest aggressively abroad in 2012. According to data from the Reserve Bank of India (RBI), outward FDI rose 38 per-cent in March to US$2.77 billion over the previous month.

For many Indian businesses, including cement manufacturers, investing abroad is a sound growth strategy. In recent years, Indian cement manufacturers have expanded operations into neighboring Sri Lanka and even further afield into the UAE and China. Therefore, expanding into some African markets is not outside the realm of logic.

lonG hisToRyIndian businesses have been investing in Africa for several decades. In the 1960s, Africa accounted for virtually all of India’s outward investments, and by the 1970s, India had established a presence in Ken-ya, Nigeria and Uganda. Today, Indian companies do business in over 20 African nations.

Over the last five years, Indian companies in Africa have made around 85 acquisi-tions and equity investments, investing US$50 billion in a wide range of sectors—including the cement industry—since 2005. Over the last decade, Indian cement companies have increasingly turned an eye toward expanding into Africa, establish-ing operations through a variety of means ranging from export market development to Greenfield projects to the use of termi-nal strategies.

ReGionAl FooTPRinTsInvestments in Africa by Indian business-es can be found throughout the region. However, the level of investment has var-ied greatly, with the preference for funding endeavors in East Africa and, particularly, Mauritius. Indeed, over 70 percent of total inflows (1961-2007) to the continent from India have been in the East African region.

Sanghi Industries elected to expand with-in this region, purchasing land in Kenya in 2010 to build a cement plant. The com-pany, in collaboration with local partners, intends to build a 1.2 million ton facility at Pokot in the Sebit region. The company claimed to have received the proper envi-ronmental clearances as of December 2011 and was projecting the facility would be completed by the end of 2013.

Banco Products is also eyeing the eastern region but has elected to go the acquisi-

African cement plants with Indian connection

New India-backed cement projects

Sanghi Industries, Sebit, Rift Valley Kenya (factory under construction)Lake Cement, Tanzania

WACEM, Mali

Fortia Cement, Togo

Diamond Cement, Burkina

Cement Ghana Diamond, Ghana

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iNDiANS iN AfriCA (select cement production units)




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tions route to establish itself. In 2010, the company acquired a 51 percent stake in Tanzania’s Lake Cement Company, which operates a 500,000 ton facility. Banco intends to invest US$65 million in expand-ing and upgrading the plant. Additionally, the company acquired 70 hectares of land rich in limestone deposits.

Binani Cement has had an eye on the East African market for some time. The com-pany purchased a 49 percent stake in a clinker manufacturing plant in the Shan-dong province of China in 2007 with an eye to exporting cement to East Africa. A

similar approach was envisioned with its Dubai operation and exportation to Tan-zania and Kenya. Binani is also in the process of establishing a one million ton clinker plant in Mauritius, but since June 2011 the company has been awaiting envi-ronmental clearances to proceed with con-struction.

The development of the oil and gas sec-tor in North Africa has contributed to this region’s attractiveness, making it the sec-ond most active area for Indian investment overall. Meanwhile, past instability in West Africa has accounted for the low level of

investment in this region, with only eight percent of total Indian FDI.

One of the earliest Indian cement com-panies to establish a presence in the West African region was the West Afri-ca Cement Company (WACEM), which ventured into Mali with its purchase of Cement of West Africa (CIMAO) assets in July 1996. Today, WACEM operates under the Diamond Cement name and plans to invest more than US$130 million in build-ing a cement plant at Astro Village Gan-gontierie, Circle of Bafoulabe. The plant is expected to produce 800,000 tons this year

Ciments et Materiaux du Mali, a competitor to WACEM. Courtesy of Vicat

“ For many Indian businesses, including cement manufacturers, investing abroad is a sound growth strategy. ”




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MaY/JUNe 2012 15

and hit one million tons by 2014. WACEM, owned by a Hyderabad-based group, also operates facilities in Togo (Fortia Cement), Diamond Cement (Burkina) and Cement Ghana Diamond (Ghana).

In the past, southern Africa received the least amount (only 1.4%) of Indian invest-ment dollars, but that appears to be chang-ing. South Africa’s substantial natural resources, well-educated population, and large domestic market has some cement manufacturers, like the Birla Group and Shree Cement, scouting for potential assets to acquire, including those of recently on-offer Lafarge.

Mozambique, another fast-growing econ-omy, is drawing interest from UltraTech, Birla and Shree Cement, among others. In addition to recently discovered natural gas reserves, improvements to infrastruc-

FEATURE

ture and education, the country is rich in limestone reserves and high-grade coking coal, making it an attractive investment destination.

Given Mozambique’s 2,400 kilometers of coastline, the potential for a cement man-ufacturer to build a cement clinker plant capable of exporting to grinding units in neighboring countries is an attractive bonus. This point has been recognized by a few Indian companies looking to build new plants, such as Aar Ess Exim. The company commissioned the construction of a 1,000 tpd plant for US$65 million in late 2009 in the province of Inhambane near Pambara. Others Indian companies are reportedly building new plants in the country as well.

For UltraTech, expanding its operations into Mozambique may well go beyond just

acquiring new natural resources. In April 2012, reports surfaced that the company was in talks to acquire a large limestone mine in Mozambique’s southern Magude region near the capital of Maputo for roughly 1,500 crore. If those talks prove successful, the company may also elect to build a one to two million ton facility.

The African continent continues to draw the interest of Indian cement compa-nies with the capital and desire to expand abroad. Given the continent’s strong eco-nomic indicators and abundance of natural resources, the likelihood of more acquisi-tions, Greenfields and joint venture project announcements throughout the region are likely. While the potential payoff could be significant, navigating this new mar-ket, which is fraught with its own unique traits unfamiliar to newcomers, will be challenging.

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Cape Town, South Africa




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we know the cement industry well. let us guide you. For more information please contact us at [email protected] or on +1-702-430-17 48

848 n. rainbow Blvd., Box #1658, las vegas nv, 89107, Usa

Cemweek: Binani was one of the first Indian cement companies to set up production sites

in China and Dubai. Currently, you are present in the UK, Singapore, Dubai, Chi-na and Indonesia as well as in some Afri-can countries. How does your investment strategy differ with regard to investing in a growth market like India versus expand-ing abroad (i.e., why leave home if home is best)?

A. Agarwal: Binani has its cement manu-facturing operations in China and Dubai in addition to India and marketing offic-es in various African countries. The coun-

LEADER Q&A

ICCM connects with Alok Agarwal, the Senior ED of Marketing & Strategy at Binani Cement. Mr. Agar-wal provides insights into the company’s expansion efforts abroad as well as domestically. He also dis-cusses Binani’s focus on Africa and its branding strategy.

riSiNg BEYoND BorDErS

tries identified by Binani are emerging economies with good visibility of growth in cement demand. The strategy is to have a global footprint for its cement busi-ness, capturing economies which are projected to have growth requirements in terms of infrastructure development and housing needs.

Cemweek: How does your expansion into eastern India support your goal of growing Binani’s export market? What is the cur-rent status of the plant project?

A. Agarwal: The idea for the plant in East India is to be located near the port. The plant in East India, in addition to serving

the domestic markets, will also serve the export markets of Bangladesh and Myan-mar. Exports can also be undertaken to other Southeast Asian countries. The plant is currently in the conception phase.

Cemweek: Africa is one of the key markets Binani is looking to expand its operations in, and exports are currently the vehicle of choice for doing so. Does the company have any future plans to undertake Green-field plants in any of the African countries, or possibly expand through acquisition opportunities?

A. Agarwal: Africa is on the priority radar of Binani due to its enormous potential

Q&a with alok aGarwal, sr Ed at Binani CEmEnt:




CW Group Coal Week


for growth. Currently, the market is being explored through exports. In the future, depending on the understanding of the market, we would be open to Greenfield-projects and /or acquisitions in that region.

Cemweek: Do you still see growth oppor-tunities in Africa despite the recent and rapid expansion by Chinese and regional companies in that region?

A. Agarwal: The resource richness of Afri-ca, the expected change in demograph-ics, the increase in labor productivity and urbanization, and the huge unmet infra-structure need—all point towards the fact that a lot of scope for growth exists. To quote the World Bank, “Africa could be on the brink of an economic takeoff much like China was 30 years ago and India 20 years ago.” Challenges exist, coupled with possi-bilities. Moreover, India has been a tradi-tional business partner of Africa in the past.

Cemweek: Binani’s plan to build a clink-er grinding and packaging plant in Mau-ritius encountered a few administrative delays over the last year. Can you provide an update of the progress of this project?

A. Agarwal: The project continues to be pursued by the group.

Cemweek: With regard to marketing, product differentiation through brand-ing remains key. Many Indian companies have focused on portraying their brand as

a strongly rooted, domestic brand. How-ever, in the last couple of years, Binani has worked to reposition itself as a brand with global ambitions and qualities. Has this campaign proven successful?

A. Agarwal: The group aspires to be pre-sent in key economies growing beyond the domestic market, which has been demon-strated by the recent acquisition of 3B in Europe. The branding campaign is targeted to reflect an Indian brand moving into the global arena, “rising beyond borders.”

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“...Binani has worked to reposition itself as a brand with global ambitions and qualities.”




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MaY/JUNe 2012 19

FOCUS

he study, released in a recent peer-reviewed report, is the first to use mathematical modeling rather than roadway experi-

ments to look at the effect of pavement deflection on vehicle fuel consumption across the entire U.S. road network. A paper on this work has also been accepted for publication later this year in the Trans-portation Research Record.

By modeling the physical forces at work when a rubber tire rolls over pavement, the study’s authors, Professor Franz-Josef Ulm and PhD student Mehdi Akbarian, conclude that because of the way energy is dissipated, the maximum deflection of the

load is behind the path of travel. This has the effect of making the tires on the vehicle drive continuously up a slight slope, which increases fuel use.

The deflection under the tires is similar to that of beach sand underfoot: With each step, the foot tamps down the sand from heel to toe, requiring the pedestrian to expend more energy than when walking on a hard surface. On the roadways, even a one percent increase in aggregate fuel con-sumption leaves a substantial environmen-tal footprint. Stiffer pavements—which can be achieved by improving the mate-rial properties or increasing the thickness of the asphalt layers, switching to a con-

crete layer or asphalt-concrete composite structures, or changing the thickness or composition of the sublayers of the road —would decrease deflection and reduce that footprint.

“This work is literally where the rubber meets the road,” says Ulm, the George Macomber Professor in the Department of Civil and Environmental Engineer-ing. “We’ve got to find ways to improve the environmental footprint of our road-way infrastructure, but previous empirical studies to determine fuel savings all looked at the impact of roughness and pavement type for a few non-conclusive scenari-os, and the findings sometimes differed

Study shows that pavement deflection under vehicle tires makes for a continuous uphill drive that increases fuel consumption.

