Business success is measured by financial health

Business success is measured by financial health

Government initiatives on infrastructure through direct investment or private participation continue to be the major thrust for a developing economy like India and the proposed investment of one trillion US dollars in the infrastructure area during the 12th Five Year Plan brings cheers to the cement industry, says
Maurizio Caneppele, Managing Director, Zuari Cement.
How would you describe the growth of Zuari Cement after you have taken over at the helm?
Zuari Cement has shown a steady progress in terms of market expansion and volume growth since the early 2000s. Italcementi Group entered the Indian market in January 2001, through a 50/50 joint-venture with KK Birla Group in Yerraguntla cement plant (2 mn tonnes per year), located in southern Andhra Pradesh. Zuari Cement then took over another plant, Sri Vishnu Sitapuram, situated in the north-eastern part of Andhra Pradesh. Finally, in May 2006, Italcementi Group went on to acquire full control of the company with a capacity of 3.5 million ton per year. In 2008, a 43 MW captive power plant was set up at Sitapuram.
In 2010, the production capacity was further expanded at Yerraguntla plant by installing a second burning line of 2 million tons of clinker and adopting top-of-range technical solutions, with particular focus on energy performance. A one million ton grinding centre at Chennai was commissioned early in 2011. Zuari Cement has now reached a cement capacity of more than 6 million tons.
Any business success is of course measured by financial health. Over the last decade, our turnover has grown at 16 per cent CAGR, while we have scored a profitability in line with the best competitors. So yes, we have witnessed quite an active growth scenario within the organization.
What factors are driving growth at Zuari Cement? What would be growth drivers in future?
We believe that growth relies on a few key driving factors such as demand, brand power, control on production costs and a definite commitment to sustainability. At Zuari Cement, we have effectively prioritized all these factors, as our consistent growth shows. While constant efforts are on to optimize the cost of production, our commitment towards sustainability is definitely in line with the Group's strong focus worldwide.
Going by the current trend and market scenarios, the Indian cement market is projected to grow by around 9 per cent CAGR over the next five years, primarily led by demand from infrastructure and housing segments.
Our brands are relentlessly energized through the innovative marketing efforts of our team. Zuari Cement has been recognized earlier as a "Master Brand" and more recently confirmed as a "Power Brand".
What is your share of the South Indian market and how do you plan to increase it?
Currently, our market share in South India is around five per cent and we are targeting to keep this level in the medium term, given the high number of new plants already in the pipeline. Our traditional market comprises the five southern states, with a growing presence in Maharashtra and Orissa.
We are planning to strengthen our industrial network via a greenfield plant in northern Karnataka, which will help us expand further into Maharashtra. We are also considering one or more grinding units to better serve our market.
What needs to be done by the Government for development of the cement industry?
Government initiatives on infrastructure through direct investment or private participation continue to be the major thrust for a developing economy like India. The proposed investment of one trillion US dollars in the infrastructure area, as detailed in the 12th Five Year Plan, brings cheers to the cement industry, giving a primary role to the cement companies to contribute to the growth curve.
What are the innovations and product development at Zuari Cement? What new products are you planning to introduce?
Innovation is what we live by and innovation is what drives us. Our Group mission is "to create value in the building materials sector through the innovative and sustainable use of natural resources for the benefit of our communities and clients". Among the most ambitious plans for 2013 are the production and marketing of two among Italcementi Group's innovative products: TX Active Cement - a revolutionary ecological product, dust and CO2 "eater" - and Transparent Cement, which was presented with great success at the 2010 Shanghai Exposition. These products will reinforce the image of Zuari Cement and Italcementi as an innovative and technologically superior producer.
What are the issue faced by cement companies? How do you tackle those issues?
Cost control remains the main issue of concern, with increase in power, fuel, raw material cost as a great challenge. Further issues, like effective capacity utilization and talent retention, add up to the present day's woes faced by many cement companies. We constantly identify opportunities and implement strategies to tackle these issues.
Where do you see Zuari Cement in the next five years?
Italcementi Group is strongly committed to the Indian market, where is strengthening its presence through organic and in-organic expansions. In 2011, we have reached an agreement with Zuari Industries for the acquisition of 74 per cent of Gulbarga Cement. The company is developing the project of a three million ton per year cement plant in North Karnataka, that - beside direct cement despatch - will supply clinker to a large grinding unit that we are going to erect at Solapur in Maharashtra. Therefore we feel we are setting important milestones for the continuous enhancement of a brand committed to a sustainable and effective growth.
What is your opinion about markets for the cement industry in Tier II and Tier III cities?
The tier I/metro cities still are top demand generators; however, the infrastructure push along with local spend at the tier II/III cities makes these markets more and more lucrative for future consumption and growth.
How do you respond to needs of the industry to 'go green' and look for more sustainable sources of energy?
The new line at Yerraguntla is equipped with the best available technology; new high-performance bag-filters have been installed also on the two other old kilns, to bring dust emissions well below the most stringent norms. We are investing large resources in projects that target growing percentage of alternate fuels, starting from biomass, while we continue to expand the utilization of available additives like fly-ash and slag, to preserve natural resources. Italcementi Group focuses on the continuous search for sustainable production processes and innovative solutions to meet the growing market demand for eco-friendly applications and products.

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