chapter 4 profile of major market...
TRANSCRIPT
99
CHAPTER 4
PROFILE OF MAJOR MARKET PLAYERS
4.1 Ultratech cement
4.2 Ambuja cement
4.3 Jaypee cement
4.4 Binani cement
4.5 J.K. lakshmi cement
4.6 Gujarat sidhee
4.7 Saurashtra cement
4.8 Sanghi cement
4.9 Cement plants in India
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CHAPTER 4
PROFILE OF MAJOR MARKET PLAYERS
4.1 ULTRATECH CEMENT
4.1.1 Top 10 Cement companies in the World
After the merger of Samruddhi Cement with UltraTech Cement, the
latter's capacity has increased to 48.75 million tonnes, the market share to
about 18 per cent, captive power capacity to 504 MW and annual turnover to
Rs 13,210 crores, which has made the company India's single largest cement
company. In addition, UltraTech has acquired Dubai based ETA Star Cement
with its five plants having an aggregate capacity of 3 million tonnes.
Consequent to these developments, UltraTech's capacity stands augmented
to 52 million tonnes, placing it among the top 10 cement companies in the
world.
In July 2010, the Mumbai based $35 billion Aditya Birla Group merged
its Samruddhi Cement Limited (demerged Cement Division of Grasim
Industries Ltd) with Ultra Tech Cement Limited. With this, UltraTech's annual
cement capacity has increased to 48.75 million tonnes, making it the single
largest cement company in India with a market share of about 18 per cent.
UltraTech is also the country's largest exporter of cement clinker and its
export markets span countries around the Indian Ocean, Africa and the
Middle East.
Further, the year of 2010 also witnessed UltraTech's entry into foreign
markets. The company's wholly owned subsidiary- UltraTech Cement Middle
East Investments Limited acquired the management control of Dubai-based
ETA Star Cement together with its operations in the UAE, Bahrain and
Bangladesh. At the time of acquisition, the ETA Star Cement had five cement
plants – one clinkerisation unit and four grinding units with a combined
capacity of 3 million tonnes.
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Today, Ultra Tech has an aggregate annual capacity of about 52
million tonnes, comprising domestic capacity of 48.75 million tonnes and
overseas capacity of 3 million tonnes. This capacity is contributed by 22
cement plants in India, 11 each of integrated plants and grinding units; five
plants abroad comprising of one clinkerisation plant in UAE, two grinding units
in UAE, one grinding unit each in Bahrain and Bangladesh.
UltraTech's integrated cement plants are well equipped with captive
thermal power plants with an aggregate capacity of 504 MW. The company
meets around 78 per cent of its power requirement through captive power
generation.
In addition, the company has one white cement plant of 0.6 million
tonne capacity in Rajasthan; 92 ready mix concrete (RMC) plants across the
country with an aggregate capacity of 9.5 million cubic metres; five bulk
packing terminals - four in India and one in Sri Lanka; and four subsidiary
companies, namely: Dakshin Cements Limited, Harish Cements Limited,
Ultratech Ceylinco (P) Limited and UltraTech Cement Middle East
Investments Limited.
4.1.2 Grasim to UltraTech
Grasim Industries Limited, a flagship company of the Aditya Birla
Group, ranks among India’s largest private sector companies. Starting as a
textiles manufacturer in 1948, six years later Grasim pioneered the production
of viscose staple fibre (VSF), a man-made biodegradable fibre with
characteristics akin to cotton. Today, Grasim is the country’s largest producer
of VSF and the largest manufacturer of caustic soda, which is used in the
production VSF.
In mid 1980s, with the opening up of the cement industry, Grasim
diversified into cement. In 1998, Grasim acquired from its group company –
Indian Rayon & Industries Ltd., a cement capacity of 3.2 million tonnes. In
1999, it acquired Shree Digvijay Cement Company Ltd. (SDCCL) from the
Kolkata based Bangurs. SDCCL had a cement plant of 1.1 million tonnes
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capacity at Sikka in Gujarat. In March 2008, Grasim sold off SDCCL to cimpor
of Portugal. Over the year, Grasim’s cement business had become the major
contributor of Grasim’s revenues, ranging between 70 to 75 per cent.
In early 80s, the Mumbai based engineering giant L & T had diversified
into cement and in the next two decades, it built up a capacity of 17 million
tonnes with a market share of over 11 per cent in India. On November 18,
2001, Grasim acquired 10 per cent of Reliance's stake in L&T for Rs 766.50
crores. By June 2002, Grasim raised its stake in L&T to 14.5 per cent. In
2003, L&T de-merged its cement business into a separate company-
UltraTech CemCo Ltd in a composite scheme of arrangement with Grasim
Industries, resulting in Grasim acquiring control of Ultra Tech.
Narmada Cement Company Ltd. (NCCL), which was an ailing
subsidiary of L&T, automatically became the subsidiary of Ultra Tech. In fact,
L&T had acquired NCCL on April 24, 1999, from Chowgule group. NCCL had
three port based cement plants with a capacity of 1.5 million tonnes,
comprising one integrated plant at Jafrabad in Gujarat and two grinding units -
one each at Magdalla in Gujarat and Ratnagiri in Maharashtra. UltraTech
merged NCCL with itself, effective May 1, 2005.
L&T divested its remaining stake in UltraTech in a phased manner and
by September 2009, it had completely quit the company withdrawing its two
directors on the board. By fully taking over Ultra Tech, Grasim had not only
gained a toe hold in the cement industry but it had also effectively shut out
MNCs from walking away with a huge chunk of cement capacity in India. In
fact, three cement MNCs - Cemex, Holcim and Lafarge were in the running to
pick up 37.5 per cent stake in L&T's de-merged cement entity.
Grasim, after getting the full control of Ultra Tech, on October 6, 2009,
decided to demerge its cement business into a wholly-owned subsidiary
company - Samruddhi Cement Limited in a cashless transaction. Accordingly,
in May 2010, the Grasim's cement division was demerged and vested in
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Samruddhi Cement, which was later in July 2010, fully merged with UltraTech
Cement Limited.
4.1.3 Cement Plants
At the time of merger in July 2010, Grasim had 11 cement plants,
comprising six integrated cement plants and five grinding units with a total
capacity of 25.65 million tonnes. Similarly, Ultra Tech too had 11 cement
plants, comprising five integrated cement plants and six grinding units with a
total capacity of 23.10 million tonnes.
After merger, as on March 31, 2010, UltraTech's number of cement
plants has increased to 22 and the aggregate capacity to 48.75 million tonnes.
Table-8
Pre and Post Merger Financial Status of Grasim and UltraTech
Particulars
*Financials of H1 FY – 2010 April 2009 to
September 2009
Unit Grasim UltraTech Combined
Net Sales Rs. Crs. 4193 3494 7687
EBIDTA Rs. Crs. 1423 1252 2675
EBIDTA Margin % 34 36 35
Depreciation Rs. Crs. 195 190 385
EBIT Rs. Crs. 1228 1062 2290
Net Worth Rs. Crs. 4798 4271 9069
Capital Employed Rs. Crs. 8183 6742 14925
Debt. (Net of Surplus
Funds) Rs. Crs.
2502 621 3123
ROCE (PBIT / CE) % 30 31 31
Source : Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012 :3rd Edition
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Table - 9
UltraTech’s cement plants at a glance – alphabetically listed
Sr.
