Looking for strong partnerships
THE Indian cement industry today accounts for about seven per cent of the global production and is the second largest cement producer in the world. It has made rapid strides, not only in terms of capacity addition but also in producing world-class quality cement from state-of-the-art technology. The policy paralysis which dragged down the GDP growth from over 8 to under 5 per cent, has led to a crisis in confidence. Further inflation, input costs, high interest costs have compounded the weaknesses, leading to a fall in demand.It is in this context, the ASAPP Media Group created a niche platform for different stakeholders to come together, at the Indian Cement Review's meet on 23 April at Hotel Orchid, Mumbai.
Delivering the welcome address, Pratap Vijay Padode, Editor in Chief-Infrastructure Today & Managing Director-ASAPP Media Information Group, said, "The cement industry of India, the second largest in the world, has a current capacity of 324 mtpa and operates at 75-80 per cent utilisation. There are 139 large cement plants and over 365 mini cement plants in India, with currently 42 players in the industry.
It is expected to add 30-40 million tonne per annum of capacity in 2013. In India, cement demand emanates from four key segments -housing, accounting for 67 per cent; infrastructure for 13 per cent; commercial construction for 11 per cent and industrial sector for 9 per cent." According to India Ratings & Research, a part of the global ratings agency Fitch, capacity utilisation at cement plants in India fell to 71 per cent in fiscal year 2012-2013 from 89 per cent in 2009-2010, and is expected to be just 75 per cent in 2014-2015, Pratap pointed out. He further sets the ball rolling for the future with his characteristic positive outlook. "I end with the quote that it is darkest before dawn. The worst is over and just as you cannot see the crack of dawn even one hour before it appears and all appears bleak and dark, remember the dawn awaits us."
Delivering the keynote address on the prospects and challenges of the Indian cement industry, NA Viswanathan, Secretary General, Cement Manufacturers' Association, said that the cement industry has been confronting severe problems on adequate demand, availability of input materials and logistics support, and the three major factors indispensable for a sustainable growth of any industry. He rued the fact that the sharp drop in capacity utilisation has been ironically perceived by the Competition Commission Watchdog as a step towards encouraging cartelisation and has therefore, severely penalised the CMA and a few cement manufacturers for no fault of theirs.
He said though the cement industry has excelled in areas which are within its control, the constraints and limitations of the main infrastructure pillars of support needed, which are mainly in the public sector and under the domain of the government, namely coal, transportation, railways and power; have been severely impacting the growth of the industry.
The current economic slowdown has inevitably left a severe dent on the growth of the cement industry as well. The decline of the industry from an average growth of around 8-9 per cent in the last couple of years to the present low of 5 per cent has shown no sign of improvement in capacity utilisation, which is still a major cause of concern. More specifically, although the Government of India has recently moved ahead with reforms needed to arrest the down-trend in the economy, what is today needed is the timely execution of the policies with adequate funding with regard to infrastructure sectors like housing, irrigation, roads, and ports, airports, for the sustained and inclusive growth of the economy, according to Viswanathan. He also said that the Working Group on Cement Industry for XII Plan in its Report submitted to the Planning Commission, had made a host of recommendations to various Departments/Ministries for the revival of the growth of the cement industry after critically examining the whole gamut of the concerned issues.
The conference gathered in experts from various knowledge domains to deliberate on myriad topics: Srinivasan Raman, Head-Technical Services, Essar Oil, spoke on the use of alternate fuel, especially the importance of petcoke as an alternate fuel, while Navin Bhagawati, Managing Director, Bhagawati Associates, shared his decades-long experience on setting up greenfield projects, Ajay Hans, Managing Director, Petron Engineering, provided an insight into efficient project management leading to a high success rate of project completed on time. Ganesh Kamat, Technical Adviser, Ganaka Engineers Architects, emphasised the importance of green and sustainable construction technology; Anuj Maheshwari, Technical Head - RMC, Ultratech, detailed the emerging trends in the use of RMC and how a progressive shift from prescriptive use of concr¡ete to performance and application-based use can bring greater sustainable construction and Gautam Mukund Padukone, Design Head - EPC, L&T Construction, spoke about the development and use of environmental friendly binders, especially energetically modified cement. Rajive Mehta, Chairman, Committee on Railway Matters, CMA and Executive Vice president (logistics), UltraTech, focused on the importance of cement terminals to facilitate use of bulk cement and Capt Yogesh Kundra, Deputy Executive Director-Supply Chain, Dalmia Cement, specifically focused on the new trends to optimise the cost of logistics. The CEO Round Table summed up the proceeding with major emphasis on the need to come onto one platform and discuss and find solutions to pressing issues like spiralling cost, the logistical and other related issues.
KK Taparia, Chief Executive Officer & Adviser, Murali Cement, Mahesh Mudda, Executive Director & Chief Executive Officer, New Consolidated Construction Co and Jacques Van Niekerk, Head-Supply Chain Ambuja Cement, shed light on various aspects of the industry and stressed what needed to be done on a war footing. "Once we have an approach of partnering, understanding each other's needs and requirements, and the issues faced, rather than getting into legal battles, I think the road ahead will be smoother. Whether it is issues of cartelisation or fluctuating prices, it is better that we sit together and sort out the differences and fight together, even if it is the government we have to fight, for the healthy growth of the industry," said Mudda.
Van Niekerk supported the view, saying, "We need strong partnerships, and we need a strong political will to effect the change that we are looking, not only for the industry but for the entire nation, which deserves the change." According to him, what customers in the future will be demanding from the industry, will be increasingly complicated products, more complicated solutions to cater to their specific needs and requirements. "Cement manufacturers will need to come out with tailor-made solutions pertaining to the specific needs of the customer that calls for more capital and a shift in the thinking.'' He added, "From the supply chain perspective, I think customers in India deserve a service level substantially better than what is being offered to them today. Instead of looking at the supply chain as a cost-centre, it should be viewed as a generator of values and that could add the topline."
Taparia stressed on the importance of price stabilisation for the cement industry to grow. He said, "The supply demand stabilisation is one of the important areas that the cement industry needs to look into. Instead of taking unilateral decisions, it is imperative to have a collaborative approach on how to bring about price stability."