Displaying items by tag: Shree Cement
Shree Cement orders vertical roller mills from Gebr. Pfeiffer
17 November 2020India: Shree Cement has ordered two vertical roller (VR) mills from Germany-based Gebr. Pfeiffer for the upcoming clinker line at its Raipur cement plant in Chhattisgarh. The supplier says that one of the mills will grind raw materials and the other will grind coal.
A MVR 6000 R-6 type raw mill will grind 800t/hr of raw material and have a drive power of 8700kW. Gebr. Pfeiffer said, “The grinding rollers of this mill can be equipped with roller tires for raw meal grinding as well as for cement grinding, provided that they have been designed according to the same force module. This saves money, because the identical components of rollers, tensioning system, roller arms, etc. mean that customers can reduce their spare parts inventory, since the same spare parts can be used for a raw meal mill and for a cement mill.” The mill will be equipped with an SLS 6000 VR high-efficiency classifier.
A MPS 2800 BK type mill will be used to grind coal with a capacity of 28t/hr, a drive power of 720kW and be “equipped with the latest design of the integrated SLS 2900 BK high-efficiency classifier optimised for MPS mills.”
The supplier said, “While the core components of the mills as well as the drive units will be supplied by Gebr. Pfeiffer from Europe, the Indian subsidiary Gebr. Pfeiffer (India) will provide components such as the mill and classifier housings, the steel foundation parts as well as internal parts of the classifiers.”
Shree Cement announces Chhattisgarh clinker unit plans
29 September 2020India: Shree Cement has announced that it plans to establish a US$135m clinker production unit in the state of Chhattisgarh. The company has said that the plant will become operational in mid-2022.
Shree Cement to sponsor East Bengal Kolkata
03 September 2020India: Shree Cement has signed a sponsorship deal with East Bengal Kolkata, one of two Kolkata, West Bengal-based football teams that compete in the I-League, the top flight of Indian football. The Economic Times newspaper has reported that the company has promised to let the club retain its ‘iconic red-and-yellow jersey’ and crest.
Shree Cement suspends power plants due to lack of demand
17 August 2020India: Low demand for power due to the 25 March 2020 – 31 August 2020 nationwide coronavirus lockdown has caused Shree Cement to suspend some of its power plant operations due to a lack of buyers. The Business Standard newspaper has reported that 300MW of Shree Cement’s 650MW power generation capacity produces power for sale to other users on the national grid. Joint managing director Prashant Bangur said, “Owing to the lockdown, power demand was impacted and some of our power capacities were shut. Power demand has not completely recovered yet. Right now, power plants are shut because there is no demand; viability is the second part.”
The first stage of lifting lockdown was announced on 1 June 2020.
Shree Cement’s profit grows by 2.1% to US$49.6m
11 August 2020India: Shree Cement recorded a profit of US$49.6m between 1 April 2020 and 30 June 2020, up by 2.1% year-on-year from US$48.6m in the corresponding quarter of the previous financial year. Sales fell by 23% to US$311m from US$406m due to the impacts of the coronavirus lockdown, which ended during the quarter, on cement demand.
Shree Cement is the sector’s best workplace
25 June 2020India: The Great Places to Work Institute (GPWI) has awarded the title of ‘Best Place to Work’ in the cement and building materials sectors to Shree Cement. India Blooms News has reported that Shree Cement is also among the GPWI’s 100 Best Places to Work in all sectors. The certificating body reached its conclusions by collating responses from 2.1m employees of over 1000 companies in 21 different industries across India.
Update on India, June 2020
03 June 2020Under the current circumstances it’s not surprising to see how much Indian cement production fell in April 2020. Like many other countries, its lockdown measures to combat the coronavirus outbreak suppressed industrial output. Yet seeing an 86% year-on-year fall in the world’s second largest producer is shocking. Cement production declined to 4.1Mt from 29.2Mt. Further data shows, as part of the Indian government’s eight core industries, that steel and cement production suffered the most. Coal, crude oil, natural gas, petroleum refinery products, fertilisers and electricity generation all fell by far less.