No. Cement Plants District State
Capacity
MTPA
Jan 2010
Capacity
MTPA
Jan 2012
Year
1. Aditya Cement Works Chittorgarh Rajasthan 5.00 5.00 1995
2. Aligarh Cement
Works (G)
Aligarh UP 1.30 1.30 2009
3. Andhra Pradesh
Cement Works
Anantpur AP 5.60 5.60 1998
4. Arakkonam Cement
Works (G)
Vellor Tamilnadu 1.10 1.10 2000
5. Awarpur Cement
Works
Chandrapur Maharashtra 3.60 3.60 1983
6. Bhatinda Cement
Works (G)
Koppal Karnataka 1.75 1.75 2001
7. Gujarat Cement
Works
Amreli Gujarat 1.30 1.30 2009
8. Hirmi Cement Works Raipur Chhattisgarh 1.30 1.30 2009
9. Hotgi Cement Works
(G)
Solapur Maharashtra 5.80 5.80 1996
10. Jafrabad Cement
Works
Amreli Gujarat 1.90 1.90 1994
11. Jharsugada Cement
Works (G)
Jharsuguda Orissa 1.80 1.80 1995
12. Jafrabad Cement
Works
Amreli Gujarat 0.50 0.50 1983
13. Jharsuguda Cement
Works (G)
Jharsuguda Orissa 1.00 1.00 1993
14. Kotputli Cement
Works
Jaipur Rajasthan 3.10 3.10 2009
15. Magdalla Cement
Works (G)
Surat Gujarat 0.70 0.70 1982
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16. Panipat Cement
Works (G)
Panipat Haryana 1.30 1.30 2009
17. Rajashree Cement
Works
Gulbarga Karnataka 3.20 3.20 1984
18. Ratnagiri Cement
Works
Ratnagiri Maharashtra 0.40 0.40 ----
19. Rawan Cement
Works
Raipur Chhattisgarh 2.50 2.50 1995
20. Reddipalayam
Cement Works
Ariyalur Tamilnadu 1.40 1.40 2000
21. Vikram Cement
Works
Neemuch MP 3.00 3.00 1985
22. WB Cement Works
(G)
Burdwan West Bengal 1.20 1.20 2002
Total 48.75 48.75
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012 :3rd Edition
4.1.3.1 Bulk Cement Terminals
UltraTech has five bulk cement terminals, four in India and one in Sri
Lanka. The four domestic terminals are located at Doddaballpur and
Mangalore in Karnataka, Navi Mumbai in Maharashtra and Shankarpally in
Andhra Pradesh. The Mangalore and Navi Mumbai bulk packaging units are
port -based and they were commissioned in September 1998 and in October
1998, respectively. The port based terminals source cement from the
company's port based Gujarat Cement Works through special chartered
ships.
The Sri Lanka terminal was set up through UltraTech Lanka (Pvt) Ltd, a
subsidiary of UltraTech. Located at Colombo, this terminal is in operation
since January 2000.
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Table - 10
UltraTech’s operational performance at a glance
Particulars Unit 2010-11
Reported
2009-10
Recasted
2009-10
Reported
Cement Capacity Mn Tons 48.75 48.75 23.10
Cement Production Mn Tons 32.92 32.11 17.64
Effective Capacity
Utilisation*
Per Cent 81 86 88
Sales Volume -
Domestic
Mn Tons 32.76 32.26 17.78
Sales Volume-
Exports
Mn Tons 1.90 2.42 2.42
Tota1 Sales Volume Mn Tons 34.67 34.68 20.21
Average Sales
Realisation
Rs Per
Ton
3323 3414 3311
Effective capacity utilization: cement production + Clinker sold, based on
period of new capacity in operation.
4.1.3.2 Captive Power Plants
Pre merger, Grasim had a total thermal captive power capacity of 268 MW
and UltraTech 236 MW Post merger; the combined captive power capacity
became 504 MW.
4.1.3.3 Waste as Fuel
UltraTech was the first cement company to set up a Municipal Solid
Waste (MSW) plant at Jaipur to process municipal waste and use it as a
substitute for conventional fuels at its Vikram Cement plant in Madhya
Pradesh.
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Table-11
UltraTech’s consolidated financial performance for first two years
Particulars Unit 2010-11
Reported
2009-10
Recasted
2009-10
Reported
Turnover Rs Crs 13210 13442 7050
Domestic Rs Crs 12821 12957 6589
Exports Rs Crs 389 485 461
Other Income Rs Crs 287 179 122
Total Expenditure Rs Crs 10688 9602 5078
Operating Profit
(PBIDT)
Rs Crs 2829 4019 2094
Operating Margin Rs Crs 21 30 30
Depreciation Rs Crs 766 700 388
Profit Before
Interest and Tax
(PBIT)
Rs Crs 2063 3319 1706
Interest Rs Crs 277 ----* 118
Profit Before Tax Rs Crs 1746 ----* 1588
Tax Expenses Rs Crs 382 ----* 495
Net Profit after Tax Rs Crs 1404 ----* 1093
*Recasted figures not available
Rajasthan, lead zinc slag, which is a low effect waste of
pyrometallurgical operations of Hindustan Zinc Smelter, is used as an
alternate raw material (additive) in raw mix.
4.1.3.4 CDM Footprint
UltraTech's CDM project was the world's first to receive CERs amongst
the cement companies, worth Rs 3.5 crores, for the year 2007-08. This was
the culmination of the journey after successfully substituting conventional fuel
by agro-based alternative fuels and waste tyres and the subsequent venture
to claim for carbon credit.
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4.1.3.5 Operations
In the financial year of 2010-11, UltraTech produced 32.92 million
tonnes of cement as against 32.11, million tonnes in previous year. The
effective capacity utilisation was 81 per cent as against 86 per cent in
previous year on an expanded capacity.
The aggregate sales volume of 34.67 million tonnes was at par with the
previous year sales volume of 34.68 million tonnes. The previous year figures
have been recasted by the company so as to include Samruddhi's figures for
the period 1st July, 2009 to 31st March, 2010.
4.1.3.6 Financial Performance
In the financial year of 2010-11, the company's net turnover stood at
Rs 13,210 crores as against Rs 13,442 crores (recasted) achieved in the
previous year. Profit before interest and tax stood at Rs 2063 crores as
against Rs 3319 crores (recasted).
The share of Ready Mix Concrete (RMC), White Cement and other
related products in the company's turnover was 9 per cent and 6 per cent,
respectively. Both RMC and White Cement have recorded a splendid
performance with turnover for RMC reflecting a growth of 26 per cent and that
of White Cement 16 per cent. White Cement business growth is linked with
the higher sale of Wall Care Putty and other White Cement based products.
4.1.3.7 Capex Plans
In the year of 2010-11, the company incurred a capital expenditure of
around Rs 1242 crores towards capacity expansion at Rawan Cement Works
and Rajashree Cement Works, setting up of captive power plants at Awarpur
Cement Works, Andhra Pradesh Cement Works, jetty expansion at Gujarat
Cement Works bulk packaging terminals and normal modernisation projects.
To accelerate the pace of growth over the next three years, the
company has earmarked a capital outlay of Rs 11,000 crores. Adds the
company's Chairman - Kumar Magalam Birla: "We are investing in the setting
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up of additional clinkerisation plants at Chhattisgarh and Karnataka together
with grinding units, bulk packaging terminals and ready mix concrete plants
across the country. These expansions are expected to be operational in FY14
and will augment our cement capacity by 9.2 million tonnes.”
4.2 AMBUJA CEMENT
Founded by Narotam Sekhsaria and Suresh Neotia, Ambuja Cements -
formerly Gujarat Ambuja is today the top third cement company in India.
Holcim acquired the company's management control in 2006 and now it holds
50.29 per cent equity in Ambuja.
Beginning operations in 1986, in the last 25 years, Ambuja Cements
has increased its capacity from a mere 0.7 million tonne to 27 million tonnes;
the number of cement plants from 01 to 13; and expanded operations from a
single State to nine States. It has also added captive power capacity of about
420 MW.
The Mumbai based Ambuja Cements Limited is today one of the
leading, most profitable and innovative cement companies in India.
