Do you still see a preference for OPC in certain segments of the cement market such as institutional or in certain geographies? How do you deal with these national preferences?
While there is an improvement in the acceptance of blended cements, there are certain segments like RMCs, select infrastructure projects, where the preference continues to be for OPC due to the cost economics and the flexibility available to the contractor. We continue to work with our customers, doing trials with our blended products - PSC, CHD and PCC to get customers to move to blended cements which are more environment friendly and more durable in the long run. We also push GGBS in the RMCs to get slag presence in this segment, from where we can later evaluate the opportunity to supply a slag cement product specific to the RMCs if the cost economics work out in favor of it.
What is your company's overall product mix - OPC, PPC and PSC? To what extent is this mix is influenced by market preferences and to what extent by availability of fly ash and/or slag?
JSW Cement is India's leading domestic producer of green cement. The overall product mix is primarily based on Portland Slag Cement (PSC) and its variants. We also have a couple of variants of high grade blended cements - Concreel HD (CHD) and a composite cement - Comp Cem, (PCC) both of which have high one day strengths and faster setting, comparable to other competitive OPC cements available in the market. The mix is largely influenced by the market preferences and we continue to educate our customers to move towards a greener variant of blended cement which is our PSC, CHD and PCC.
Having said this, there are also some key projects where we supply OPC, which is more in projects where we want to have a presence and where we feel there is a long term opportunity with such customers.
How do you view the historical growth rates of PSC & PPC in your markets? How do you project this growth in the coming five years?
The blended market space has been expanding over the last few years with many companies trying to conserve the lifetimes of their mines and also to get into a more environmentally friendly product space. JSW Cement, the largest manufacturer of Portland Slag Cement (PSC), has chalked out an ambitious expansion plan to enhance its production capacity in the coming years. JSW currently produces green cement variants - PSC, CHD & PCC at our manufacturing facilities - Vijayanagar (Karnataka), Nandyal (Andhra Pradesh), Dolvi (Maharashtra) & Salboni (West Bengal) units to service the demand in the South, West and Eastern regions.
In the last year, our PSC has grown by more than 30 per cent, and the premium variants much higher on a year-on-year basis. We are on the process of commissioning a new greenfield 1.2 million tonnes per annum new state-of-the-art plant in Jajpur, Odisha. We expect to optimise our production there by December 2019.
We are planning to double our cement production capacity in the next few years to meet the growing demand for "Green" Cement in the eastern region by a combination of brownfield expansions at our new facility at Salboni, West Bengal and Shiva Cement, Odisha. These projects are expected to be commissioned in various phases until 2023. We are also debottlenecking our plants in South and evaluating opportunities for a GU in Tamil Nadu.
What are the applications or regions where you would recommend use of PPC/PSC to your customers and why?
PPC and PSC both are environment-friendly cements as they use industrial bye-products as an input. PPC classically uses fly ash and PSC uses slag generated in the blast furnace of steel plants.
With a better impermeability, lower heat of hydration and improved resistance to chemicals PPC and PSC cements are largely used in concreting applications. PPC offers good resistance against sulphate attack and hence, it is used in hydraulic structures, marine structures, construction near seashores, dam construction, etc. While with improved workability, higher strength and better chemical resistance PSC is a superior product and is usually lighter in color than OPC. PSC is preferred in applications where the building is exposed to high moisture, salt (chloride or sulphate) or chemicals. For example, marine structures, sewage treatment-related buildings, etc. We also offer PCC- Composite cement - which offers the best of both PPC and PSC and recommend this to our channel, influencers and associated IHBs and contractors.
We have heard a lot about peculiar customer perceptions about colour and smell of cement in some markets? Have you experienced this phenomena? Are these related to presence of slag/fly ash in cement? How do you deal with such idiosyncratic ideas?
We have come across geographies exhibiting a color preference, like for example the South - particularly Andhra Pradesh and Telangana - wanting a darker shade of cement - which they associate with better or higher strength cement. Partly this is also due to the historic availability of OPC in these markets which has attuned the customer preference to the darker shade.
A diametrically opposite view has been observed in the eastern markets where the lighter shade cement is associated with better quality and the premium cements there be it from JSW or any other brand is always a shade lighter than across the rest of the country. This also can probably be due to the availability of slag based cements in the eastern markets traditionally and it being promoted by the bigger brands there like Lafarge, ACC, etc.
Recently BIS have permitted composite cements to be manufactured and sold in India. What is your strategy for introducing this product in the market and what are the manufacturing and marketing challenges involved in this?
We welcome BIS's decision to permit manufacturing and selling of composite cement in India. In fact, we have already introduced composite cement - which is a blend of fly ash and slag based cement- offering the best of both PSC and PPC - to our customers in Karnataka and more recently in Salboni. We also plan to make it the core product from Jhajpur, our upcoming plant in Odisha.
The feedback from the markets where we have introduced this product, has been very positive and we observe good repeat purchases at our dealer outlets. The key influencers like engineers and contractors who understand the product and its strengths also have given favourable recommendations to this product.
The supply chain of both fly ash and slag have now become an integral part of cement manufacturer. In the light of this how do you see the current demand and supply scenarios of these two commodities - Fly ash and slag? What are the price movements of these 2 commodities? Are you recommending any regulatory help in ensuring more liberal supply of fly ash?
Most cement manufacturers have started moving towards blended cements over the last few years and with this trend continuing, both fly ash and slag will become more and more important in cement manufacturing. With the capacity additions in East, we already observe an increase in slag cost there, and this has resulted in the overall cement prices moving up in the East.
The slowdown in thermal capacity addition could result in availability constraints for fly-ash in the long term, which could affect some of the manufacturers who have only PPC as their blended cement offering. The outlook is relatively better for Slag considering that most Steel manufacturers have shown an inclination to add capacity going ahead.
- BS SRINIVASALU REDDY