Denise Brehm, MIT Dept. of Civil and Environmental Engineering

CiVil ENgiNEErS fiND SAViNgSwhErE thE ruBBEr MEEtS thE roAD

MIT DEpARTMENT oF CIVIL & ENVIRoNMENTAL ENGINEERING:

A new study by civil engineers at MIT shows that using stiffer pavements on the nation’s roads could reduce vehicle fuel consumption by as much as 3 percent—a savings that could add up to 273 million barrels of crude oil per year, or $15.6 billion at today’s oil prices. This would result in an accompanying annual decrease in CO2 emissions of 46.5 mil-lion metric tons.




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by an order of magnitude. Where do you find identical roadways on the same soils under the same conditions? You can’t. You get side effects. The empirical approach doesn’t work. So we used statistical analy-sis to avoid those side effects.”

The new study defines the key param-eters involved in analyzing the structur-al (thickness) and material (stiffness and type of subgrade) properties of pavements. The mathematical model is therefore based on the actual mechanical behavior of pave-ments under load. To obtain their results, Ulm and Akbar-ian fed their model data on 5,643 representative sections of the nation’s roadways taken from Federal Highway Admin-istration data sets. These data include information on the surface and subsurface materi-als of pavements and the soils beneath, as well as the num-ber, type and weight of vehicles using the roads. The research-ers also calculated and incor-porated the contact area of vehicle tires with the pavement.

Ulm and Akbarian estimate that the combined effects of road roughness and deflection are responsible for an annual average extra fuel consump-tion of 7,000 to 9,000 gallons per lane-mile on high-volume roads (not including the most heavily traveled roads) in the 8.5 million lane-miles mak-ing up the U.S. roadway network. They say that up to 80 percent of that extra fuel con-sumption, in excess of the vehicles’ nor-mal fuel use, could be reduced through improvements in the basic properties of the asphalt, concrete and other materials used to build the roads.

“We’re wasting fuel unnecessarily because pavement design has been based sole-ly on minimizing initial costs more than

performance—how well the pavement holds up—when it should also take into account the environmental footprint of pavements based on variations in exter-nal conditions,” Akbarian says. “We can now include environmental impacts, pave-ment performance and, eventually, a cost model to optimize pavement design and obtain the lowest cost and lowest envi-ronmental impact with the best structural performance.”

ments. And the state departments of trans-portation would save money while reduc-ing their environmental footprint over time, because the roads won’t deteriorate as quickly.”

This research was conducted as part of the Concrete Sustainability Hub at MIT, which is sponsored by the Portland Cement Association and the Ready Mixed Con-crete Research & Education Foundation

with the goal of improving the environmental footprint of that industry.

“This work is not about asphalt versus concrete,” Ulm says. “The ultimate goal is to make our nation’s infrastructure more sustainable. Our model will help make this possible by giving pavement engineers a tool for including sustainability as a design parameter, just like safety, cost and ride quality.”

“This MIT research pioneered a rigorous mathematical framework relating fuel con-sumption with mathematically predicted pavement deflection. This framework lays a foun-dation for continued develop-ment and future improvement of advanced pavement-vehicle interaction models,” says Lev Khazanovich, a professor of civil engineering at the Uni-versity of Minnesota who was not involved in this research. “Integration of the results of

this study with the Mechanistic-Empirical Pavement Design Guide recently adopt-ed by the American Association of State Highway Transportation Officials will enable transportation agencies to account for traffic fuel consumption in pavement design decisions. This makes Akbarian and Ulm’s research especially important today in light of the efforts of transporta-tion agencies to reduce the environmental footprint of the transportation system.”

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The researchers say the initial cost out-lay for better pavements would quick-ly pay for itself, not just in fuel efficiency and decreased CO2 emissions but also in reduced maintenance costs.

“There’s a misconception that if you want to go green you have to spend more mon-ey, but that’s not necessarily true,” Akbar-ian says. “Better pavement design over a lifetime would save much more money in fuel costs than the initial cost of improve-




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FOCUS

port ExpANSioN NEEDED, But iS it likElY?

India’s coastline is currently home to 12 major ports and approximately 187 minor ports which act as important hubs with regard to the sub-continent’s trade and export industries. Seaborne-trade represents around 80 percent of India’s total exports and the amount of car-go handled by all of the ports has risen steadily in the last six years. The India Port Associa-tion notes that, along with these increases, the country is also expected to become a major destination for container operations, which could do even more to increase the growth in port operations. However, the question on the minds of many is whether the country’s ports can handle such growth.




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s India becomes a major player on the stage of world trade, the country’s ports and terminals are seeing an urgent need for

infrastructure and capacity development. These major ports play a key role in exter-nal trade, as roughly 95 percent by volume and 75 percent by value are carried by sea. Therefore, the further development of the port and shipping industry is viewed as critical to not only maintain current trade levels but in anticipating future growth.

According to India’s Ministry of Shipping, the country’s total annual cargo traffic is on course to reach 2,495 tons by 2020. This is a substantial increase when compared to the numbers generated at present. It also means that existing ports will be unable to handle the increase. Aware of this, the government has planned several port pro-

jects. In the current fiscal year, the govern-ment has identified 23 port projects that could expand capacity by 236.63 million tons a year for an estimated investment of Rs 16,743.92 crore. Unfortunately, the government as of January 2012 had only awarded one of the 23 proposed projects.

PRiVATe PARTiCiPATionThe federal government is relying heavily on major contributions from public-pri-vate partnerships to carry out its expan-sion efforts for major port projects while it advocates that state-governments take the reins with regard to the development of non-major ports.

Private participation and investment will be necessary if the appropriate changes are to be made to the country’s port sys-tems. Several private groups have already

announced their participation. JSW, Adi-tya Birla, Essar Shipping Ports and Logis-tics, Sembmarine Kakinada Limited, Tuti-con Port Trust and Adani Group are just a handful of those investors announcing plans to invest in the development of the country’s port system.

In order to cope with the demands placed by trade in India, the country will need to ensure that its ports can handle an annual capacity of over three billion tons. Accord-ing to the planning commission associat-ed with the proposed expansion efforts, an investment opportunity of US$25 bil-lion by 2011-12 is expected as the country seeks to double its port capacity.

oBsTACles To oVeRComeSeveral impediments still lie in the way of the Indian government in terms of execut-ing their port expansion plan. The uncer-tainty of acquiring funds from private sources is the largest hurdle, but there are other factors to be taken into account.

Likely partners in the shipping industry that could have been tapped for invest-ment have faced problems of restricted cash-inflow and are still trying to recov-er from the global economic slowdown. Then there is the actual construction issue with which to contend. The failure of the government to award key projects in a timely manner has not only increased the likelihood of cost and time overruns, but it has led to a loss of efficiency and the opportunity such projects could bring to supporting industries such as cement.

Despite the possible factors working against India and its development of the ports systems along the coast, the government and several private corporations appear committed to moving forward with their efforts to expand the system. If all goes as planned, the shipping and subsequently the export sector in India could become an even greater force to be reckoned with in terms of the global economy.

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MaY/JUNe 2012 23

FOCUS

iNCrEASiNg EMphASiS oN iNlAND wAtErwAYS CoulD BENEfit CEMENt iNDuStrY

Multi-Modal logistics, cost control and safety stand to gain

The current IWT network stretches 14,500 km across the country from the hinter-lands to the coast. Not all of the network is navigable for larger barges and vessels, which require a minimum depth of two meters. However, more than 5,700 km are navigable by mechanized boat at least 330 days a year.

This large waterways network was once a thriving transport system for India in the 18th and 19th centuries. In the 20th centu-ry, the country's emphasis shifted to roads and rails as a means of moving goods. As of 2008, inland waterways represented just 0.34 percent of total inland cargo move-ment. While the cement industry does move an estimated two percent of its total shipping over the water, it is a far cry from the past and the potential future of India's waterways system.

moVinG oFF RoADMoving bulk freight and goods off the roads and rails isn't just a throwback to India's old methods of getting things done. It's also a jump to catch up with neighbor-ing countries and other developed econo-mies who use inland waterways as a cost management and logistics control strategy. Bangladesh, for example, moves 32 percent of its freight over inland waterways, while Germany maintains a 20 percent freight usage rate over the water. This is a boon to cargo intensive industries like the cement sector, as waterways can handle large sin-gle loads of 100 tons or more where roads and rails require multiple carriages.

In many ways, IWT is significantly cheap-er, more environmentally friendly, and more energy efficient than overland trans-port when moving cement. One liter of

fuel can move 24 tons/km by road; 85 tons/km by rail; and 105 tons/km by IWT. Looking at it from an energy angle, one HP can move approximately 150 kg over road-ways, 500 kg by rail and 4,000 kg by IWT. Both of these measures show the cost sav-ings that are available, and in addition to lower transport bills, IWT also significant-ly reduces noise and air pollution.

There are also the hard to quantify savings in disruption times and safety incidents for Indian cement firms. At the height of the rainy season, flooding often disrupts or destroys transport systems in rural manu-facturing and raw material sourcing areas. IWT doesn't stop; the heavier inflows even help with areas that are too shallow for mechanized transport in other times of the year. The waterways are also safer year-round than roads, preventing accidents

ndia is dramatically increasing its development of inland waterways transport (IWT) in a move that could have significant benefits for the cement industry. With the cost of shipping by rail and road on the rise, cement manufacturers need to find a way to manage logistics expenses, and despite the development boom, India's government still needs viable alternatives to crowded roadways.

The result is an emerging opportunity for the cement industry to take advantage of India's extensive inland waterways.




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that can cause supply chain interruptions, product loss and unnecessary loss of life.

mAnAGinG DeVeloPmenTThe many benefits of IWT are already available in some areas, but other areas face a sharp need for development. The Inland Waterways Authority of India (IWAI) is in charge of the country's national water-ways, of which three are open and one is scheduled to open in 2013. The remain-ing waterways are managed by each state. Both systems link to each other, and both lag behind demand for shipping infrastructure.

Capacity development is the biggest issue. The use of IWT is limited by the availabil-ity of suitable vessels and barges, manual technology in the terminals for loading and unloading, and the lack of 24/7 sup-port for logistical operations along the routes. With the fixed routes of waterways, there is also a need for some road and rail linkages at each terminal point to allow for more cargo connection. However, these are known issues with funded national development plans in place, as well as pri-vate ventures to get more boat capacity and automated loading systems installed.

mAximizinG BeneFiTsFor the cement sector to maximize its benefits with IWT, the key is developing multi-modal logistics systems. This helps link together road, rail and water transport options to move cement to projects, buyers and export sites as efficiently as possible.