Incorporated in 1981 as Gujarat Ambuja Cements Ltd (GACL), the company
was promoted by Narotam Sekhsaria, Suresh Neotia and their associates as
a joint venture with the State owned Gujarat Industrial Investment Corporation
(GIIC). Two years later, in 1983, it was converted into a public limited
company and in November 1985, it went for its first IPO. During the years
1987-1990, GIIC sold its 26 per cent equity stake to Sekhsaria and his
associates. Sekhsaria's business acumen and leadership skills led the
company on a fast track to growth and under his leadership; the company has
set several new benchmarks for cement industry in India.
In the last 25 years, the company added integrated green-field plants,
grinding units, acquired two major cement companies - Modi Cements and
DLF Cement, formed two subsidiaries - Ambuja Cement Eastern Ltd (ACEL)
and Ambuja Cement Rajasthan Ltd. (ACRL) for managing the acquired
companies, merged ACEL and ACRL with itself, launched an investment
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company - Ambuja Cement India Ltd. (ACIL), bought stake in ACC Ltd, got
acquired by Holcim – a cement multinational of Switzerland, promoters sold
their equity to Holcim, financial year changed from April- March to calendar
year of January to December, and the company quit the membership of
Cement Manufacturers' Association (CMA).
Under the management of Holcim, the company enhanced its cement
capacity to 27 million tonnes, increased the captive power capacity to about
420 MW, entered the renewable energy sector beginning with wind energy
and made a few strategic acquisitions.
It bought substantial stakes in Alcon, Dang Cement and Dirk India.
Further, with Alcon, it has formed a joint venture - Counto Microfine Products
Private Limited.
4.2.1 Early Acquisitions
Ambuja Cements acquired two major cement companies - Modi
Cements and DLF Cement, which enabled the company to expand its
capacity and markets in new areas. The Modi Cements, which had a 1.8
million tonnes integrated cement plant at Bhatapara in Chhattisgarh, was a
BIFR case with accumulated losses of Rs 300 crores. In June 1997, Ambuja
acquired Modi Cements from BIFR for Rs 191 crores and injected about Rs
166 crores as equity, which increased its stake to 93.55 per cent. The plant
was restarted in December 1997. Modi Cements was renamed as Ambuja
Cement Eastern Ltd (ACEL) and Harshavardan Neotia was appointed its
Managing Director. In September 2001 ACEL's capacity was reduced from
1.8 million tonnes to one million tonne and in the same year, ACEL set up a
grinding unit with a capacity of one million tonne at Sankrail in West Bengal
involving an investment of Rs. 122 crores. Finally, in January 2006, ACEL
was merged with the parent company - Ambuja Cements.
In March 2000, Ambuja Cements took over the management control of
the Delhi based DLF Cement Ltd for Rs 82.61 crores and rechristened it as
Ambuja Cement Rajasthan Ltd (ACRL). Ambuja Cements, which held a 49
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per cent of share holdings in ACRL, merged it with itself, effective from June
1, 2004. At the time of its acquisition, ACRL had a cement plant of 1.5 million
tonnes capacity at Rabriyawas in Rajasthan and a captive power plant of 21
MW.
4.2.2 Formation of ACIL
In 2000, Ambuja Cement India Limited (ACIL) was promoted as a joint
venture of Ambuja Cements and two foreign investors-American International
Groups (AIG) and Government of Singapore Investment Corporation (GIC).
Ambuja Cements held major stake of 60 per cent in ACIL, while AIG and GIC
had the remaining 40 per cent. In 2001 ACIL raised Rs 461 crores by issuing
'foreign currency convertible bonds and Warburg Pincus, a private equity
player, alone contributed Rs 360 crores.
4.2.3 Stake in ACC
The year 2000 also witnessed a historical event at Ambuja Cements as
it acquired a major stake in ACC from the Tatas through its investment
subsidiary - Ambuja Cement 'India Limited (ACIL). Initially, ACIL had
purchased 11.4 per cent equity of ACC at Rs 732 crores from Tatas and a
year later, it acquired the remaining three per cent of equity for Rs 196 crores,
held by Tata companies. These two transactions raised ACIL's total stake in
ACC to 14.4 per cent and investment to Rs 925 crores. At the time of
acquiring the major stake, ACC had a capacity of 16.1 million tonnes, the
largest cement company in the country.
4.2.4 Holcim's Entry
In January 2005, Holcim acquired Ambuja Cements' entire 40 per cent
shareholding in ACIL for Rs 897 crores, which was held by two foreign private
equity investors, namely: AIG and GIC. It also subscribed to the share capital
of ACIL by investing Rs 1834 crores by way of equity shares and Rs 810
crores by way of preference shares aggregating to an investment of Rs 3541
crores, making it one of the largest Foreign Direct Investment (FDI) in India.
Post capital infusion, Holcim's total share holding in ACIL increased to 67
percent, whereas Ambuja Cements' share got diluted to 33 percent from the
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original 60 percent. Consequent to this, ACIL had ceased to be a subsidiary of
Ambuja Cements. Further, in February 2007, Ambuja Cements divested 11
percent equity in ACIL for a consideration of Rs 526.5 crores, which further
stepped up Holcim's share to 78 per cent.
Later Holcim along with ACIL made an open offer to acquire ACC's
equity shares at Rs 370 per share and shares of Ambuja Cement Eastern Ltd.
(ACEL) at Rs 70 per share. Both the open offers received a good response.
Consequently, ACIL's holdings in ACC increased from 13.8 percent to
34.7 percent and in ACEL from 94.1 percent to 96.9 percent. Consequently,
ACEL was merged with Ambuja Cements.
In May 2006, Holcim Group got the management control of Ambuja
Cements and it reconstituted the company's board. Holcim inducted its three
representatives as additional directors.
In November 2006, Holcim bought another 3.67 per cent of the equity
from the founding promoters and others. With this and post merger of ACEL,
the aggregate shareholding of Holcim in Ambuja Cements increased to 26.44
percent in December 2006. To further increase its stake, Holcim Group made
a second open offer in December 2007 to acquire up to 20 percent stake at
Rs 154 per share. This enabled Holcim to enhance its holdings in Ambuja
Cements to 45.68 percent. By January 2012, Holcim's stake in the company
was further enhanced to 50.29 percent.
Effective from April 5, 2007 the company's original name was also
changed to Ambuja Cements Limited (ACL) from Gujarat Ambuja Cements
Ltd (GACL) to present a pan India image of the company.
4.2.5 Strategic Acquisitions
In the last two years of 2010 and 2011, the company made three
strategic acquisitions. It bought substantial stakes in Alcon, Nepal's Dang
Cement Industries Pvt Ltd and Dirk India Pvt Ltd.
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Ambuja Cements has formed a joint venture with Alcon Cement
Company Pvt. Ltd., known as Counto Microfine Products Private Limited to
introduce market innovation and offer a solution to large buyers. In fact, Alcon,
which has a clinker grinding and cement packing unit in Goa, is already
having a technical and marketing collaboration with ACC.
Ambuja Cements has expanded its presence to South Asia region by
acquiring about 90 percent stake in Nepal's Dang Cement Industries Private
Limited by investing over Rs 20 crores. With this, Dang Cement has become
a subsidiary of Ambuja Cements. Dang holds limestone mining lease in
Nepal.
Dirk India, a Dirk Group of UK Company, came to India in 2000 and
has a unit in Nashik to produce Pozzocrete from fly ash to replace cement in
concrete. In 2001, the company obtained 30 years contract for the exclusive
recycling of all pulverized fuel ash (PFA) from Nashik Thermal Power Station,
belonging to Maharashtra State Electricity Board (MSEB).
