Ready to tap demand

CEMENT SECTOR OVERVIEW

India is going ahead with its plan to build a robust infrastructure. The focus is on building high speed rail networks, manufacturing zones, dedicated freight corridors, mass transit systems, expressways, expansion of airports and ports infrastructure, water and wastewater treatment plants. The government of India with its proactive policies are leading to eliminate roadblocks and facilitate investments in substantial and long-term infrastructure projects. The country has already taken up a massive project to construct 100 Smart Cities. Increased infrastructure spending will almost certainly create a big opportunity for India’s cement industry. The construction of houses under PMAY is further boosting the demand for Cement in India. India is the world’s second-largest cement producer in the world, accounting for more than 7% of the world’s installed capacity. The cement industry is an important segment of the construction and infrastructure sector. Sandeep Sharma takes a look at the Cement sector growth in India.

BRIEF HISTORY
In 1914, the first cement plant opened in Porbandar, Gujarat, with a capacity of 10,000 tonnes. With the implementation of partial decontrol in 1982, the industry grew at an exponential rate, eventually reaching comprehensive decontrol in 1989 and delicensing in 1991. Indian cement plants are now the most energy-efficient and environmentally friendly in the world, and are comparable to the best in the world in all respects, whether it is kiln size, technology, energy consumption, or environmental friendliness, thanks to massive modernisation and assimilation of state-of-the-art technology.

GROWTH DRIVERS
The housing sector is a major driver of cement industry expansion. The sector is estimated to consume around 60% of all cement produced in India. The non-trade industry is also boosting demand, thanks to the resumption of building activity on major infrastructure projects such as highways and metros during the lockout. The construction sector has been revived, according to the Economic Survey 2021-22, due to increased government infrastructure spending and an acceleration in the housing cycle. As a result, steel consumption and production, as well as cement consumption, have returned to pre-COVID levels (Figure 1). According to RBI and prominent real estate companies’ data, the Indian residential real estate industry would see a substantial resurgence in 2021 in terms of sales, prices, and new launches (Figure 2 and 3).

FACTS AND FIGURES
India’s overall cement production capacity was around 545 million tonnes (MT) in FY20, according to IBEF. The private sector owns 98 percent of total capacity, while the state sector owns the balance. Around 70% of India’s total cement production is produced by the top 20 businesses. South India has the highest production capability of the five zones in terms of output, and accounts for around 33% of total cement production.
Cement and gypsum products received US$ 5.28 billion in Foreign Direct Investment (FDI) between April 2000 and June 2021, according to data released by the Department for Promotion of Industry and Internal Trade (DPIIT). India’s cement, clinker, and asbestos exports were US$ 627.7 million in FY21, according to the Chemicals & Allied Products Export Promotion Council (CAPEXIL).
According to a recent research report by ICRA, the cement sector is expected to record an 18-20 per cent volume-based growth and even surpass pre-COVID levels by 6 per cent in FY2022. All-India cement production is higher by 8% YoY at 87 million MT in Q3 FY2022 and by 26% YoY at 256 million MT in 9M FY2022. High input prices due to inflationary pressure, on the other hand, are causing operating margins to fall by 440-480 basis points to roughly 19.8-20.2 percent in FY2022. The cement production is expected to grow by 7-8% in FY2023 to around 382 million MT.
In January 2022, the combined Index of Eight Core Industries was 144.4, an increase of 3.7 percent (provisional) over the Index of January 2021. In January 2022, the output of Coal, Natural Gas, Refinery Products, Steel, Cement, and Electricity increased compared to the same month the previous year. The Index of Eight Core Industries’ final growth rate for October 2021 has been amended to 8.7%. ICI grew at a rate of 11.6 percent (P) from April to January 2021-22, compared to the same time the previous fiscal year. Cement production increaesd by 13.6 percent in January 2022 over January 2021, according to data issued under the Index of Eight Core Industries. During April to January 2021-22, its cumulative index increased by 24.6 percent over the same period the prior year.