For example, in the Northeast region, IWT routes are shorter and faster than overland routes in certain sectors, allowing both cost and time savings for cement transport. In Goa, West Bengal, Assam, Mumbai and Kerala, organized IWT systems supple-ment the national waterways for smooth cargo transfers from production sites to export opportunities. Links with neigh-boring waterways systems in Bangladesh also allow some cement firms to minimize transfer points in export sales. It all adds up to bottom line advantages for switching away from rails and roads.

The 11th national plan calls for steps to increase India's IWT use to two percent of all inland cargo by 2025. Cement mak-ers are well-positioned to find significant logistical benefits in helping to meet this goal. With the lower energy costs, lower environmental impact and greater avail-ability of safe transport year-round, IWT routes save money, save time and fight pol-lution. It may seem like a throwback to the ways of old, but in this case, India's inland waterways provide a tried-and-true solu-tion to heavy cargo needs.

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0

600

1,200

11th Plan (planned)10th Plan9th Plan8th Plan

NATIONAL SPENDING ON INLAND WATERWAYS (CRORE) CEMENT CARGO TRANSPORT METHODS (TONS)

Road & Rail

98%

2%

Inland Waterways




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MaY/JUNe 2012 25

PositionEd For sustainaBlE ProFits dEsPitE ChanGinG GloBal markEts

rAiN CEMENta sElF-suFFiCiEnt

CEmEnt manuFaCturEr

PROFILE




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RCL started operating as a cement produc-er in Southern India in 1986, changing its name from Priyadarshini Cement in 2004. In 2010, the firm announced its inten-tion to achieve a 10 mtpa capacity in India through inorganic means but put no fixed end-date on the project. RCL bought Birla Cement and Industries from the Yasha Bir-la Group in 2011 as a wholly owned sub-sidiary, securing an additional 1.5 mtpa capacity and key limestone mining leases in Andhra Pradesh as part of the deal.

RCl ToDAyCurrently, RCL's production is based out of two integrated plants in Andhra Pradesh. The larger plant site, near Boincheruvu-palli village, has a 2.16 mtpa capacity after the Birla acquisition while the smaller plant, near Ramapuram Village and Kodad Taluk, has a one million ton capacity. Both plants enjoy the cost advantages of being connected to a larger multi-faceted opera-tion, as RCOL is self-sufficient in all crit-ical raw materials, including limestone, power and coal.

This self-sufficiency as an organization helps RCOL position its cement business for profits despite volatility in the com-modities markets and slowdowns in some of RCL's major contracts. Though ana-lysts have viewed the cement operations as over capacity for the market, the firm's 2011 Annual Report stated that the com-pany viewed the perceived oversupply of produced cement to be transitory based on existing and expected infrastructure pro-jects in the works in Southern India. The firm acknowledged that some of the larger irrigation and housing projects in Andhra Pradesh were moving at a slower pace than RCL had initially been expecting due to political agitations, but stated that with no additional capacity expansions planned at the moment, the firm saw the supply-demand gap narrowing.

The Directors' confidence in the financial stability of the firm and future profit poten-tial have the company on a unique path to control costs and expand profit margins in its cement operations in the coming years. While other firms focus on supply costs, RCOL's self-sufficiency is allowing it to accelerate the pre-payment of debts to optimize its working capital for all seg-ments. Additionally, the firm is nearing completion on a massive share buy-back program approved in October of 2011 and maintains a 55 percent dividend on shares.

The Birla expansion purchase and debt pay-down strategy have positively shifted the financials and international analyst rat-ings of the cement business for RCOL and

RCL. Between 2010 and 2011, the net debt to operating EBITDA improved from 3.8x to 2.2x. In 2011, the cement portion of the business earned total revenues of 8.68 bil-lion INR, up from 2010's 7.16 billion INR.

This positive and profitable trend for the cement segment is expected to contin-ue until at least 2013. Throughout 2011, cement realization was up one percent quarter over quarter, and the first quarter of 2012 delivered increased revenues in the cement division. Thus, while the global commodities markets and capacity expan-sions in India do create a volatile operat-ing environment, RCL is in a position to enjoy solid profit margins and returns in the years ahead.

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0

1,250

2,500

Q4CY11Q3CY11Q2CY11Q1CY114QCY10

REVENUE FROM RCL

INR mn

Quarter

Rain Commodities (RCOL) is perhaps also well-known as an important producer of calcined petro-leum coke. However, 19 percent of its overall revenues stem from its cement business in South-ern India, known as Rain Cement (RCL). Marketed under the brand name Priya Cement in Andhra Pradesh, Karnataka and Tamil Nadu, RCL currently has a total installed capacity of 3.16 mtpa.




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arket andcompetition

51

51

M

CEMENT MARKET & COMPETITION

ement stock prices take a hit ahead of the long anticipated release of the CCI report regarding cartelization. Jaypee is under investigation for alleged environmental violations in Himachal Pradesh. Udayapur Cement shuts down reportedly for maintenance work, but claims of

financial mismanagement plague the manufacturer.

AnTiTRusT ACCusATions hiT sToCksThe possibility of a CCI penalty due to accusations of cement company carteli-zation may have a negative impact on the industry. Analysts say that with the CCI moving closer to releasing a report on their findings, pressure is likely to mount on cement companies. The outcome is still unclear because the companies will most likely contest the ruling, but some kind of impact on cement stocks is expected. Even if the companies don’t actually pay a penal-ty, it will still adversely affect cement stocks because it will be the first time the CCI has taken such a step against the sector.

inVesTiGATion unDeRWAyOfficials are gearing up for a probe into alleged favors extended to the Jaypee Group in Himachal Pradesh, which alleg-edly led to environmental violations.Himachal Pradesh Chief Minister Prem Kumar Dhumal announced his govern-ment was investigating the role of govern-ment officials in this regard.

"The previous government was responsible for granting the permission to Jaiprakash

Associates for setting up a cement plant and a thermal power plant by ignoring mandatory codal formalities from 2004 to 2007," he said.

According to sources, the green bench of the Himachal Pradesh High Court on May 4 imposed Rs 100 crore in damages on JAL for having set up a cement plant and dismantling a thermal plant, both in the state's Solan district, violating environ-mental laws and making false pleas before the authorities and the court.

GRouP CAlls FoR BoyCoTTRayalaseema Rashtra Samiti called for a general strike against four cement factories

in the area on May 23 if the price per bag was not brought down to Rs 150 from the current Rs 330.

Samithi president Kuncham Venkata Sub-ba Reddy sent out notices to the cement factories and also wrote a letter to the Prime Minister, apprising him of the prob-lems faced by people in the Anantapur, Chittoor, Kadapa and Kurnool districts with regard to the high prices of cement.

TemPoRARy shuTDoWnUdayapur Cement is reportedly shut-ting down its cement plant for a month for “maintenance work.” Closure of the 800 tpd facility has been speculated to be




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CEMENT: M

ARKET AND COMPETITION

caused not by a technical failure but by mismanagement. The company countered that the shutdown was due to a malfunc-tioning gear box and that repairs have been proceeding as scheduled and the plant should resume operations soon.

The company’s employees, however, doubted the company’s statement, saying the company’s finances are in shambles and it cannot pay its employees. They add that production has previously been sus-pended due to a myriad of reasons.

The management admits that the factory has incurred losses of more than US$1.9 million due to the month-long halt in pro-duction, and it has not paid its employees for this month. It says it was unable to pay its staff as it was not producing cement, adding it will pay its employees once pro-duction resumes.

JAyPee RAises CAPACiTyThe Jaypee Group is planning to increase its cement production capacity. The com-pany is pushing for a production capac-ity of 50 mtpa in the next five years. Cur-rently, the company produces about 33.5 mtpa. By the end of the year, the compa-

ny expects to reach a production capacity of 36 mtpa. Industry sources suggest that the company may require an investment of more than Rs 10,000 crore.

The group plans to add capacity in states that it currently does not have any pres-ence in, including Karnataka and the North East. It is also considering possi-bilities in the East. Currently, the Jaypee Group sells a vast number of its cement products into the Central region, where its sales have reached about 17 million tons last fiscal year.

mininG liCenses issueD The government said it will allot min-ing licenses for limestone and iron ore.According to one report, mining licens-es for these two minerals will be issued only to those companies who will use the cement grade limestone and steel grade iron ore in cement and steel plants.

The report notes that in earlier schemes there was nothing binding companies who were issued mining leases to invest in man-ufacturing plants. This policy resulted in iron ore and limestone reserves going out of state and failing to bring in revenues.

sTABle PRiCes exPeCTeDHeidelbergCement says it expects prices to remain stable in the coming months, even as the monsoon season approaches which may dampen dispatches.

"We have cut prices in some areas and we have increased prices in some areas. So it varies from area to area. I do not think demand has been pretty sluggish. If you compare the demand in the first four months of this year to that of last year, there has been a growth and the growth has been significant," said Ashish Guha, CEO & MD of the company.

He also expects growth to beat earlier estimates this year."We were talking about a seven percent growth for the whole year and it seems that the first four months indicate a higher growth for us. Maybe we are in different markets and in different regions the price corrections have been somewhat effective. In some markets it is larger than in other markets and in some markets we have seen price increases. So it is up on the current demand and situation in that particular area," he said.

On the monsoons, Ashish Guha expects the season to have an impact on dispatches, albeit a minimal one. "Majority part of next three to six months is monsoons. So anyway we see every year the dispatches have impacted a bit. So I do not think it is going to be a significant impact on dispatches. It will be seasonal as it is observed every year and beyond September we start seeing growth. So if you say from May to October I am not seeing significant decreases in dispatch year on year, obviously from the months of March or May which are high season months for cement dispatches, it will be lower but that is yearly and I do not see any significant impact on dispatches on a proportionate basis," he said.

focus




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olume and pricingv

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51

CEMENT VOLUME AND PRICING

ement sales slowed in April due to a lack of demand from infrastructure and a shortage of labor. Cement makers recovered from a sub-par FY11 by posting higher numbers in the succeeding quarter. Trade resumed between Pakistan and India in mid-April.

DemAnD sloW in APRilCement sales slowed in April and a lack of demand from infrastructure and a labor shortage appear to be the culprits. Soften-ing demand also led to falling prices in a few regions. Average cement prices across the country fell by Rs 10 per 50 kg bag to Rs 280 from Rs 290 in April. The price decline comes after a series of hikes that have plagued the market since January.

Jaypee continued to outperform other large players with 23 percent YoY growth in dispatches. Mangalam Cement and Shree Cement also reported robust 30 per-cent and 20 percent YoY growth, respec-tively. JK Cement reported seven percent growth while HeidelbergCement`s dis-patches were flat on a YoY basis. The aggre-gate dispatch of these players grew six per-cent YoY while declining 16 percent on a month over month basis.