4.2.6 Cement Plants
Starting with a single cement plant in 1986 at Ambujanagar in Gujarat,
over the years, Ambuja Cements has increased the strength of its plants to
13, comprising five integrated plants and eight grinding units. Similarly, its
installed capacity has risen from a mere 0.7 million tonne per annum to 27
million tonnes, registering about 40 fold growth. Now, the company has
cement manufacturing operations in nine States, namely: Chhattisgarh,
Gujarat, Himachal Pradesh, Maharashtra, Punjab, Rajasthan, Uttrakhand,
Uttar Pradesh and West Bengal.
Of the company's five integrated plants, the three were set up by the
company itself and the other two were added through the acquisitions and
mergers of two companies – Modi Cements and DLF Cement. The integrated
plants are Ambuja Nagar - Gajambuja plant, Bhatapara plant, Darlaghat plant,
Chandrapur plant and Rabriyawas plant.
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4.2.6.1 Gajambuja Plant
Ambuja Cements' first integrated cement plant was set up at Ambuja
Nagar, adjacent to Vadnagar village, Kodinar taluka in Junagadh district of
Gujarat. It was commissioned in October 1986 with a capacity of 0.7 million
tonne. A decade later, in 2006, its capacity was increased to 1.5 million
tonnes.
The company's second integrated cement plant, known as
Gajambujam, is also located on the same premises of Ambuja Nagar.
Gajambujam plant was commissioned in March 1993 with a capacity of one
million tonnes and since then its capacity has been increased to four million
tonnes. Thus, the company's Ambuja Nagar complex has a combined
capacity of 5. 5 million tonnes, which makes it the country's one of the largest
capacity plants and second biggest in Gujarat, the first being UltraTech's
Gujarat Cement Works, which has a capacity of 5.8 million tonnes.
The Ambuja Nagar complex is well equipped with captive power plants
having capacity of 90 MW. Initially, a 60 MW captive power plant was installed
and in 2010, an additional capacity of 30 MW was added.
4.2.6.2 Bhatapara Plant
Originally, the Bhatapara Cement plant was set up in 1987 by Modi
Cements and in 1997; the Ambuja Cements acquired the same and renamed
it as Ambuja Cement Eastern Ltd (ACEL), which was ultimately merged with
Ambuja Cements in January 2006. The Bhatapara plant was restarted in
December 1997 and was also expanded. Its present cement capacity is 2.9
million tonnes. In 2010, a 33 MW captive power unit was commissioned at
Bhatapara.
4.2.6.3 Chandrapur Plant
Located at Chandrapur in Maharashtra, the Chandrapur plant is Ambujas'
fourth integrated cement plant with a cement production capacity of 2 million
tonnes along with a 40 MW captive thermal power plant. The unit commenced
production on June 1, 2002 and the total cost of the project was over Rs 700
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crores including the power plant. At present, Chandrapur plant has a capacity
of 4.5 million tonnes.
4.2.6.4 Darlaghat Plant
Located in Solan district of Himachal Pradesh, the Darlaghat plant was
commissioned in September 1995 with an initial capacity of 0.5 million tonne
and three years later, its capacity was increased to 1.16 million tonnes. At
present, Darlaghat plant has a capacity of 1.6 million tonnes and also a
captive power plant of 24 MW.
4.2.6.5 Rabriyawas Plant
Commissioned in 1996, originally Rabriyawas plant was set up by DLF
Cement Ltd. In March 2000, Ambuja Cements acquired DLF's management
control and renamed the company as Ambuja Cement Rajasthan Ltd (ACRL),
making it an associate company. At the time of its acquisition, ACRL had a
capacity of 1.5 million tonnes and a captive power plant of 21 MW. As ACRL
was a loss making company, it was merged with the parent company –
Ambuja Cement, effective from June 1, 2004. Located in Pali district of
Rajasthan, Rabriyawas' present capacity is 1.8 million tonnes.
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Table-12
Ambuja Cements’ plants at a glance – alphabetically listed
Sr.
No.
Cement
Plants District State
Capacity
MTPA
Jan 2010
Capacity
MTPA
Jan 2012
Year
1 Ambujanagar
Cement Plant
Junagadh Gujarat 5.50 5.50 1986
2 Bhatapara
Cement Plant
Raipur Chhattisgarh 1.80 2.90 1987
3 Bhatinda
Grinding
Plant
Bhatinda Punjab 0.50 0.50 2001
4 Chandrapur
Cement Plant
Chandrapur Maharashtra 3.60 4.50 2002
5 Dadri
Grinding
Plant
GB Nagar Uttar Pradesh ---- 1.50 2010
6 Darlaghat
Cement Plant
Solan Himachal 1.60 1.60 1995
7 Farakka
Grinding
Plant
Murshidabad West Bengal 1.00 1.00 2007
8 Magdalla
Grinding
Plant
Surat Gujarat 1.20 1.20 2008
9 Nalagarh
Grinding
Plant
Solan Himachal 1.50 1.50 2010
10 Rabriyawas
Cement Plant
Pali Uttarkhand 1.80 1.80 1996
11 Roorkee
Grinding
Plant
Haridwar 1.00 1.00 2007
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12 Ropar
Grinding
Plant
Ropar Punjab 2.50 2.50 1995
13 Sankrail
Grinding
Plant
Howrah West Bengal 1.50 1.50 2001
Total 23.50 27.00
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
MTPA – Million Tonnes per Annum,
4.2.7 Grinding Units
Besides setting up integrated cement plants, the company opted for
grinding units to make an entry into new States, beginning with Punjab in
1995 and since then, it has set up a total of eight grinding units. Of these, two
are in Punjab at Bhatinda and Ropar, two in West Bengal at Farakka and
Sankrail; one each in Gujarat at Magdalla; in Himachal at Nalagarh; in
Uttrakhand at Roorkee and in Uttar Pradesh at Dadri.
The Ropar and Bhatinda grinding units in Punjab are located in the
vicinity of thermal power plants, mainly for manufacture of fly ash based
cement. The first grinding unit at Ropar was commissioned in 1995. In the
year 2003-04, its capacity was expanded from 1.34 million tonnes to 2.5
million tonnes. It also has a 12.5 MW dedicated power line from the adjacent
Ropar Thermal Plant. It was the first grinding unit in the country to use fly ash
in large quantities for cement manufacturing. The second grinding unit at
Bhatinda was commissioned in 2001 with a capacity of 0.5 million tonne.
In West Bengal, the Sankrail grinding unit has a capacity of 1.5 million
tonnes, while the Farakka grinding unit's capacity is one million tonne. They
were set up by the company's erstwhile subsidiary – Ambuja Cement Eastern
Ltd in 2001 and 2007, respectively.
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4.2.8 Captive Power Plants (CPP)
Over 40 percent of the production cost of cement is power, so
gradually the company is reducing its dependence on grid power by installing
captive power plants at its various cement plants (CPP). In 2010, the
company's captive power capacity has increased to about 420 Mw.
Further, it sources a cheaper and higher quality coal from South Africa
and better furnace oil from the Middle East. The cumulative result of this
strategy is that today the company is in a position to sell its excess power to
the local State governments. ACL has also pioneered the development of the
multiple bio-mass co-fired technology for generating greener power in its
captive plants.
Recently, the company has opted for renewable energy sources and
has made its first investment in a wind power project at Gujarat.
119
Table-13
Ambuja’s Captive power plants
Sr.