Graph 1: Change in Indian cement production year-on-year (%). Source: Office of the Economic Adviser.
By comparison in China monthly cement output only fell around 30% at the peak of its outbreak. The difference is that China implemented a graduated lockdown nationally, with the toughest measures applied in Wuhan, the place the outbreak was first identified. As we reported in April 2020 demand for cement in Wuhan had fallen by around 80% at the time its lockdown ended. Production and demand are different, but India’s experience feels similar except that it’s on a national scale. The last time the country had a dip in cement production recently was in late 2016 when the government introduced its demonetisation measures and dented cement production growth rate (and national productivity) in the process.
UltraTech Cement, Orient Cement, Ambuja Cement, India Cement, Dalmia Bharat, JK Lakshmi Cement, Shree Cement and others all suspended operations to varying degrees in the first phase of the lockdown in late March 2020. Operations of industrial plants in rural areas was then cleared to restart in mid-April 2020, although subject to local permissions and social distancing rules, as the country’s lockdown zones took shape. All of this started to show in company results towards the end of March 2020 as sales started to be hit. The worst is yet to filter through to balance sheets.
March 2020 was a particularly bad time for the government to shut down cement plants because it is normally the month when annual construction work peaks. Cement production usually hits a high around the same time. The monsoon season then follows, reducing demand, giving producers a poor time to restart business. Credit ratings agency Care Ratings has forecast that capacity utilisation will drop to 45% in the 2020 – 2021 financial year. This follows a rate of 65 – 70% over the last six years with the exception of 2019- 2020, which was dragged down to 61% due to lockdown effects. On top of this labour issues are also expected to be a major issue to the sector returning to normality. The mass movement of workers back to their homes made world-wide news as India started its lockdown. Now they have to move back and Care Ratings thinks this is unlikely to complete until after the monsoon season, by September 2020. Hence, it doesn’t expect a partial recovery until the autumn, nor a full recovery until January 2021 at the earliest.
Not everybody is quite as gloomy though. HM Bangur, the managing director at Shree Cement recently told the Business Standard newspaper that he was expecting a rebound following the resumption of production in May 2020. He also reported a capacity utilisation rate of 60% at his company, higher than Care Rating’s prediction above, and he noted a difference between demand in rural areas and smaller cities (higher) compared to bigger cities (lower).
India is now pushing forward with plans to further unlock its containment measures to focus on the economy. However, daily reported news cases of coronavirus surpassed 8000 for the first time on Sunday 31 May 2020. How well its more relaxed lockdown rules will work won’t be seen for a few weeks. While this plays out we’ll end with quote from HM Bangur that will resonate with cement producers everywhere: “sales are imperative.”
Many of the first quarter financial results are in from the multinational cement producers and a few points are worth discussing. As usual a few caveats are worth mentioning such as seasonal and geographical variations between companies, such as producers in the northern hemisphere experiencing a generally slower period. It’s also worth noting that this is a selective look at some of the larger cement producers as not all of them release detailed figures at this stage and others have been delayed. However, the economic effects of the coronavirus lockdowns are clearly showing an effect in a kind of wave as the pandemic has spread.
Graph 1: Sales revenues in the first quarter of 2020 from selected cement producers. Source: Company financial reports.
Graph 1 above shows the effects of the earlier lockdown in China upon the results of the Chinese producers like CNBM, Anhui Conch and China Resources Cement (CRC). What’s interesting with these companies is that they have all suffered revenue hits of 20 – 25%. Huaxin Cement, a producer based in Hubei province near Wuhan where the Chinese lockdown was strictest, is not shown in Graph 1 but its revenue fell by 35% in the first quarter. See GCW452 for more on coronavirus effects on the Chinese cement industry.
