‘Investment in infrastructure, housing determines cement consumption’

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Wonder Cement, part of the RK Marble Group, is a green field project at Chittorgarh, Rajasthan with present plant capacity of 3.25 million tonnes per annum. The company has around 2500 dealers in Rajasthan, Gujarat, Madhya Pradesh, Haryana, Uttar Pradesh, Delhi and Punjab.

 

 

S.M. Joshi – President (Plant), Wonder Cement told Sandeep Menezes that infrastructure is needed to support other businesses therefore if government spending on infrastructure increases then cement consumption will also increase.

 

 

 

S.M. Joshi

S.M. Joshi

 

Excerpts from the interview:

 

What is the current and evolving scenario across the cement industry?

 

The cement industry’s capacity is roughly 350 million tonnes per annum in India, while the capacity utilization is roughly around 70 to 80 per cent. The per capita consumption in India is below 200 kg per person but when compared to developed nations it is half therefore the growth potential is roughly double.

 

A 100 per cent capacity increase is required while if consumption growth is increasing at the rate of roughly 10 per cent then in next eight years the capacity will need to be doubled.

 

Tell us about the main growth drivers for the cement industry?

 

The quantum of investment in infrastructure and housing determines cement consumption. Infrastructure development is basically government schemes such as roads, bridges and dams. It is also dependant on GDP growth and improvement in the national economy. Infrastructure is also needed to support other businesses therefore if government spending on infrastructure increases then cement consumption will also increase.

 

What is the current demand supply across India’s cement industry?

                          

The demand supply scenario of cement industry in India is cyclical. Every six to eight years there is a downward trend and then again bumper profits in this business. This is mainly because when there are bumper profits everybody enters the business and then capacity addition is very high which ultimately results in an oversupply situation. Then after three to four years again balance is reached. Therefore the demand is expected to grow in 2016.

 

It is alleged that cement industry is one of the most polluting industries in India. Therefore do you feel additional investments need to be done on better eco-friendly technologies?

 

I don’t know why it is felt to be polluting – it is not at all polluting. When environmental clearances are given by the ministry of environment and forest – they have stringent conditions on emissions. Fortunately in cement manufacturing no toxic gases are coming out – it is only dust particles which can come out. For that the present norms are 50 mg/N m3 and we already have installed machines to bring down emissions to below 30 mg/N m3. Therefore the technology that we have installed can meet future norms also.

 

Tell us about your proposed second line capacity expansion plans? 

 

The second line is under execution and work has started. This second line should be ready by the end of 2015. The proposed expenditure on the second line is roughly estimated at Rs 1200 to Rs 1400 crore. The projects financial closure is currently under progress.

 

 

There is a 40 MW captive power plant for current power requirements but the second line will require additional power. Comment.

 

Our current 40 MW captive power plant is enough for present line one. For line two, we will be putting up another 40 MW power plant but not with the construction of this line. With this second line, we are putting up a waste heat recovery system which will have 18 MW capacity. Therefore there will be shortfall of 22 MW but actually 18 MW because 4 MW is actually internal consumption of the power plant – our plant requirement is 36 MW. For the balance, we have a grid connection also.

 

 

For the waste heat system – the orders have already been placed. The orders for the 40 MW second power plant have not yet been placed – but it will be a PET coke based plant which is more economical.

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