No. Captive Power Plants
MW Jan
2012
1 Ambujanagar-Gajambuja 128.20
2 Bhatapara Cement Plant 77.00
3 Bhatinda Grinding Unit ----
4 Chandrapur Cement Plant 70.54
5 Dadri Grinding Unit 1.00
6 Darlaghat Cement Plant 36.00
7 Farakka Grinding Unit 1.00
8 Magdalla Grinding Unit 8.90
9 Nalagarh Grinding Unit 10.00
10 Rabriyawas Cement Plant 39.70
11 Ropar Griinding Unit 30.00
12 Roorkee Grinding Unit 1.25
13 Sanskrail Grinding Unit 16.00
Total 419.59
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
4.2.9 Market Developments
Cement is a commodity, which is sold largely on price but Ambuja
Cements was the first company to create a brand out of cement and
command a premium. The company has a nationwide reach with strong
footprints in the West, North and East India. Its cement plants cover strategic
locations in all these regions. The company maintains a strong position of
about 16.5 percent market share in its primary markets and around 10 percent
on an all-India basis. In the last 25 years, it has built a large network of over
7500 dealers and 20,000 retailers across 18 States in the country. Its wide
network of dealers and retailers nurtured on empowered partnership enables
the company to reach even the tiniest village.
120
4.2.10 Bulk Cement Transportation
Almost all the cement companies in India transport 90 percent of their
cement in bags by rail or road but Ambuja Cements has earned the distinction
of being the country's first cement company to move bulk cement by sea. This
capability has brought many coastal markets within the company's easy
reach. This has also enabled the company to become the country's largest
cement exporter.
In 1993, the company built up a dedicated all weather captive port at
Muldwarka with three terminals along the country's western coastline to
facilitate timely, cost effective and environmentally cleaner shipments of bulk
cement to its customers. The Muldwarka port is just 8 kms from the
company's Ambuja Nagar plant and is capable of berthing 40,000 DWT
vessels.
For serving the coastal markets, the company today has four bulk
cement terminals at Surat, Panvel, Kochi and Galle (Sri Lanka) with
unloading, storage and packaging facilities. Galle terminal is managed by the
company's subsidiary - Ceylon Ambuja Cement (Private) Ltd. In fact, the
company had launched its marketing in Sri Lanka initially with bagged cement
during the year 1999.
In the year 2010, the company's fleet of ships increased from seven to
nine for ferrying the bulk cement to the terminals. One more ship is under
construction and the same will be added soon.
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Table-14
Capacity Production and Profitability of Ambuja Cement
Particulars Unit 2011 2010 2009 2008
Total Capacity Mn Tons 27.00 25.00 22.00 18.50
Cement Production Mn Tons 20.97 20.13** 18.80 17.75
Total Sales, Volume Mn Tons 20.91 20.30 18.00 17.70
Cement Sales, Value Rs. Crs. 8515 7390 7077 6235
Total Income Rs. Crs. 8833 7638 7333 6410
Net Profit Rs. Crs. 1229 1264 1218 1402
Net Worth Rs. Crs. 8069 7330 6468 5669
EPS Rs. 8.02 8.28 8.00 9.21
Profit After Tax Rs. Crs. 1229 1264 1218 1402
Dividend Per Cent 160 130 120 110
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012 :3rd Edition
4.2.11 Performance
In the last four years, the company's total installed cement capacity has
increased from 18.50 million tonnes in 2008 to 27 million tonnes in 2011.
Similarly, the company has recorded an impressive growth in its sales from
Rs 6235 crores to Rs 8515 crores.
4.2.12 Subsidiary Companies
At present, Ambuja Cements has three subsidiary companies, namely:
Chemical Limes Mundwa Pvt Ltd; Kakinada Cements Ltd; and MGT Cements
Pvt Ltd. As on December 31, 2010, the company held 100 per cent equity in
all the three subsidiaries. However, none of them is in operation.
Besides the three subsidiaries, the company also has two joint
ventures, namely: Wardha Vaalley Coal Fields Pvt Ltd and Counto Microfine
Products Pvt Ltd. In Wardha Valley Coal Fields, the company has equity of
27.27 per cent, while Count Microfine is the latest joint venture with Goa's
Alcon Group.
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Future Cement Project
In October 2010, the company signed an agreement with the
Rajasthan State Industrial Development and Investment Corporation for
setting up a 2.2 million tonne clinkerisation unit in Nagaur district. The pre-
project planning is at an advanced stage and construction is expected to start.
This project will support the company's objective of maintaining long term
market share at around 10 per cent.
4.2.13 Knowledge Initiative
In 2009, the company launched its knowledge initiative – Ambuja
Knowledge Center, to enable industry professionals get a first-hand feel of the
world of cement and concrete. During the year, three centers became
operational in the cities of Ahmedabad, Jaipur, and Kolkata.
4.3 JAYPEE CEMENT
Jaypee Cement is part of Noida based Rs.18, 000 crores JP group. In
the last eight years, the Jaypee Groups flagship company – Jayprakash
Associates Limited (JAL) has increased its cement capacity from a mere 4.8
million tonnes to about 24.50 million tonnes, registering a five fold growth.
This makes JAL the country’s 4th largest standalone cement producer. It also
has 278 MW of thermal captive power capacity.
JAL has two joint venture companies – Bhilai Jaypee Cement Ltd
(BJCL) and Bokaro Jaypee Cement Ltd (BoJCL) with combined capacity of
4.30 millon tonnes. With these two JVs, JP Groups capacity goes upto 28.80
million tonnes. Further, the Group is poised to have a cement capacity of
42.40 million tonnes with 22 cement plants and 700 MW captive power
capacity by the end of 2013-14.
JAL is a flagship company of Jaypee Group with four business
segments, namely engineering, cement, star hotels and real estate. Today,
JAL is the fastest growing cement company in the country with a capacity of
24.50 million tonnes, contributed by 14 cement plants, comprising six
integrated plants and eight grinding units. This makes JAL the country’s fourth
123
largest cement producer, the three others being UltraTech Cement 48.75
million tonnes; ACC 30.08 million tonnes and Ambuja Cements 27.00 million
tonnes.
JAL’s promoters were never deterred by the slow growth in cement industry,
while expanding their cement capacities. In 2004, while spaking on the
company’s cement expansion plans, the then Chairman – Jaiprakash Gaur
observed: “It is a cyclical business but the demand is ongoing and we will
definitely go ahead with our expansion plans”
JAL along with its subsidiaries and joint venture companies is continuing to
add capacities to take Jaypee Group’s tally further to over 38 million tonnes
by the year 2013-14. By doing so, JAL is scripting the fastest organic growth,
which has not been achieved by any other Indian company in such a short
period of less than a decade. JAL is also positioning itself amongst the world’s
top 15 cement manufacturers.
The Jaypee cement is a leading brand in the markets of Bihar, Delhi, Gujarat,
Haryan, Himachal, Madhypradesh, Utarpradesh and Uttarakhand. It has been
the largest consistent exporter of cement to Nepal for several years now.
Jaypee Group is driven by the vision of its founder Chariman Jaiprakash
Gaur, 82, a government employee turned most successful enterprneur. He
entered into business in 1958 starting as a civil contractor and in the last five
decades, has build up a multi product Jaypee Group. Now his sons – Manoj
Gaur, Executive Chairman and Sunny Gaur, Managing Director – Cement
Divison, alongwith a team of dedicated senior managers are steering the
Group to newer heights.
4.3.1 Cement Business in retrospect
After being highly successful in the construction business, JAL diversified into
cement manufacturing in 1983. Initially, it created a cement division under
Jaiprakash Industries Limited (JIL), which later in 2003, merged with
Jaiprakash Associates Limited (JAL). JAL’s first cement plant of one million
124
tone capacity was set up at Jaypee Nagar; 14 km form Rewa City in Madhya
Pradesh. Commissioned on Decemeber 2, 1986, the Jaypee Rewa Cement
Plant was the most modern plant with dry process single rotary kiln and 4
stage pre-heater and calciner. In Januuary 1992, Unit II of 1.5 million tonnes
was added at Rewa Plant, which increased to its capacity to 2.5 million
tonnes. Now Rewa Plant has capacity of 3.2 million tonnes.