GOVERNMENT INITIATIVES
The Government of India is making concerted efforts to build a robust infrastructure which would act as a catalyst for overall economic development. In the Budget 2022-23, the Centre has allocated ₹48,000 crore for completion of 80 lakh houses in 2022-23 under PM Awas Yojana; ₹60,000 crore allocated to cover 3.8 crore households in 2022-23 under Har Ghar, Nal se Jal scheme (Piped water supply scheme). The Government intends to mobilise ₹20,000 Crore National Highways Network expansion. The overall National Highways Network is to be expanded by 25000 Km in 2022-23. The Contracts for implementation of Multimodal Logistics Parks at four locations will be awarded through PPP mode in 2022-23. Apart from this, 100 PM GatiShakti Cargo terminals for multimodal logistics will be taken up for development during the next three years. The contracts for 8 ropeway projects of 60 Km length will be awarded in 2022-23 under National Ropeways Development Program, Parvatmala. These projects will be implemented on PPP mode. All these development initiatives include Construction as the main activity which is primarily dependent on the availability of Cement, thus translating in to increase in demand for the same.

GREEN CEMENT
Green cement, which includes fly ash cement, slag cement, geopolymer cement, and other cements made using alternative raw materials, is expected to develop at a 15 percent compound annual growth rate (CAGR) between 2018 and 2023, according to Market Research Future. Fly ash cement is expected to develop at the fastest rate in the world, according to Market Research Future, due to its widespread availability. Its analysis stated that mergers, joint ventures, and acquisitions will be among the cement industry’s growth plans.
According TechsciResearch report, due to considerable growth in the building, construction, and infrastructure industries, which drives demand for Green Cement as a result of high emissions from Portland cement, the India Green Cement Market is expected to rise rapidly by 2023. The increased use of Green Cement in residential and commercial construction, as well as expanding urbanisation and industrialization, will drive market expansion. The increase in awareness and adoption for green and sustainable buildings is likely to drive future growth in the green cement segment.

PROJECT OPPORTUNITIES
Some of the prominent projects and announcements pertaining to the Cement sector are listed below:

• The Ministry of Environment, Forest and Climate Change has given Shiva Cement, a subsidiary of JSW Cement, permission to expand its cement factory in Kutra, Orissa, to 3 million tonnes of clinker and 2 million tonnes of cement. A 12MW waste heat recovery power generation system will be installed as part of the project.
• Saraswati Power & Industries Private Limited plans to setup a Greenfield Cement Plant of 2.50 MTPA Clinker & 3.50 MTPA Cement (OPC/PPC) at Tangeda, Vemavram & Chennayyapalem Villages, Dachepalli & Machavaram Tehsils, Guntur District, Andhra Pradesh.
• Jai Shree Krishna Cements plans to undertake the expansion of existing Clinker Grinding unit from 50 TPD to 150 TPD, located at Plot No. G-26(B) and G-27, RIICO Industrial Area, Sotanala, Tehsil Behror, District Alwar, Rajasthan.
• Calcom Cement India Limited plans to undertake the expansion of the Clinker Production Capacity from 0.98 MTPA to 1.52 MTPA located at 16 Kilo – Langcherui (Jamunanagar), Tehsil: Umrangso, District: Dima Hasao, Assam.
• Adani Cement Industries Limited plans to setup Cement manufacturing unit at Bharuch, Gujarat. The plant will have a capacity of 2000000.00 TPA.
• Calderys India Refractories Limited plans to manufacture portland cement, luminous cement, Slag cement and similar hydraulic cement at Katni, Madhya Pradesh.
• Jaykaycem (Central) Limited plans to undertake the expansion in Clinker Production Capacity from 5.28 Million TPA to 6.6 Million TPA at Panna, Madhya Pradesh.
• Wonder Cement Limited plans to setup Integrated Cement Project: Clinker – 8.0 MTPA (2 x 4.0 MTPA), Cement – 5.0 MPTA (2×2.5 MTPA), CPP – 40 MW (2 x 20 MW), WHRS – 40 MW (2 x 20 MW) in phase manner along with Railway Siding, located at Village Parewar, Tehsil & District Jaisalmer, Rajasthan.
• Deccan Cements Limited is seeking the expansion of Cement Plant through increase in clinker production capacity from 1.7 to 3.2 MTPA, cement production from 1.8 to 4.0 MTPA at Mahankaligudem Village, Palakeedu Mandal, Suryapet District, Telangana.
• UltraTech Cement Limited plans to undertake expansion in Cement production capacity of existing Stand-alone Clinker Grinding Unit from 2.0 to 2.5 MTPA, located at Village – Nalheri Dehviran, PO – Nalhera Anantpur, Tehsil – Roorkee, District – Haridwar, Uttarakhand.
• Arcelor Mittal Nippon Steel (AMNS) plans to set up a a 18.75 million tonnes per annum of cement plant at Mahakalapada block in Kendrapara district.
• By expanding its footprints in northern and central India, JK Cement aims to increase production capacity to almost 23 million tonnes per annum in the next two years, up from 15 million tonnes as of September 2021. The company is building a new cement plant in Hamirpur, Uttar Pradesh, with a capacity of close to 2 MT per year as part of its expansion plans. The business has set aside ₹2,970 crore for capital expenditure to increase capacity at the Panna and Hamirpur projects by 2 MT each.
• Dalmia Bharat intends to raise its cement capacity to more than 48 million tonnes (MT) by the end of fiscal 2024, up from 35.9 MT in January 2022, with an expenditure of ₹9,000 crore in new plants, expansion of existing facilities, acquisitions, and debottlenecking of production. The company has secured property in Tamil Nadu’s Chennai and Tuticorin for two grinding plants, and is in the final stages of securing land in Bihar for a new project as of Jan 2022.
• The Ambuja Cements unit of the Holcim Group has announced an investment of ₹3,500 crore to expand its current grinding operations in West Bengal at Sankrail and Farakka, as well as a greenfield development in Bihar at Barh. In addition, the business is considering expanding a 3.2-million-tonne clinker facility in Bhatapara, Chhattisgarh.
• JSW Cement has signed an agreement with Punjab Renewable Energy Systems Private Limited to utilise agricultural waste as biomass energy in its manufacturing processes. JSW Cement will employ agri-waste as a source of energy to minimise its reliance on coal and reduce carbon emissions.
• Shree Cement has started a trial run of its new Clinkerisation Unit (Kiln -3) in Baloda Bazar, Chhattisgarh, near Raipur. This clinkerisation unit will supplement the Company’s clinker supply to its Eastern grinding units. Along with the kiln, the company has installed a Waste Heat Recovery Power unit.
• The Mukutban Integrated Cement Plant of Birla Corporation Limited’s wholly-owned subsidiary RCCPL has begun clinker dispatch. The factory has a clinker capacity of 2.68 million tonnes per year, a cement grinding capacity of 3.9 million tonnes per year, and a captive thermal power plant with a capacity of 40 MW.

FUTURE OF CEMENT SECTOR IN INDIA
The cement sector has enormous expansion potential from the supply side as India has abundant and high-quality limestone reserves throughout the country. Infrastructure spending, along with strong rural consumption and a long-awaited revival in the urban housing sector, is expected to be the main drivers of demand. Due to the growing demand from sectors such as housing, commercial development, and industrial construction, the cement industry is predicted to reach 550-600 MTPA capacity by 2025. The government is undertaking augmentation of the railway freight handling capacity through setting up Dedicated Freight Corridors which could help in transporting cement at lesser cost. Waste heat recovery systems (WHRS), which are being set up by many of the cement firms, are likely to benefit cement makers. A WHRS can recycle up to 15-20% of the kiln’s waste heat, resulting in cost savings for the firms. For every 1 million MT of clinker generated, this may efficiently produce 4-5MW of electricity. The keys to cementing growth in the coming years are digitization and sustainability.

*Image used in this article is for illustration only

Note: The above-mentioned article covers India’s Cement sector overview. This was first published by us in our ProjectX India | 1st April 2022 edition. Each issue of ProjectX contains information on new projects, ongoing projects, contract award, commissioned projects, and e-procurement opportunities. Buy our latest or archival issues by clicking here…

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