In order to achieve the projected seven to eight percent growth for this fiscal peri-od, demand will need to improve by three to four percent in May and June. India cement demand is expected to increase ten

percent in FY13, even amid price correc-tions during the period.

hiGheR PRoDuCTion VolumesACC and Ambuja reported higher produc-tion in April and in the first four months of the year.

They reported production growth at 2.17 million tons and 1.91 million tons, respec-tively, in April. During the corresponding

month last year, the output of ACC and Ambuja stood at 2.06 MT and 1.81 MT, respectively.

Sales for ACC grew to 2.07 million tons compared to 2.05 million in the same peri-od of the previous year, while those for Ambuja stood at 1.85 million tons against 1.82 million in April last year. For the Jan-uary-April period 2012, ACC's produc-tion stood at 8.87 million tons compared to 8.28 million in the same period in 2011, the report said.

Meanwhile, Jaiprakash Associates announced cement shipments in April rose 23 percent from a year ago to 1.77 million tons.

TRADe ResumesTrade resumed mid-April between Paki-stan and India after the opening of the Attari-Wagah joint check post. Indian traders have already started giving orders to Pakistani cement companies.

According to Ministry of Trade officials, cement export via the Wagah border were




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CEMENT: VOLUM

E AND PRICING

CemenT PRiCes soFTeninGCement prices in India are on the way down after data suggests average prices have dipped two percent since April 15. CLSA re-ports that cement prices have started to weaken across India, with dealers expecting more falls ahead, according to its India Real-ity Research survey. Demand is being hit by "sluggish" construction activity.

According to the report, ACC’s prices have risen six percent in 2012, Ambuja Cements are down four percent, while UltraTech Cement is up 21 percent on a year-to-date basis, compared to a 12.2 percent rise in Nifty.

The outlook for the sector is mixed, with de-mand expected to rise seven to eight percent as construction picks up on the back of fall-

ing interest rates. Rising costs could, how-ever, force companies to increase prices.

shRee's Q1 sAles RiseShree Cement indicated its cement busi-ness did well in the first quarter of the year, helped by strong demand from its key North-ern and Central India markets. This led to a 20 percent jump in sales compared with the same quarter last year. Firm cement prices also helped and boosted net sales 38.1 per-cent to Rs 1,477.8 crore, with 80 percent of this accruing from the cement business.

Revenue surged 90 percent YoY, arising from power sale agreements with northern elec-tricity distribution firms and the commis-sioning of a 150 megawatts (MW) unit.

On the flip side, average earnings in both business segments did not impress, as ce-ment realization was a marginal five percent higher, and power realization dropped as merchant tariffs were lower than the year-ago period. Thus, operating margins con-tracted by around 240 points to 25.3 percent, pulled down largely by the poorer profitabil-ity in the power division.

According to analysts, this is partly because there was a larger proportion of power trad-ed as opposed to generated during the quar-ter. Higher operating leverage of the cement segment and savings in power and fuel costs arrested a steeper drop in profitability dur-ing the quarter.

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allowed and Pakistan would start export-ing cement to India through trucks.

After the trade resumption, Indian traders placed orders of cement to Pakistani indus-tries, sources said, adding that cement pro-duction is in surplus in Pakistan. Due to the million-ton yearly cement export to India, closed plants will resume production.

inDusTRy shoWs GRoWThIndia-based cement makers recovered from a sub-par FY11 by posting higher numbers in the succeeding quarter thanks to the robust demand revival in the second half of the year. According to data, demand grew 6.4 percent against less than five per-cent in FY11, better than cement makers’ earlier estimates of six percent.

Cement makers sold 223.02 million tons of cement compared with 209.5 million tons, with production also rising to 223.6 mil-lion tons against 210.5 million tons.

ReGion’s PRoDuCTion on The RiseCapacity additions in light of increas-ing demand will hike cement production capacity in Hichamal by 2015. Himachal’s

total cement and clinker production capacity is projected to reach 22.37 mil-lion tons by 2015 with the commissioning of a 3.75 mtpa capacity cement plant by JP Himachal Cements.

The Industries Minister, Krishan Kapoor, reported that ACC had set up two cement plants at Barmana in the Bilaspur dis-trict with 7.70 million tons of capacity, and an agreement had been signed with

JP Cements to set up a second unit at Bagha with a capacity of 3.75 million tons in August 2010. The plant was slated for commissioning by August 2015.

JP Cement’s first plant at Bahga, with a 2.75 mtpa capacity, has already been commis-sioned. Ambuja also set up two cement plants with 7.70 million tons of capacity, and another plant is producing 6.1 lakh tons of cement.




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&a andfinanceM

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CEMENT M&A AND FINANCE

ltraTech is in negotiations to purchase a limestone mine in Mozambique and a cement plant in the northeast region of India. Released Q4 financials are mixed for several of the larger manu-facturers. Chettinad Cement ponders delisting.

ulTRATeCh in neGoTiATionsNegotiations between Mumbai-based UltraTech and a limestone mine owner in the Magude region in southern Mozam-bique could result in the group building a one to two million ton cement plant in the African country where demand for the building material has been growing at the rate of eight to nine percent annually.

UltraTech is reportedly also in talks to buy Adhunik MSP Cement's Meghalaya plant for over Rs 700 crore. According to reports, it plans to buy the 1.5 million ton

unit and bolster its presence in the fast-growing but largely untapped northeastern market. Due diligence for the unit located at Jaintia Hills has been completed and is now pending no-objection certificates, as mining leases and environmental clear-ances are prerequisites for any large manu-facturing transactions.

eARninGs PosTeDBirla reported an 8.85 percent drop in its standalone net profit to Rs 57.46 crore for the fourth quarter. The company showed a net profit of Rs 63.04 crore during the cor-

responding quarter of 2011-12. The com-pany’s net sales increased 9.75 percent to Rs 651.36 crore compared to Rs 593.50 crore last year. For the full year 2011-12, the company's net profit, on a consolidat-ed basis, declined by over 25 percent to Rs 239.44 crore, though net sales were up 5.80 percent to Rs 2,246.87 crore. Birla says its performance was dragged down by higher expenses, which rose 15.68 percent to Rs 599.02 crore.

India Cements reports its revenues climbed into the double digits in the last three months of the year, on the back of higher demand growth in its main South-ern India business. Revenues grew 19 per-cent at Rs 4,223 crore for the year ended March 31, 2012, up from Rs 3,540 crore in the preceding year. The significant pick-up in cement demand in the South during the final quarter and a big jump in net realiza-tion largely helped ICL post a healthy net profit of Rs 293 crore, up from Rs 68 crore in the preceding year.

UltraTech Cement has reported its profits rose 19 percent in the fourth quarter, even as the company warned its margins were being squeezed by climbing production




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CEMENT: M

&A AND FINANCE

hiGheR mARGins in Q1Indian cement firms have turned in higher operating profits in Q1 on the back of higher revenues driven by better sales for the pe-riod, reports the Digital FC.

The country's largest cement producer, UltraTech Cement, reported 24.5 percent EBITDA margin in the quarter compared with 23.9 percent a year ago, and Ambuja Cement reported a 29 percent operating margin compared to 28 percent a year ago. JK Lakshmi Cement has reported a 21 per-cent operating margin compared to 19 per-cent a year ago.

According to the report, UltraTech’s prof-its was 8.7 percent higher than last year at Rs 4,060 per ton. Ambuja Cement’s profits were up 8.8 percent from a year ago to Rs 4,260 per ton.

Meanwhile, JK Lakshmi Cement’s profits for January-March increased 12.7 percent from a year ago to Rs 3,717 per ton. In spite of these factors, higher energy prices and rail freight are expected to keep the profit margins under pressure, Ambuja said in a statement.

“Last year, the cement sector witnessed a demand growth of around five percent while

this year the sector witnessed demand growth of around 6.9 percent which has helped the cement companies to increase prices and pass on their increase in input costs to consumers. In 2012-13 we expect the sector to grow at around eight to nine percent,” Shailendra Chouksey, whole-time director of JK Lakshmi Cement, said.

CAuTious sTAnCeCredit Suisse is taking a cautious stance on India-based cement makers, taking into account risk factors in the local market. It recently restarted coverage of the domes-tic cement sector with an "underperform" rating on ACC and UltraTech Cement, and a "neutral rating" on Ambuja Cement.

The company sees near-term "headwinds" for the sector due to a slowdown in rural and urban housing, despite the "attractive long-term rural story." Credit Suisse says margins will also "deteriorate" due to an expected 13 percent rise in power and freight costs on the back of higher domestic coal and diesel prices.

On the flip side, Credit Suisse makes an ex-ception for India Cements, which secured a rating of "outperform" given their more attractive valuations compared to other stocks in the sector.

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costs. UltraTech posted net profits of 8.67 billion rupees for the March quarter, beat-ing estimates of higher volumes. Net sales rose 18.8 percent over the same period to 53.37 billion rupees.

ACC and Ambuja Cements reported lower Q1 profits on the back of a one-time charge and higher inputs. Ambuja indicated a 23 percent fall in net profit to Rs 312 crore for the first quarter ended March 2012 com-pared with Rs 407 crore a year earlier. This was mainly due to a retrospective change in depreciation on captive power plants, which resulted in an additional charge of Rs 289 crore. ACC, for its part, report-ed net profit of Rs 152 crore for the same period compared with Rs 350 crore a year earlier, also impacted by a retrospective change in depreciation method. The net profit would have been Rs 380 crore under the earlier method.

Sales at JK Lakshmi rose 28 percent in the first three months of the year on the back of higher demand and increased prices. According to the firm, net sales in the quarter ended March 2012 rose to Rs 526.33 crore. The company registered net sales of Rs 411.95 crore in the same

period 2011. Net profits, however, dipped 5.2 percent, as the company has changed the method of providing for captive power plant depreciation.

TeAminG uPKajaria Ceramics and Anjani Cement are teaming up for the production of tiles. The venture will be named Vennar Ceramics. It is expected to mark Kajarias’ entry into South India with a manufacturing plant at Kaikalur in Andra Pradesh.

Kajaria Ceramics is expected to have a 51 percent equity in the joint venture, with the rest of the shares allocated to Ven-

nar, a subsidiary of Anjani Cement, which launched its diversification into tiles last year. Total investments for the project are estimated at Rs 600 million.

DelisTinGChettinad is is reportedly entertaining the idea of delisting its shares from the local bourse and is considering making an offer to shareholders to that effect. Promoters hold a large 88.4 percent stake in the com-pany according to company financials. The remaining 11.6 percent equity is held by the public, including 3.3 percent by insti-tutions and 4.7 percent by corporations.