In October 1996, JAL commissioned its second cement plant – Jaypee Bela
at Jaypeepuram with capacity of 1.7 million tonnes. Jaypee Bela, an ultra
modern plant of international starndards, is situated within the vicinity of 5 km
from Jaypee Rewa Plant and now its capacity is 2.2 million tonnes.
Further to achieve better economies of scale and to take advantage ot the
market opportunities, JAL sett up its third plant – Jayppe Cement Blending
Unit ( JCBU) at Sadwa Khurd village on the Allahabad Rewa Road, about 28
kms from Allahabad city. Commissioned in December 2002, this plant has a
capacity of 0.6 million tonne.
With a view to use locally available fly ash from TPC – Tanda, the company
commissioned its first grinding unit – Jaypee Ayodya Grinding Unit (JAGO) in
August 2004, Located at Tanda in Uttar Pradesh, JAGO has a capacity of one
million tonne and it receives clinker from Jaypee Rewa and Jaypee Bela
plants.
125
Table 15: JAL’s cement plants in operation at a glance- alphabetically
listed
Sr
No
Cement Plants District State Capacity
MTPA
Jan 2010
Capacity
MTPA
Jan 2012
Year
1 Chunar Cement
Factory
Mirzapur UP 2.50 2.50 2008
2 Dalla Cement
Factory
Sonebhadra UP 0.50 0.50 2009
3 Jaypee Ayodhya
Grinding
Operations
Ambedkar
Ngr
UP 1.00 1.00 2004
4 Jaypee Bela
Cement Plant
Rewa MP 2.20 2.20 1996
5 Jaypee Gujarat
Cement Plant
Kutch Gujarat 2.40 2.40 2009
6 Jaypee Himachal
Cement Plant
Solan HP - 2.00 2012
7 Jaypee Himachal
Cement G&B unit
Solan HP 2.00 2.00 2010
8 Jaypee Panipat
Cement Grinding
Unit
Panipat Haryana 1.50 1.50 2008
9 Jaypee Rewa
Cement Plant
Rewa MP 3.20 3.20 1986
10 Jaypee Roorkee
Cement Grinding
unit
Haridwar UK 1.20 1.20 2010
11 Jaypee Sadwa
Cement Blending
unit
Allahabad UP 0.60 0.60 2001
12 Jaypee Sidhi
Cement Plant
Sidhi MP 2.00 2.00 2009
13 Jaypee
Sikandrabad
Cement Grinding
Unit
Bulandshahar UP - 1.00 2011
14 Jaypee Kheda Gujarat 2.40 2.40 2009
126
Wanakbori
Cement Grinding
unit
JAL TOTAL 21.50 24.50 Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
MTPA- Millon Tonnes Per Annum, Year - Year of first commissioning, G -
Grinding Unit
4.3.2 Acquisitions & Mergers
JAL has accomplished a massive growth in its cement business during the
period of 2005-2011 through acquisitions and mergers of cement companies,
brown-field expansions, green- field projects, joint ventures and special
purpose vehicles (SPVs). No other Indian cement company has adopted such
a multi- faceted approach so far for the kind of growth achieved by JAL.
JAL’s first acquisition was the state owned Uttar Pradesh cement
Corporation Ltd (UPCC), which was a BIFR case. It was on October 11, 2006,
that the Allahabad High Court confirmed the sale of assets of the closed
UPCC in favour of Jaiprakash Associates as it had quoted the highest price of
Rs 459 crores against the reserved proce of Rs 271 crores. There were three
other leading companies as bidders, viz., Dalmia Cement, Grasim Industries
(now UltraTech) and Lafarge India, but all of them had quoted the same set
proce of Rs 271 crores.
UPCC was incorporated in early 50s by the Government of Uttar
Pradesh for manufacture of cement and it had set up three plants in Mirzapur
district at Churk, Chunar and Dalla. Churk was the first cement plant in public
sector to go on stream in 1954 with 0.48 million tonne cement. The Chunar
plant had a distinction of being the biggest and the first split location planbt
with its kiln at Dalla (at a distance of 116 Kms from Chunar). Owning to
various reasons, UPCC became sick and remained closed for about 15 years
till the intervention of the Court.
127
JAL has already revived the Chunar and Dalla units by infusing fresh
capital, morddenizing old machinery and adding new equipments. First,
Chunar Cement Factory was re-commissioned in February 2008 with a
capacity of 2.5 million tonnes, followed by Dalla Cement Factory with a new
kiln and now it has a capacity of 2 million tonnes. The Dalla plant is also
equipped with a 38 MW captive power plant.
In 2006, JAL acquired a second company – Gujarat Anjan Cement
Ltd., which was implementing a 1.2 million tonnes plant at Kutch in Gujarat.
The Gujarat Anjan was promoted by the Ahmedabad based Sumeru Group
and its acquisition enabled JAL to have a foothold in the western India
markets, particularly in Gujarat. Later in April 2008, Gujarat Anjan Cement Ltd
was merged with JAL.
Table 16: JAL’s cement plants under implementation (including
subsidiaries)
Sr
No
Cement Plants District State Capacity
Planned
MTPA
To be
Commissioned
in
1 Andhra Cement-
Nadikude
Guntur AP 2.00 -
2 Andhra Cement GU Vizag AP 1.50 -
3 Jaypee Balaji Cement
Plant
Krishna AP 5.00 2012
4 Jaypee Sidhi- II,
Expansion
Sidhi MP 1.00 2012
5 Jaypee Super Cement
Plant
Sonebhadra UP 1.10 2012
6 JCCL- Shahabad Gulbarga KAR 3.00 2013-14
TOTAL 13.60
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
MTPA- Millon Tonnes Per Annum, G - Grinding Unit
128
4.3.3 New plants added
Between the years of 2008 to 2010, JAL has commissioned seven green-field
cement plants, comprising three integrated plants and four grinding units.
The three integrated plants include: JAypee Sidhi in Madhya Pradesh,
September 2008; Jaypee Gujarat at Bhuj in Gujarat, March 2009; and Jaypee
Himachal at Baga in Himachal, January 2010.
The four grinding units are: Jaypee Panipat in Haryana, March 2008;
Jaypee Wanakbori in Gujarat, November 2009; Jaypee Roorkee in
Uttrakhand, December- 2009; and Jaypee Bagheri in Himachal, January
2010.
JAL has set up green-field cement plants in Chattisgarh, Jharkhand,
and Madhya Pradesh through an innovative approach of joint ventures with
prestigious Central owned public sector undertaking like SAIL, retaining the
management and operational control with itself. It has successfully launched
two such joint venture companies, namely: Bhilai Jaypee Cement Limited
(BJCL) and Bokaro JAypee Cement Limited (BoJCL), which are now already
in commercial operations.
Incorporated on April 11, 2007 in Chhatisgarh, Bhilai Jaypee Cement
Limited (BJCL) is the first joint venture of JAL with Steel Authority of India Ltd.
(SAIL). JAL holds a stake of 74 percent in BJCL, while the remaining 26
percent is held by SAIL. SAIL has given the required land on a long term
lease at its Bhilai Steel Plant site. It also provides slag for the grinding unit at
Bhilai.
BJCL has set up two slag cement plants, one is a million tonnes clinkerisation
plant at Babupur in Satna district of Madhya Pradesh and other is a split
location grinding unit of 2.20 million tonnes capacity at Bhilai in Chhattisgarh.
The clinkerisation unit was successfully commissioned in December 2009,
while the grinding unit commenced commercial operations from June 2010.