Looking more widely, both LafargeHolcim and HeidelbergCement suffered declines of around 10%. This is somewhat misleading as both companies are constantly selling assets making the like-for-like results not quite as bad, particularly in the case of LafargeHolcim with its South-East Asian divestments. Although note this week that LafargeHolcim’s deal to sell its majority stake in Holcim Philippines lapsed this week due to the local competition regulator not granting permission in time. Yet, they are also beneficiaries and victims to an extent of their wide geographical spread with worse performance in Asia and better results in North America. For a fuller look at LafargeHolcim’s first quarter results see last week’s column. The rest of the producers featured generally reflect their tighter market spread with Buzzi Unicem particularly benefiting from the relatively untouched market in the US. Shree Cement, an Indian producer, escaped relatively unscathed, possibly as the Indian lockdown only started in late March 2020. All eyes will be on the results of UltraTech Cement, the largest producer in India, when they finally emerge.
Graph 2: Cement sales volumes in the first quarter of 2020 from selected cement producers. Source: Company financial reports.
Cement sales volumes tell a similar story, although a few different companies are featured in Graph 2. Note CRC’s year-on-year fall of 26% to 11.2Mt in the first quarter. It’s the only larger Chinese cement producer that we’ve found so far that has released sales volumes. Semen Indonesia is interesting too because its figures jumped in January 2020 as its acquisition of Holcim Indonesia only went on the books in February 2019. It’s February and March sales volumes have each been 4 - 5% down year-on-year but it’s far from clear whether this is due to general production overcapacity in the country or from the global health crisis. Despite this, its export volumes from both the mainland and its TLCC subsidiary in Vietnam have held up well. Unfortunately though, its performance in Vietnam may be an outlier if data from the General Department of Vietnam Customs is to be believed this week. It indicated that overall cement exports from the country fell by 9.7% year-on-year to 7.73Mt in the first quarter of 2020. Cementos Argos is also worth looking at as it suffered from the government lockdown in Colombia despite having an international presence in the Caribbean and the US.
Most of the world’s largest cement producers are preparing for the economic shockwaves from lockdowns to hit balance sheets in the second quarter of 2020. Many have said exactly this and have paraded their liquidity levels in preparation. Alongside this the results of the Chinese producers in the next quarter may offer some light on what kind of recovery is possible from easing lockdown measures. Yet the risk of second waves of infections from coronavirus potentially jeopardises any kind of fast or easy recovery without a vaccine. Today’s news that Cemex is considering mothballing its integrated plant at South Ferriby in the UK has been blamed on an analysis of the company’s European cement supply chain. The company says it is not related to coronoavirus but it does suggest the company is making savings.
This week has seen international press coverage return to Wuhan, China and South Korea where small numbers of infections have started to build despite being thought mostly eradicated. No one wants the so-called ‘W’ economic recovery with its rollercoaster ride of crests and dips or indeed the ‘L’ with its slow tail of recovery. Yet, for better or for worse, some form of normality has to return after the lockdowns end. The UK, for example, the country with the worst death rate from coronanvirus in Europe, has allowed its construction workers to pick up tools this week. If and when they can do so in the UK and everywhere else without causing the basic reproduction number (R0) to rise then the future starts to look a little brighter.
Shree Cement ready to resume operations
08 April 2020India: Shree Cement has said that it will resume production across its 37.9Mt installed capacity as soon as the government lifts its coronavirus lockdown. Shree Cement general manager Hari Bangur said, “We are technically ready to start our cement plants.” The Business Standard newspaper reported that other producers are equally determined to get back to work. JK Lakshmi Cement has said that it will require a minimum of 15 days after the end of lockdown to streamline its operations.
Shree Cement profit rises 2.9% in fourth quarter
17 February 2020India: Shree Cement posted a 2.9% increase in its standalone net profit to US$43.4m in the quarter that ended on 31 December 2019, from US$42.2m a year earlier. Its revenue rose to US$399m from US$389m. The company reported that its cement sales rose by 6% to 6.0Mt for the quarter, from 5.6Mt in the corresponding quarter of the previous year.