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rojects andexpansionsp

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ComPAny/loCATion CommenTsACC/Jharkhand, Bengal & Chhat-tisgarh

ACC plans to build three grinding plants and add a clinker unit: ■ One grinding unit will come up at Sindri in Jharkhand and a second in Kharag-

pur in West Bengal. ■ The third grinding plant and the clinker plant will be set up at Jamul in Chhat-

tisgarh. ■ The new grinding facilities in Jharkhand and Bengal will use the clinker pro-

duced at Jamul.

state of Tamil nadu/ Ariyalur The state of Tamil Nadu has given approval for an Rs 515 crore plan to upgrade two of its units:

■ Alangulam cement plant with an outlay of Rs 165 crore. ■ Ariyalur cement plant for around Rs 350 crore.

Cement ProjeCts/exPansion table

CEMENT PROJECTS AND EXPANSIONS

CC discusses its four mtpa expansion plans. Work on Wonder Cement’s new production line gets underway. Jharkhand celebrates the addition of a new 2.1 mtpa capacity cement facility in the state.

ACC unVeils exPAnsion PlAnsACC plans to build three grinding plants and add a clinker unit in India by spending Rs 3,300 crore through 2015. ACC Manag-ing Director and Chief Executive Kuldeep Kaura indicates the plans will increase production by four mtpa by 2015 from the current capacity of 30 mtpa.

"The new grinding facilities in Jharkhand and Bengal will use the clinker produced at Jamul. The expansion plan will be imple-mented in a phased manner and complet-ed by 2015," he said.

According to the company, the existing clinker and grinding facilities at Jamul will be phased out, and the new clinker unit will have a capacity of 2.79 mtpa. One grinding unit each will come up at Sindri in Jharkhand and Kharagpur in West Ben-gal. The third grinding plant and the clink-er facility will be set up at Jamul in Chhat-tisgarh.

neW PRoDuCTion line Commissioning work has commenced at the new 6,500 tpd cement production line built for Wonder Cement in Nimbahera in the state of Rajasthan. ThyssenKrupp

Polysius provided the main components, including a tangential blending silo with a capacity of 20,000 tons of raw meal and the kiln system consisting of a 6-stage, 2-string Dopol’90 preheater with Prepol-Msccalcining system, the rotary kiln and a Polytrack clinker cooler.

Also supplied were two cement-grinding systems. Each of these 200 tph combi-grinding systems consists of a Polycom high-pressure grinding roll, a Sepol-PC high-efficiency separator and a single-compartment mill.

neW FACiliTy inAuGuRATeD The Chief Minister of Jharkhand India, Arjun Munda, and the Chairman of the Steel Authority of India Limited (SAIL), C.S.Verma, dedicated a 2.1 mtpa capac-ity cement facility. The new facility is the fourth major cement plant within the state and involves a 74:24 equity participation by the two partners, Jaypee Group and SAIL.

The new plant will be called the Bokaro Jaypee Cement Plant (BOJCL), and the chairman will be Sanjay Gaur.




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CEMENT: PROJECTS AND EXPANSIONS

The facility is comprised of two mills. Each will have a 1.7-ton capacity. With both mills functioning, the facility will have the capacity to produce around 340 tons of cement per hour. The plant itself was built at an approximate cost of Rs 440 crore.

APPRoVAl seCuReDThe state of Tamil Nadu has given approval for an Rs 515 crore plan to upgrade two of its units. The state government has indicat-ed that Rs 165 crore had been sanctioned to upgrade the Alangulam cement plant with an outlay of Rs 165 crore.

Orders have also been issued to appoint a project management consultant to increase the production of the Ariyalur cement plant to 1.5 mtpa from the current 500,000 tons. The investment for the proposed expansion would be around Rs 350 crore, according to the state industries depart-ment. The government has also permit-ted TNPL to produce 600 tons of cement per day at an investment of Rs 67.46 crore from the waste of lime clay and fly ash.

CemenT TeRminAl PRoJeCT To ABGA cement terminal project in Azhikkal port has been awarded to India's ABG Group, according to media sources.

Reports indicate the state government had floated two separate tenders for two terminals, one for cement and the other multi-purpose, and ABG was the lone bidder for the terminal. The committee, comprising Kerala Port Department direc-tor Jacob Thomas, deputy director Hari A Warrier and senior port conservator at the Azhikkal port M Sudheer Kumar, evaluated the tender and decided to give the work to ABG.

As part of this project, the business group will develop the terminal by creating a six-meter draft so that a 10,000 ton ship can be brought to the terminal.

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eoplepesignations of directors announced at HeidelbergCement and

UltraTech. Lafarge India welcomes new CEO.

DiReCToR ResiGnATionsHeidelbergCement India announced that Mr. Amitabha Ghosh ceased to be Direc-tor of the Company effective upon the con-clusion of the 53rd Annual General Meet-ing (AGM) held on April 25, 2012. He was retired by rotation at the AGM since he had not sought re-election by the shareholders at the meeting due to personal reasons.

UltraTech Cement, one of India’s larg-est cement companies, also informed the Exchange that Mr. N. J. Jhaveri had resigned from the Board of the Company effective April 04, 2012.

neW Ceo AT lAFARGe inDiAMartin Kriegner, appointed to the posi-tion, said: "I am happy to return to India as Country CEO, at a time when the con-struction sector is evolving quickly in the country. By combining all of our activities together, we will be able to support this evolution by offering integrated and inno-vative solutions at an earlier stage of con-struction in close proximity with our cus-tomers, allowing the full benefits of our innovative products and services to be real-ized."

Kriegner joined Lafarge in 1990 and became the CEO of Lafarge Perlmooser, Austria in 1998 before he moved to India as Head of the Cement activity in 2002. Prior to this assignment he served as Regional President, based in Kuala Lumpur. Lafarge has four cement plants in India: two plants in the state of Chattisgarh and a grinding plant each in Jharkhand and West Bengal.




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MaY/JUNe 2012 35

ementequipmentc

CEMENT EQUIPMENT

FiVes ACQuiRes CBl ComBusTionIn January, Fives acquired CBL Combus-tion Systems, an Indian company special-izing in the design and supply of com-bustion equipment used mainly in the energy (burners for industrial boilers and thermal power plants) and miner-als (cement) sectors.

CBL, headquartered in Mumbai, also has a burner production and assembly workshop located in Vadodara in the state of Guja-rat. The company, which has approximate-ly 100 employees, has a turnover of about US$5 million (INR 300 million of sales).

CBL markets its offer based both on its own technologies and those of Fives Pil-lard. The company will change its name pending regulatory approvals and will adopt the Group’s visual identity.

Through this acquisition, Fives Pillard has gained an operational structure in the combustion field in India, allowing it to accelerate its development in this high growth market for which a local presence is a key success factor.

This acquisition marks a new stage in the Fives Group’s development in India and the growth of its local operational footprint.

ives acquires Indian compa-ny specializing in the design and supply of combustion

equipment. Ibau builds cement terminal in Sweden.

iBAu BuilDs CemenT TeRminAl AT The PoRT oF mAlmö, sWeDenHaver & Boecker subsidiary Ibau Hamburg led the construction of a cement terminal for Cementa of the HeidelbergCement Group at the port of Malmö, Sweden. Haver & Boecker supplied the complete electrical system and automation for the project.

During the planning phase, Ibau worked in close cooperation with HeidelbergeCement's Technology Center in Brussels, and it was decided that the control room in the multi-chamber silo would be moved to Level 1. This offered the advantage of considerably re-duced cable paths through silo walls. Because space for the switching and control cabinets, energy distribution and transformers was limited, Ibau opted for maintenance-free, gas-isolated medium switchgear.

The electrical installation involved a number of demanding challenges for the personnel. In-stallation of the cable works and laying the ca-ble in the bucket conveyor tower—from Level 0 to 100 meters—required special cranes and had to be carried out by workers who weren’t afraid of heights.

One challenge for the automation systems supplied by Haver & Boecker was adapting the PCS7 process control system to the silo pro-cesses so that clear and well-arranged pro-cess groups resulted and thus allowed easy operation and rapid fault detection. The tank-er trucks and wagons are automatically load-

ed according to the shipping orders thanks to the data exchange between the process control unit and the shipping system provid-ed by Cementa. By cooperating closely with HeidelbergCement’s Technology Center in Brussels, the processes were optimized so that the terminal could be operated without operating personnel.

After the facility start-up, the terminal was successfully handed over to Cementa in March 2012 after almost two years of planning and construction work. When ap-proaching the Copenhagen, Denmark air-port at night, it is possible to see the distinct skyline of the multi-chamber silo, which is fed by a mechanical-pneumatic ship unload-ing system, is 100 meters tall, has a diameter of 26 meters and contains 30,000 tons of cement. Automatic loading of tanker trucks and wagons is carried out 365 days a year.




CW Group Coal Week


Loesche ThermoProzess announced that they have taken over the specialized “Com-bustion Technology” department at UCON’s Containersysteme in Gelsenkirchen, Ger-many.

For more than 60 years, this division of UCON’s Containersysteme has been well known as “Küppersbusch Fachbereich Wärmetechnik.” A large variety of industrial combustion systems have been developed, designed and delivered by them.

Loesche ThermoProzess is a subsidiary of Loesche Düsseldorf and together with the “Thermal Applications” department repre-sents, within the Loesche Group, thermo process technology for this field of interna-tional industry.

With thermo process technological solutions, Loesche covers another field of activities with related products, e.g. industrial burn-ers and hot gas generators. The integration of the specialized “Combustion Technology” department at UCON’s Containersysteme KG, Gelsenkirchen, with their range of products is thus another component for the expansion of the Loesche Group’s portfolio.

In the future, products by the new Loesche ThermoProzess will be available under the brand name Loesche & Küppersbusch. The Managing Director of Loesche ThermoPro-zess is Matthias Authenrieth, and Günther Balgar has been designated as operational manager for the facility in Gelsenkirchen.

BMWeekBMWeek



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loesChe exPAnDs inTo ComBusTion sysTems

CemWeek: What is the foundation of the Cement Business & Industry India Con-ference 2012?

Cholewinski: The primary intent of CBI is to provide a forum that is not only inform-ative and relevant from an industry per-spective, but one that also provides great networking opportunities. Our events and programs are developed with the assistance of leading industry thought leaders. I can even go as far as to say that we are selec-tive in the development and delivery of our programs to ensure we deliver quality programs that are commensurate with our reputation for top-notch programming.

CemWeek: That is a lofty promise. How do you intend to deliver on it?

Cholewinski: Our philosophy is to take a dual track approach whereby we are able to provide a “content-first” forum that pro-vides our delegates with a careful and rel-evant content agenda and not a mere suc-cession of PowerPoint slide presentations. This content agenda is shaped around common as well as dual track sessions aligned along both business and technol-ogy perspectives to attract “both” sides of the house to further hone in on rel-evant topics.

By employing this approach, we not only bring together both important perspec-tives but also still maintain the individual-ity of each so that they can select topics rel-evant to them and prevent the mishmash of agenda topics that pollute some events.

CemWeek: What has been the response been to CBI India 2012?