129
Bokaro Jaypee Cement Limited (BoJCL) is the second joint venture
between JAL and SAIL with management control vested in the JAL. BoJCL
has set up a 2.1 million tonnes slag based cement grinding unit at Bokaro in
Jharkhand. Incorporated on March 13, 2008, it sources slag from SAIL –
Bokaro and clinker from JAL’s cement plants. Bokaro Jaypee Grinding Unit
commenced commercial production in May 2011.
Table 17: BJCL and BoJCL cement plants at a glance
Sr
No
Cement Plants State Capacity
MTPA
Jan 2010
Capacity
MTPA
Jan 2012
Year
1 Bhilai Jaypee Cement Plant-
Clinkerisation, JV
MP - - 2010
2 Bhilai Jaypee Grinding Unit, JV CHG 2.20 2.20 2010
3 Bokaro Jaypee Grinding Unit, JV JHK 2.10 2.10 2011
TOTAL 4.30 4.30
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
MTPA- Millon Tonnes Per Annum, Year - Year of first commissioning, JV
– Joint Venture
4.3.4 under Implementation
The Jaypee Group has two more companies, comprising one joint venture,
namely: Gujarat Jaypee Cement & Infrastructure Limited (GJCIL) and one
subsidiary – Jaypee Cement Corporation Limited (JCCL). These two ventures
are in the process of implementing their cement plants in the states of
Gujarat, Andhra Pradesh and Karnataka.
Gujarat Jaypee Cement & Infrastructure Limited (GJCIL) was
incorporated on June 20, 2007, as a joint venture between Jaiprakash
Associates Limited (JAL) and Gujarat Mineral Development Corporation
Limited (GMDC) for setting up a 2.4 million tonnes capacity integrated cement
130
plant at Kutch in Gujarat. Originally, JAL had a 74 percent stake in GJCIL but
later, the same was increased to 100 percent effective December 26, 2007.
GJCIL will also have a lignite based captive power plant and captive jetty for
cement exports and serving coastal districts.
In February 2011, JAL acquired 100 percent stake in Zawar Cement
Private Limited (ZCPL) and renamed it as Jaypee Cement Corporation
Limited (JCCL), which is a wholly owned subsidiary of JAL. JCCL is setting up
a 3 million tonnes integrated cement plant at Shahabad aling with a 35 MW
captive power plant at a cost of Rs 1400 crores. The orders for main plant and
machinery have already been placed and the project is scheduled to be
commissioned during the financial year of 2013-14.
In fact, the Zawar Cement had a cement plant at Bankur village in
Chittapur tehsil of Gulbarga district of Karnataka.This plant was originally
known as ACC-Shahabad Cement Works, which was first acquired by the
Kolkatta based HMP Ltd in 1990 and later in 2006, HMP divested the plant to
pune based Zawar Cement. Set up in 1926, Shahabad Cement was India’s
fourth cement plant.
Further, JCCL is also getting the cement plants located in Andhra Pradesh
and Gujarat into its fold. For this, on November 14, 2011, the JAL’s board
accepted the recommendations of the Committee of Directors to demerge the
company’s cement plants in Andhra Pradesh and Gujarat into JCCL.
In Andhra Pradesh, JAL is setting up one 3.5 million tone integrated
cement plant along with a 50 MW captive power plant. This plant, known as
Jaypee Balaji Cement, is being set up at Budawada village in Jaggatapeta in
Krishna district of Andhra Pradesh.
According to a report in Times of India, in November 2011, JAL has
acquired Andhra Cement Limited from GP Goenka Group in an all cash deal
for Rs 235 crores. Andhra Cements incurred a loss of Rs 35.50 crores on net
sale of Rs 65.48 crores last year while two of its units have been non
131
operational since June 2010. Andhra Cements had accumulated losses of
over Rs 200 crores in the past two years.
Andhra Cements is a 73 years old cement company and before
becoming non operational in the year 2010, the company had a cement
capacity of 1.42 million tonnes per annum.
Andhra Cements was also in the process of augmenting its cement production
Capacity to 3.5 million tonnes by 2010, but owing to several problems, the
expansion has not yet been completed. The Nadikude integrated plant’s
capacity is being increased from 0.86 million tonnes to 2 million tonnes and
Visakhapatanam ginding unit’s from 0.56 million tonnes to 1.50 million tonnes.
In Gujarat, JAL already has two cement plants in operation since 2009
with an aggregate capacity of 4.8 million tonnes. In addition, JAL’s JV
Company – Gujarat Jaypee Cement & Infra Ltd (GJCIL) is setting up a
cement unit with a capacity of 2.4 million tonnes. With this, JAL’s total cement
capacity in Gujarat will be increased to 7.2 million tonnes, making it the
largest cement producers in the Gujarat State, the other two comparable
producers being ultra Tech Cement – 7 million tonnes and the Ambuja
Cement – 6.7 million tonnes.
4.3.5 Captive Power Plants
Power is the lifeline for cement manufacturing and its uninterrupted availability
at economical cost is a critical success factor for a cement company. JAL has
strategically set up its own thermal captive power plants (CPP) to support
cement production.
JAL’s first CPP- a 22.5 MW thermal plant, was set up at Jaypee Rewa
plant in November 2003. The second one, commissioned in November 2004
at Jaypee Vela, was also a 22.5 MW power plant. In August 2006, the
company added the third CPP at Rewa complex with a capacity of 38.5 MW,
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raising the CPP’s capacity to about 83.5 MW. This made the Rewa complex
self reliant in meeting its entire power requirements at reduced energy cost.
By January 2010, JAL’s total CPP capacity was increased to 223.5 MW
and by January 2012, to 278 MW. Further, the Group is poised to increase its
captive power capacity to over 700 MW. This will make Jaypee to have the
largest thermal captive power facility among the Indian cement companies.
Table 18: Captive Power Plants (CPPs) at a glance- alphabetically listed
Sr
No
Power Plants at Capacity
MW
Jan 2010
Capacity
MW
Jan 2012
Year
1 Jaypee Rewa Cement Plant 62 62 2003
2 Jaypee Bela Cement Plant 27 27 2004
3 Jaypee Chunar Grinding Unit 37 37 2009
4 Jaypee Dalla Cement Plant 27 27 2009
5 Jaypee Sidhi Cement Plant 35 35 2009
6 Jaypee Gujarat Cement Plant 35 65 2009
7 Jaypee Wanakbori GU - 25 2011
TOTAL 223 278
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
Year - Year of first commissioning
4.3.6 Operational Performance
JAL’s cement division has emerged as the second largest revenue earner for
the company after the construction division, which was its first business
segment.
The company’s cement production has increased to 14.68 million tonnes in
2010-11 from 6.78 million tonnes in 2007-08. Cement dispatches including
133
clinker sale has also increased to 15.09 million tonnes from 6.76 million
tonnes and net sales stood at Rs 4852.06 crores from Rs 1902.39 crores.
Table 19: Cement Division’s operational performance for four years
Particulars Unit 2010-11 2009-10 2008-09 2007-08
Cement Production Mn Tons 14.68 10.52 7.63 6.78
Clinker Production Mn Tons 11.53 8.35 5.55 5.14
Cement Sales,Volume Mn Tons 15.09 10.55 7.61 6.76
Cement Sales, Value Rs Crs 4852.06 3940.36 2195.86 1902.39
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
4.3.7 JAL’s Financial Results
In the last four years, JAL has achieved a steady growth in its financial
results, which have increased from Rs 4261.20 crores in 2007-08 to Rs
13831.87 crores by 2010-11. Similarly, the company’s profit after tax has
jumped from Rs 609.67 crores to 1167.78 crores.
