Focus on technology
The cement companies have had a good season in 2011-12. The year started on a challenging note, as the industry was plagued with a capacity glut, slowing demand and rising input costs. But the sector has sailed through the period with sustained price rises. A pick-up in demand, due to increased activity before the state elections, has helped indeed. As a result, the fourth quarter has been a good one for the top five companies. Analysts expect all-India consumption to have grown 10 per cent to 64 million tonnes (mt) in the fourth quarter.
Stock broking firms expect consumption for the full year (2011-12) to settle around 225 mt, a growth of seven per cent. Strong demand from central, western and northern India has helped the sector clock healthy double-digit volumes in these regions, even as demand in the south and east remained muted. In order to keep up with the rapid pace of demand, the cement industry needs to get highly mechanized, adopting the latest technological equipments. This is where cement machinery manufacturers can make a high degree of difference by supplying the industry with modern machines.
Modern cement plants work on the principle of zero downtime, high product quality and better output with minimum energy consumed per unit of cement production. Recent projections for the next three years estimate that the cement industry will grow at a compounded annual growth rate (CAGR) of around three per cent. This implies that cement production in India is set to reach 303 million mt in 2014. Keeping in mind the present degree of utilization, the growth rate for the cement machinery is seen at roughly eight per cent per annum. In order to optimize production and minimize losses, the cement industry needs to install machinery which is in sync with the latest technology. Foreign Direct Investment (FDI) of up to 100 per cent is allowed in the industry under automatic route as well as technology collaboration. The industry is de-licensed and import of old and new machinery too is allowed free.
As compared to bituminous roads, concrete roads are proving to be a viable alternative in resource strapped countries like India. Though the initial cost of a concrete road is higher, its life cycle cost is around 20-25 per cent lower as compared to bituminous road. After 20 years, the life cycle cost of a bituminous pavement is 19 per cent higher than a concrete pavement. There is no maintenance required for a concrete road over a period of time. Hence, over the long term, concrete roads will prove to be a cost-effective alternative to bituminous roads for a long-lasting well connected road network. Especially in the case of the Pradhan Mantri Gram Sadak Yojana, concretizing will at least ensure a maintenance free connectivity for a longer duration. Technology, indeed, will make a difference to the cement industry in times to come.
This issue, do not miss reading "In Conversation" with Richard Deng, Managing Director, Sany Heavy Industry and the spotlight on Sanghi Industries.
Please send in your feedback/letters to firstname.lastname@example.org