Cholewinski: I am very pleased and excit-ed to share with you that we have gotten an

incredible response to CBI India 2012 from a wide variety of organizations in India, as well as many international organizations. This is truly a “local” event, appealing to both global as well as local thought-lead-ers and participants. Just the other day, a manager from a leading cement company in India said, “Thank you for finally put-ting some relevant content on the table for us.” Feedback like this has been coming in, energizing and motivating our work on this event.

CemWeek: What do you attribute the posi-tive response to?

Cholewinski: Although the conference has a focused regional context, it is also pro-viding meaningful content that has global appeal. In addition to our dual approach that I mentioned previously, the theme of the conference is “The shift from West to East in global cement.” This is reflect-ed in the content of the program as well as the individual presentations which will be delivered at the conference.

CemWeek: What is the outlook for the future of GMI and what else are you planning?

Cholewinski: In the upcoming months, we are fully focused on CBI India 2012 and are already preparing for the follow up, CBI India 2013. In addition, we are pav-ing the way for CBI Africa 2013 and CBI Brazil 2013. You will also be seeing several cement sector summits that are highly rel-evant to the cement industry later this year and into next.

EVENtS oN thE horizoN

To learn more about cBi india 2012 or other Gmi events, contact andre cholewinski at [email protected] or via telephone at +1-203-516-7424. www.gmiforum.com

CemWeek catches up with Andre Cholewinski of GMI Global—the organizer of the Cement Business & Industry Conference—to discuss its flagship event, the Cement Business & Industry India 2012 Conference, which will be held in Mumbai, India on October 10-11, 2012 at the Leela Mumbai Hotel.

UPDATE




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MaY/JUNe 2012 37

CONSTRUCTION MATERIALS

VRCL Assets wins two national highways projects. The Hindujua Group plans to develop several projects across India. Opening of the Yamuna Expressway is delayed once again.

neW PRoJeCTs

iVRCl seCuRes TWo hiGhWAy PRoJeCTsHyderabad-based IVRCL Assets and Holding has won two national highways projects from the National Highways Authority of India (NHAI) worth Rs 3,203 crore. The cost of building the national highways is estimated to be Rs 1,617 crore. The project involves upgrading the four-lane national highway (NH-5) between the Gundugolonu and Rajamundry section in Andhra Pradesh into six lanes on a toll basis. The project also includes conversion of the Patiala to Bhatinda section of NH-64 to four lanes in Punjab. The total cost of the project is Rs 1,586 crore as per PWD, the Punjab government.

GRouP lAnD DeVeloPmenTThe Hinduja Group is set to develop 2,500 acres of group land through its realty arm, Hinduja Realty Ventures. The Hinduja Group holds around 2,500 acres of land parcels in India privately and through group companies. The Group’s real estate development arm will develop projects over 300 acres across the country that are owned by companies such as Ashok Ley-land, Gulf Oil Corp, and Hinduja TMT. The company is expected to spend around

nfrastructure& projectsnfrastructure& projectsII

Rs 7,300 crore to develop nearly 40 million square feet of office space in the coming five to seven years at Hyderabad and Ban-galore. Of this developable space, around 27 million square feet will be saleable and leasable. 16-lAne CoRRiDoR AT GuRGAonIndia’s leading real estate developer, DLF, along with Haryana Urban Development Authority (HUDA) plans to build a 16-lane dedicated corridor in Gurgaon. The 8.3 km corridor will connect DLF’s Gateway Tow-er in Cyber City to the Golf Course Road in Delhi. The estimated cost of the project is around Rs 400-600 crore. After comple-

tion, the corridor will ease congestion and will bring relief to around 1.5 million resi-dents and commuters in Gurgaon.

hCC ConCession seCuRes nhAi ConTRACTHCC Concessions, a subsidiary of Hindu-stan Construction Company, has bagged a contract worth Rs 800 crore from the National Highways Authority of India (NHAI) for six-laning of the Vadodara-Surat section of NH-8. The project involves construction of a new four-lane bridge across the Narmada river in Gujarat. The concession period for the project is 12 years, which includes a construction peri-od of 30 months.

smAll FiRms To BeneFiTNHAI plans to build one-third or 2,800 km of this fiscal year’s target of 8,800 km in the form of two-land roads on cash contracts. The road authority plans to award two-lane projects which may entail work orders worth up to Rs 15,000 crore to smaller firms on EPC or engineering procurement and construction or cash contract basis rather than on BOT (build-operate-trans-fer) or BOOT (build, own, operate and transfer) basis.




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CONSTRUCTION MATERIALS: INFRASTRUCTURE & PROJECTS

hCC BAGs RAil TunnelThe Hindustan Construction Company (HCC) bagged a rail tunnel order worth 162 crore to develop a railway tunnel at Imphal, Manipur. The project awarded by the North Frontier Railway involves con-struction of a 3.3 km rail tunnel and is scheduled for completion in 28 months.

kAshmiR GeTs neW TunnelJammu & Kashmir is set to get the long-est road tunnel. The road tunnel project, known as the Patnitop Tunnel, will con-nect the districts of Chenani and Nashri. The project will see the construction of two tunnels, two each on the Quazigund-Ban-ihal stretch (8.45 km) and Chenani-Nashri stretch (9 km). The cost of the project is expected to reach Rs 4,500 crore.

The tunnel is a part of the planned four-lane widening of the National Highway 1A (NH1A) between Srinagar and Jammu and is an alternative to the existing NH1A sec-tion, which faces safety concerns as it pass-es through the steep mountain terrains. The tunnel is being constructed using the New Austrian Tunneling Method (NATM) technique and is expected to be completed by mid-2015.

Work on the tunnel has already begun to impact employment opportunities for locals and is also expected to benefit the food-processing industry in the state.

uTTAR PRADesh ToWnshiP exPAnsionsAnsal Properties and Infrastructure has sought permission from the government of Uttar Pradesh to expand its 3,500-acre township Sushant Golf City at Lucknow to 6,000 acres. The company is develop-ing about 70,000 units and 50,000 units at present at Lucknow and Greater Noida, respectively. The Ansal API has already spent Rs 33,000 crore over a period of two decades to expand the two townships. The cost of the project, which involves develop-ment of the township for middle and high-middle class people, is expected to increase proportionately.

uPDATe on PRoJeCTs

yAmunA exPRessWAy misses DeADline The opening of Yamuna Expressway will take at least six more weeks, missing its deadline yet again by a month. Work is still pending on the expressway, and technical glitches need to be sorted out. The Yamuna Expressway opening has been stalled for varied reasons over the past few months, and the latest dispute is between farmers and the E-way Authority Chairman over-seeing construction of the Expressway and the reshuffling of officials in the district. Once the Yamuna Expressway is opera-tional, it will decongest traffic in the Yamu-na region.

WoRk on BoGiBeel BRiDGe FAsT TRACkeDConstruction work on Bogibeel Bridge—the country’s longest rail-come-road bridge—is picking up pace. The 4.9 km project comprises a double line broad gauge rack and a three-lane road connect-ing two existing railway networks from Chaulkhowa and Moranhat stations and between Sisibargao and Siripani station of the Rangiya-Mukongselek section. The slow execution of the project, which was sanctioned in 1997-98, has resulted in cost overruns from the original Rs 1,767 crore to Rs 3,230 crore. However, work on the bridge is now on the fast track and is expected to complete by 2015.

exCAVATion WoRk ComPleTeDLeighton Welspun Contractors has suc-cessfully completed excavation of 2 km at its iconic Chenani-Nashri tunnel pro-ject. The excavation of the 2 km combined length of the two escape tunnels, north and south, has kept the company on tar-get to complete the tunnel on schedule. Once completed, the Chenani-Nashri tun-nel will reduce the distance from Chenani to Nashri to 10 km from the present 30 km and will lessen the travelling time by up to an hour.

iVRCl To sTART WoRk in sePTemBeRThe Hyderabad-based IVRCL assured the Punjab government that it would start work on four-laning the Patiala-Bathin-da stretch by September 15, 2012. IVR-CL assured the Punjab government that it would complete the project as per the government’s deadline. The project, when completed, will change the face of Pun-jab. The total cost of the project is Rs 1,586 crore as per PWD.

ConsTRuCTion on RoADWAy BeGinsThe NHAI has started construction work on the service road between Rajokari and RTR-Palam crossing. Once completed, the service road will reduce congestion on the Delhi-Gurgaon expressway. The NHAI has awarded construction to a private con-tractor under a cash contract project. The service road is expected to be complete in four to five months.




CW Group Coal Week

MaY/JUNe 2012 39

CONSTRUCTION MATERIALS

quipmentupdatesquipmentupdatesEE

ew products launched by several manufacturers, including Volvo, Caterpillar and XCMG. Others, such as Bobcat and Kobelco, expand existing lines.

hyunDAi’s ComPACT RADius exCAVAToRsHyundai Construction has launched a series of Compact Radius Excavators. For projects requiring small excavators, Hyun-dai has launched the R27Z-9 and R35Z-9 zero tail swing models. The new excava-tors are perfect for tight, confined job sites. The R35Z-9 zero tail swing weighs 8,050 lbs (3650 Kg) and is powered by a 27.3 hp (20.4 k) Yanmar 3TNV88, water-cooled, four-cycle engine. It has a dig depth of 7.2 feet and bucket digging force of 7,050 lb.

For medium projects, Hyundai has launched R60CR-9 and R80CR-9 excava-tors. Both models are powered by fuel-effi-

cient Yanmar 4TNV98 diesel engines. The maneuverability make of these models is suitable for light construction, landscap-ing, demolition, utility and other applica-tions where power is needed in confined spaces.

For large projects, Hyundai has launched the R145CR-9 and the R235CR-9 exca-vators. These have a digging capacity of 16.1 feet and are powered by Mitsubishi’s D04FD-TAA water-cooled, four-cycle die-sel engine.

hoRizonTAl DiReCTionAl DRillVermeer Corporation has launched the D100x140 Navigator horizontal direc-

tional drill. This new drill is powered by a 275-hp CAT diesel engine. The drill has a rotational torque or max rotational speeds up to 200 rpm. Its user interface offers enhanced ability to monitor drill perfor-mance during operation.

neW ColD PlAneR millinG mAChinesBomag has launched two new models of milling machines, the BM500/15 and the BM600/15. These new milling machines feature an innovative rotor geometry which reduces the vibration, simplifies drum replacement and increases service life. A 125-hp Deutz liquid-cooled diesel engine powers the new models.

Both models have three variable cutting speeds that optimize milling performance. The BM500/15 offers a standard cut-ting width of 19.7 inches whereas the lat-ter offers a 23.6-inch cutting width. Both models have a cutting depth of 8.3 inches and a milling radius of less than ten inches.

BoBCAT limiTeD eDiTionBobcat launched a new, limited edition version Bobcat 1.6 ton compact excavator E16 with unique styling to celebrate its 25 years in the compact excavator industry. The limited version model is an attractive




CW Group Coal Week


CONSTRUCTION MATERIALS: EQUIPM

ENT UPDATESMATERIALS

complement to new enhanced versions of both the E16 and the 1.4-ton E14 launched by Bobcat. The new excavator features new exterior styling, new ergonomic travel levers, and pedals.

VolVo’s neW exCAVAToRsVolvo Construction Equipment has launched two new short swing radius exca-vators, the ECR145D and ECR235D. The excavators are designed for operation in confined areas. Both the models launched by Volvo meet the Tier 4-Interim emis-sions legislations. The models also fea-ture improved hydraulics and pump flow that provides faster cycle times and bet-ter digging performance. Both models are available with mono or two-piece boom, an optional blade, several arm configura-tions and three-piece, high tensile steel X-shaped frame undercarriages.

neW eleCTRiC FoRkliFT Caterpillar launched a new electric fork-lift called the EP13-20. The new forklift delivers power and productivity. Available in lift capacities of 1.3, 1.5 (three-wheel versions), 1.6, 1.8 and 2.0 tons (three and four-wheel), the EP13-20 extends service intervals to 1000 hours and reduces energy consumption by nine percent. The newly launched trucks resist harsh working envi-ronments and ensure maximum up-time, lifetime, and maximum productivity.

neW CRAne lAunCheD in uAeSwiss-based Liebherr introduced the mobile construction crane MK 00/110. The MK 100/100 mobile construction crane can be used to perform a number of jobs where a mobile crane would not be as efficient. The crane uses a trolley similar to a tower crane and can be used to complete smaller jobs in a much quicker manner than with a mobile crane with a telescop-ic arm. The new crane weighs 1800 kg at full range and has a lifting capacity of eight tons to a range of 14 meters.

koBelCo’s ADDiTion exCAVAToR seRiesKobelco America has complemented its Mark 9 excavator series with the SK170 full-size, high performance excavator. The

highly versatile excavator newly intro-duced by Kobelco delivers up to a ten per-cent improvement in both productivity and fuel efficiency. The new product also provides more power and faster engine response. The SK170 Mark 9 is equipped with the industry’s first selective catalyt-ic reduction (SCR) emission solution for excavators and features a fully automat-ic engine and hydraulic warm-up system. Kobelco America’s Mark 9 excavators are the most fuel-efficient machines the com-pany has ever built.

xCmG’s neW PRoDuCTs lAunCheD XCMG launched six new products, includ-ing cranes and loaders, at Qatar Project 2012, an exhibition held in Doha, the capi-tal of Qatar. XCMG, which has fully par-ticipated in all of Qatar’s key construction projects including the new Doha port pro-ject, displayed its new products and con-solidated its position during the exhibi-tion, which also saw participation from construction companies such as the Al Mana Group and Al Hamad Automobile.




CW Group Coal Week

MaY/JUNe 2012 41

REGIONAL NEWS

PAkisTAnAll Pakistan Cement Manufacturers Asso-ciation (APCMA) Chairman Aizaz Shaikh reported that as many as 11 cement units suffered losses before taxation, aggregat-ing to Rs 5.68 billion during the financial year 2010-2011, while seven cement units, of which two are located near Karachi in close proximity to the seaport, earned profits of Rs 5.98 billion.

Industry debts to financial institutions have also risen to a massive Rs125.3 billion, and cement units located in the North are par-ticularly challenged owing to low demand and are unable to service their debts.

Meanwhile, cement sales in Pakistan rose in April, but exports to neighboring coun-tries continued to sink. According to a reported from the APCMA, total cement dispatches until April 2012 totaled 26.64 million tons, which is 3.31 percent higher

A large number of Pakistani cement makers suffered losses in financial year 2010-2011, and industry debt is on the rise. Bang-ladesh’s Seven Circle plans to double capacity, and Holcim’s Sri Lanka unit turns to waste materials to reduce production costs.

than the corresponding period of the last fiscal. Domestic sales during this period rose by 8.51 percent, but exports registered a 8.91 percent decline.

According to the report, the performance of north- and south-based mills depict-ed different trends in domestic sales and exports. Local sales of north-based mills

rose by 7.77 percent to nearly 15.93 mil-lion tons, and south-based mills registered higher domestic consumption by 11.81 percent to 3.70 million tons.

The Afghanistan market remained rela-tively stable as exports declined nominally by 0.15 percent to 3.78 million tons, and India rose by 15.19 percent to slightly over 500,000 tons by sea and the Wahga bor-der. Exports to other destinations by sea decreased by 16.96 percent to 2.7 million tons.

BAnGlADeshSeven Circle plans to double its produc-tion output in two years to 3.3 million tons. According to Asadul Haque Sufyani, gen-eral manager of Marketing for Seven Cir-cle (BD), “We have now the capacity of 1.7 million tons per year and the expansion drive of our company was taken in view of the rising demand of cement."

"Consumption of cement, one of the key backward linkages of the construction and real estate sectors, witnessed signifi-cant growth in Bangladesh in the recent years and our expansion drive reflects that vision," he added.

Presently, there are 30 operational cement companies in Bangladesh able to produce around 21 million tons of cement a year against a demand for 8.5 million tons.

Some local companies are enhancing their production capacity, as domestic demand has consistently been on the rise for the past few years—except for 2007—along with increasing government initiatives.

sRi lAnkAHolcim's Sri Lanka based unit started using agricultural waste to reduce produc-tion costs by at least 30 percent.

Chairman Manilal Fernando indicated the company was using rice husks, straw, agri-waste and other garbage material to gen-erate power. Furthermore, the company is doing on-going research to save more energy by way of using building material waste to generate energy.

BMWeekBMWeek



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CW Group Coal Week


achapuz Bilanciai Group has announced a new version of its dispatching solution for cement plants—SLV Cement.

The new SLV Cement solution was built taking into account a more connected world where the mobile devices and the cross-platform solutions are needed. In

the cement industry this is also the case. The users and agents from all departments (such as maintenance, logistics, commer-cial, dispatching and management) inter-acting with IT systems are demanding the ability to use their applications and access to the information across several devices and platformsin order to take control of

CroSS-plAtforM rEADYthe inbound and outbound processes in their plants.

This new release of SLV Cement is now web-based and cross-platform, introduc-ing new ways for the users to interact with the system from everywhere and using dif-ferent types of devices. From a standard desktop PC, a kiosk, a Smartphone or Tab-let, the users can always be connected with the system and are able to interact with it at any time. Functionalities like the report-ing and KPI analysis, layout and flow con-figurations, monitoring of the system, front-end of the kiosk screens, among oth-ers, are now available from multiple devic-es and platforms, improving the user expe-rience and availability and thus reducing the time to access those features.

Complementing the mobility of the users, the notification and alert components were also improved so that the users can be informed by e-mail or SMS on pre-defined events occurring during the loading and unloading processes (such as abnormal situations, unauthorized operations, main-tenance needs, lack of connectivity in a module of the system, etc.).

All the new system modules have been upgraded with these new functionalities, such as the check-in, parking manage-ment and truck calling, access control and identification, automatic and self-service weighing, dispatch and reception, bulk loading, raw materials unloading and bags loading and counting.

BMWeekBMWeek



CW Group Coal Week

NEw SlV CEMENt CaChapuz BilanCiai updates dispatChing solution:

UPDATE




CW Group Coal Week

MaY/JUNe 2012 43

ANALYST RECOMMENDATIONS

ACC

ACC received a ‘Sell’ rating from Fin-quest due to low realizations that fell below expectations. Stagnant cement prices in the face of increasing costs also affected EBITDA margins. Going forward, demand is yet to pick up while prices may contin-ue to remain stagnant despite escalating costs. Profits were 55.7 percent lower for Q1CY12, largely due to a one time depre-ciation cost as the company migrated from straight line depreciation to written down value depreciation on its captive power plants. Price target is set as Rs 1,150 against Rs 1,226.

Through Q1CY12, performance is in line with estimates. Additional cost pressures are on the horizon for ACC as the increase in railway freight and excise duty comes into effect. Capital expenditure to the tune of Rs 33 billion is also in the cards with the self-financed capacity expansion project that is slated for completion in 2015. Hikes in coal royalties and power charges are also in the pipeline. As such, Emkay has main-tained a ‘Hold’ rating with a price target set at Rs 1,247 against Rs 551.1.

AmBuJA CemenT

Motilal Oswal Securities has given the green signal to Ambuja Cement with a ‘Buy’ rating based on the company’s strong

balance sheet and future prospects that depends on the company’s brand equity and market and segment mix. Further-more, capital and fuel efficiency is also expected to add to the profit figures in the coming years. The price target has been set at Rs 200 against the current market price of Rs 143.

Ambuja Cement’s strong presence in the western and northern regions, where there is a demand upswing, coupled with its smooth logistic ties and network connec-tions, will hold the company in good stead and is expected to boost EBITDA figures, especially in the wake of rising infrastruc-ture investment projects. Networth Capital has given a ‘Buy’ rating with a price target of Rs 180 against a CMP of Rs 146.

Lower expenses and increasing volumes improve operational efficiency for the company for 1QCY12, but looking ahead escalating freight and tax hikes are expect-ed to affect bottom line figures. Increased coal prices and upwards revision of wages at CIL will also add to the cost pressure. As such, Emkay has advised a ‘Reduce’ for Ambuja Cement with a price target of Rs 165 for a CMP of Rs 165.

BiRlA CoRPoRATion

A strong presence in the northern, cen-tral and western regions that is expected

to see a demand upswing works in Birla Corporation’s favor. Though the company is fighting a legal battle over mining rights, affecting its profit margins, the end seems to be in sight. Marwadi Shares & Finance (MSFL) has given a ‘Buy’ rating to the company, and a price target has been set as Rs 315 against a CMP of Rs 255.

With three percent YoY growth in cement volumes and a ten percent YoY increase in net realizations, Networth Capital has giv-en a ‘Buy’ rating to Birla Coporation. The price target has been set as Rs 292 against Rs 248.

heiDelBeRGCemenT inDiA

Higher than expected profit figures due to a 17 percent fall in expenditures has earned HeidelbergCement a ‘Buy’ rating from SPA Securities with a price target of Rs 50 against a CMP of Rs 269. A demand surge in the central and western regions resulted in a volume hike of seven percent QoQ, while revenue growth was pegged at 11 percent QoQ. Demand is expected to grow in Central and Western India where the company enjoys a strong presence.

inDiA CemenTs

Lower EBITDA and lower realizations compounded by higher costs and only two percent YoY growth in volumes has lead Emkay to give India Cements a rating of ‘Hold’ with a price target at Rs 101 against a CMP of Rs 87.

Strong operational efficiency is in the cards for India Cements with the commissioning of a 50 MW captive power plant in Tamil Nadu and another expected in Andhra Pradesh. The company is also considering captive coal mining in Indonesia. With the thrust on operational efficiency and with rising demand and pricing discipline con-tinuing in South India, India Cements is expected to do well. Karvy has endorsed the company with a ‘Buy’ rating, keeping the price target as Rs 119 against Rs 87.




CW Group Coal Week


RATinGs ChAnGesDATe BROKeR COMPANy RATING TARGeT PRICe CURReNT MARKeT PRICe

25-Apr-12 Finquest ACC Sell 1,150.00 1,226.00

23-Apr-12 emkay ACC Hold 1,247.00 551.10

17-May-12 Motiwal Oswal Securities Ambuja Cement Buy 200.00 143.00

10-May-12 Networth Capital Ambuja Cement Buy 180.00 146.00

23-Apr-12 emkay Ambuja Cement Reduce 165.00 165.00

8-May-12 MSFL Birla Corporation Buy 315.00 255.00

4-May-12 Networth Capital Birla Corporation Buy 292.00 248.00

17-May-12 SPA Securities Heidelberg Cement Buy 50.00 269.00

2-May-12 emkay India Cement Hold 101.00 87.00

27-Apr-12 Karvy India Cement Buy 119.00 87.00

26-Apr-12 ICICIDirect India Cement Hold 93.00 87.00

17-May-12 Angel Broking JK Lakshmi Cement Buy 79.00 --

10-May-12 SPA Securities Mangalam Cement Buy 193.00 132.00

17-May-12 Kotak Securities Shree Cement Accumulate 2,886.00 2,657.00

16-May-12 emkay Shree Cement Accumulate 3,000.00 2,659.00

25-Apr-12 emkay UltraTech Cement Reduce 1,290.00 1,437.00

25-Apr-12 GePL Capital UltraTech Cement Accumulate 1,595.00 1,414.35

25-Apr-12 Karvy UltraTech Cement Hold 1,566.00 1,466.00

Despite lower than expected net sales and cement volumes, EBITDA per ton rose 18 percent YoY due to an increase in reali-zation. ICICIDirect has recommended a ‘Hold’ for India Cements with a target price at Rs 93 against a CMP of Rs 87.

Jk lAkshmi

Strong realizations and 26.3 percent YoY growth in top line figures overcame a 21 percent YoY hike in freight costs and 23 percent increase in personnel expenditures to help JK Lakshmi get a ‘Buy’ rating from Angel Broking. The price target has been set as Rs 79.

mAnGAlAm CemenT

Mangalam Cement gets a ‘Buy’ from SPA Securities with a price target set at Rs 193 against a CMP of Rs 132. High operating costs played havoc with bottom line fig-ures as EBITDA dropped 15.3 percent over rising pet coke and freight costs. Howev-er, lower valuations, capacity expansion and reducing power dependency are set to improve the top line and bottom line fig-ures over the next two years.

shRee CemenT

Improved sales as well as higher cement prices helped Shree Cement improve rev-enues by 38 percent YoY during the fourth quarter. Bottom line figures also got a boost from other income sources that were greatly augmented by an additional Rs 370 million from earlier reserves that are no longer needed. Lower pet coke prices also had a positive impact on EBITDA figures. As such, Kotak Securities has revised its rating to “Accumulate” for Shree Cement. The price target has been set as Rs 2,886 against a CMP of Rs 2,657.

Emkay has advised an “Accumulate” for Shree Cement with a price target of Rs 3,000 against a CMP of Rs 2,659 because the company posted higher than expected EBITDA that increased 48 percent YoY to Rs 4.38 billion, backed by reduced power and fuel expenses, higher other income and a decline in pet coke prices. Looking ahead, FY 2013 is also expected to reap the benefits of power cost savings, improved product mix and volume growth.

ulTRATeCh CemenT

Higher cement realization and lower ener-gy costs led to a better than expected 15 percent growth in EBITDA that was fur-ther aided by higher income from other sources. Emkay has retained its “Reduce” rating for UltraTech with a price target of Rs 1,290 against a CMP of Rs 1,437.

Higher volumes, positive pricing trends and improved realization led to an 18.8 percent YoY increase in net sales in line with estimates. A demand surge is also expected with increased infrastructure projects, including the MIC (Delhi Mum-bai industrial corridor), though cement prices are likely to remain firm. As such, GEPL Capital has advised “Accumulate” for UltraTech Cement with the price target set at Rs 1,595 against Rs 1,414.35 CMP.

Karvy has recommended a “Hold” for UltraTech with a price target at Rs 1,566 against a CMP of Rs 1,466 on the basis of a strong performance that saw a rise in real-ization and profits while operating costs remained firm. Demand is also expected to pick up.

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CW Group Coal Week

MaY/JUNe 2012 45

PeRFoRmAnCe in The PAsT 90 DAysCOMPANy START DATe START PRICe eND DATe eND PRICe DIFFeReNCe % CHANGe

ACC LTD 3-Mar-12 1326.1 31-May-12 1140.2 -185.9 -14.02

AMBUJA CeMe 3-Mar-12 167.3 31-May-12 151.05 -16.25 -9.71

BIRLA CORPOR 2-Mar-12 278.5 31-May-12 242.9 -35.6 -12.78

CCL INTeR 3-Mar-12 38.2 31-May-12 68 29.8 78.01

CHeTTINAD CeM 2-Mar-12 550 31-May-12 805.5 255.5 46.45

DeCAN CeMeNT 2-Mar-12 158.45 31-May-12 180.1 21.65 13.66

HeIDeL CeM 3-Mar-12 38.1 31-May-12 31.6 -6.5 -17.06

INDIA CeMeNT 3-Mar-12 99.65 31-May-12 75.4 -24.25 -24.34

JK CeMeNT 3-Mar-12 146.15 31-May-12 146.5 0.35 0.24

JK LAKSHMI 3-Mar-12 60 31-May-12 61.15 1.15 1.92

KAKATIyA CeM 2-Mar-12 81.95 31-May-12 81.25 -0.7 -0.85

KALyANPUR Ce 7-Feb-12 25.9 14-May-12 31 5.1 19.69

KCP LTD 3-Mar-12 33.55 31-May-12 30.05 -3.5 -10.43

KeeRTHI 29-Feb-12 34 29-May-12 26.5 -7.5 -22.06

MADRAS CeM 3-Mar-12 138.45 31-May-12 136.65 -1.8 -1.3

MANGALAM CeM 3-Mar-12 136.15 31-May-12 125.05 -11.1 -8.15

N C L IND 3-Mar-12 48.2 31-May-12 43.05 -5.15 -10.68

OCL INDIA L 3-Mar-12 104.85 31-May-12 79.95 -24.9 -23.75

PANyAM CeMeN 2-Mar-12 70 30-May-12 61.45 -8.55 -12.21

PRISM CeMeNT 3-Mar-12 48.15 31-May-12 48 -0.15 -0.31

RAIN COMMODI 3-Mar-12 38.6 31-May-12 37.05 -1.55 -4.02

SAGAR CeM. 3-Mar-12 159.5 31-May-12 168 8.5 5.33

SHRee CeMeNT 2-Mar-12 2786.15 31-May-12 2420.75 -365.4 -13.11

ULTRATeCH CM 3-Mar-12 1402.85 31-May-12 1416.5 13.65 0.97

As a regular service to our readers, we will provide here a listing of the latest in stock performance, keeping you up to date with the latest in stock trends. Additional company stock performance information is available on our web-site: www.cemweek.com/india.

Stock performance of leading cement companies

STOCK PERFORMANCE




CW Group Coal Week


Most popular on CemWeek.comThe most-read stories on CemWeek over the past two months reflect the industry's mixed outlook. The India column shows the 20 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.

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inDiA GloBAl

India cement demand increases in March

Jaypee Cement launches new ad campaign

India cement prices soften on weaker demand

India cement prices softening

ACC, Ambuja report higher production in April

Ultratech Cement director resigns

Rough times ahead for India cement?

India cement sales slowed in April

India: JK Cement sees huge growth in capacity

Jaypee, SAIL inaugurate new facility in India

FLSmidth wins Middle east order

Foreign firms up India cement holdings

UltraTech Q4 earnings rise, but isues profit warning

Dalmia, GCC join WBCSD-CSI

India cement demand seen rising in Fy13

India: Court fines Jaypee for environmental violations

India to issue mining licenses for cement, steel projects

Fives acquires India’s CBL Combustion

HeidelbergCement India director resigns

Indian cement prices to remain pressured

Ultratech in talks to acquire Mozambique quarry

India cement makers seen posting lower profit margins

India cement industry posts growth

Firmer prices boost India cement makers Q1 haul

India competition authorities to rule shortly

egypt determined to issue new licenses to cover shortfall

Omani cement exports seen climbing this year

Report: Cemex likely to post narrower Q1 loss

Holcim says overcapacity eating at margins

Lafarge restructures operations, moves to cut debt burden

Italcementi awards Bulgaria production line to Sinoma

Votorantim plans to sell off Cimpor stake to Camargo

Tough choices for new Holcim chief

Turkey: Lafarge unveils new ‘green’ cement

Brazil’s CADe waiting on resolution of Camargo bid for Cimpor

Camargo formalizes asset swap offer with Votorantim

Malaysia’s yTL Cement orders new production unit

Lafarge to build new units in Algeria

Saudi: Najran cement to build new cement line

Intercement says changes coming at Cimpor

Sinoma operating income up 21.8% in Q1

Russia: Sinoma ties up with NMD Ural to build plant

Tensions high in Angola cement plant project

Brazil cement sales climb in April

China cement production grows at slower pace in Q1

Pakistani cement prices called ‘disproportionate’

Foreign sales boost Cementos Molins Q1 profit

Cementos Portland to return to profit by 2013

Pakistani cement prices called ‘disproportionate’

Foreign sales boost Cementos Molins Q1 profit




CW Group Coal Week

MaY/JUNe 2012 47

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* Subject to change; † Actual country data reported on different lags; S&H: Shipping and Handling for reports distributed in physical

hardcopy;Discounted group and corporate rates available upon request

Global Cement market Data ServiCe

Global Cement retail PriCe rePort

Global Cement traDe PriCe rePort

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

$475per user / year

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48 countries covered* 25 key markets 70+countries covered*† Individual countries & global Global scope, ex-China

■ Cement consumption ■ Cement production ■ Cement trade and/or ■ Select cement prices

■ Actual retail prices per bag ■ Range of prices and

avareges ■ Gray and/or white cement ■ Weekly price data points

■ Gray, white and / or clinker ■ Monthly import prices ■ Monthly export prices ■ Regional price indices ■ Monthly trade volumes

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