4.3.8 Fastest growing company
“Jaypee Group’s learning of the past has given it a good understanding of the
cement sector. With continued emphasis on improving productivity, creating
capacity before demand and focusing on customer satisfaction has in turn
helped Jaypee Group to emerge as one of the fastest growing Groups to
expand through the organic route”, quoted by Manoj Gaur, Executive
chairman of JAL.
134
Table 20: JAL’s financial results for four years at a glance
Particulars Unit 2010-11 2009-10 2008-09 2007-08
Gross Revenue Rs Crs 13831.87 11671.78 6147.93 4261.20
Profit before Tax Rs Crs 1754.51 2381.67 1250.98 843.35
Profit after Tax Rs Crs 1167.78 1708.36 897.01 609.67
Total Assets Rs Crs 32325 27365 20524 13474
Dividends Percent 40% 54% 30% 50%
Earning per share
(Face value Rs 2)
Rs 5.49 8.08 6.46 5.42
Segment Revenues
Cement Rs Crs 4852.06 3943.07 2167.51 2240.51
Construction Rs Crs 6029.24 5575.61 2890.55 1730.19
Real Estate Rs Crs 1705.23 651.13 439.43 255.83
Hotel/ Hospitality Rs Crs 177.31 151.99 153.17 30.58
Power Rs Crs 118.31 87.46 45.03 18.11
Asbestos Sheets Rs Crs 82.89 87.99 68.49 51.65
Others Rs Crs 866.83 1582.87 383.75 276.43
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
4.4 BINANI CEMENT
Binani Cement, a subsidiary of Binani Industries Ltd, has two cement plants in
Rajasthan with capacity of 6.25 million tonnes. It is the third largest in
Rajasthan, the first and second being Shree Cement and Ultra Tech with
capacities of 11.70 million tonnes and 8.1 million tonnes, respectively. The
company also has operations in China and Dubai with a combined capacity of
2.50 million tonnes.
The Mumbai based Braj Binani Group is a multi- deimensional
business conglomerate with a 139 years history. It has business interest in
cement, EPC projects, fibre, glass composite products, media, minerals,
readymix concrete, Zinc, etc. The Group has extended its reach well beyond
Indian shores to UAE, China and is in the process of expanding to Mauritius,
135
Tanzania, Africa and other countries. At present, the Group has a net global
asset value of $521 million, net income of $ 603 million and 1700 strong
professionals, committed workforce. Braj Binani heads the Group as
chairman.
Binani Industries Limited (BIL) is the Group’s flagship enterprise. BIL
was founded following the restructuring of the Braj Binani Group, from 1996-
2004, to serve as the holding company for Binani Cement Limited, Binani Zinc
Limited, Goa Glass Fibre Limited and BT Composites Limited.
4.4.1 Evolution of Binani Group
The group traces its beginning to 1872, when Seth Pragdas Binani – a trader
in metal utensils, began an enterprise with his son Seth Mathuradas to
engage in the import and export of metals. The year 1941 marked an
important phase in the evolution, when Seth Mathuradas’ son Seth
Govardhandas made a bold, but significant move from trading to
manufacturing. His venture – Binani Metal Works got rolling with a plant at
Howrah. In 1953, the company went public for the first time. Taking on the
mantle from his father, it was during the reign of son – Ghanshyam Binani,
that Binani Zinc was born.
In 1962, Binani entered into a technical and financial collaboration with
Cominco Limited of Canada to form Cominco Binani Zinc Limited. It was the
first Indian Company to manufacture high grade electrolytic zinc at
Biananipuram in Kerela in 1967. About 14 years later, in March 1991, the
Cominco Binani Zinc was re-christened as Binani Zinc Limited. This was
followed by two public issues, one in February 1994 and the other in February
1995 and both issues were oversubscribed. The funds so raised were
invested in the implementation of two new projects – namely: glass fibre and
cement. Located at Colvale in Goa, the glass fibre plant commenced
production in March 1996, while the cement plant was commissioned in
November 1997 at Pindwara, Rajasthan.
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But it was with the advent of the company’s preset youthful chairman –
Braj Binani, 51, that the Group truly began to prosper and exploring uncharted
horizons. First, the Binani Zinc was re-christened as Binani Industries Limited
in 1996, reflecting its status as a multi- divisional, multi- product and multi-
locational company driven by technology and professionalism. This was
followed by restructuring of the Binani Industries Limited and its cement and
glass fibre product divisions were hived off into separate independent
subsidiaries.Thus Binani Cement Limited was formed in November 1997 and
Goa Glass Fibre Limited in October 1998.
Braj Binani is a pioneer in every sense. He has been the architect of
the growth and development of the Group. His rich entrepreneurial skills with
long years of industrial experience and knowledge in commodity business
have taken the Braj Binani Group to unfathomable heights and are set to keep
rising higher.
4.4.2 Cement Business
Binani Cement, a flagship subsidiary of Binani industries, is today one of the
leading cement companies in India. It has two cement plants in Rajsthan –
one at Sirohi and Neem ka Thana with a combined capacity of 6.25 million
tonnes. This makes Binani Cement the third largets cement capacity in
Rajasthan, the first and second being Shree Cement and Ultra Tech having
capacity of 11.70 million tonnes and 8.1 million tonnes, respectively.
4.4.2.1 Binanigram Cement Plant
Strategically located at Binanigram at pindwara in sirohi district of Rajsthan, it
is an integrated cement plant. It was commissioned in July 1997 with a
capacity of 1.65 million tonnes and 25 MW captive power plant at a cost of Rs
500 crores. In 2005, following de-bottlenecking efforts, Sirohi plant’s capacity
was raised to 2.25 million tonnes. Later in 2009, through a brown-field
expansion, its capacity was further increased to 4.85 million tonnes.
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4.4.2.2 Neem ka Thana Plant
To tap the growing demand in the markets of Rajasthan and other regions of
northern India, the company added one grinding unit of 1.4 million tonnes
capacity at Neem Ka Thana. This unit was commissioned in September 2008
and with this, the company’s total capacity has increased to 6.25 million
tonnes.
Table 21: Binani’s cement plants at a glance
Sr
No
Cement Plants District State Capacity
MTPA
Jan
2010
Capacity
MTPA
Jan
2012
Year
1 Binanigram Cement Plant Sirohi Rajasthan 4.85 4.85 1997
2 Neem Ka Thana Grinding Unit Sikar Rajasthan 1.40 1.40 2008
TOTAL 6.25 6.25
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
MTPA- Millon Tonnes Per Annum, Year- Year of first commissioning
4.4.3 Gujarat Project
The company has planned to set up a 5 million tonnes green field integrated
cement plant in Gujarat along with a captive power plant as well as a captive
jetty at an estimated cost of Rs 825 crores. For this, the company has already
signed an MOU with the Gujarat Government in January 2009. The orders for
the long delivery major equipments and the engineering of the project have
been initiated. The Gujarat plant will come up at Lodhva village in Sutrapada
in Junagadh district on 188 hectares.
4.4.4 Odisha Project
The company has plans to install one million tonne split grinding unit in
Odisha. The order for project pre planning has been given to Group’s own
company- BIL Infratech Limited. In principle approval for the acquisition of
land has been granted by the Government. Acquisition of land is under
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progress. Process for EIA study and other statutory compliance is under
progress. Basic system engineering has been done and finalization of
technical specification is under progress.
4.4.5 Captive Power Plants
In view of the severe shortage of power in Rajasthan, the company had set up
a 25 MW captive thermal power plant at Binanigram Cement Plant in 1997.
Later in March, 2008 and May, 2009, two captive power plants, each with a
capacity of 22.3 MW were commissioned. These additions raised the
Binanigram plant’s total captive power capacity to 69.6 MW, making the plant
self sufficient in meeting its power requirements.
4.4.6 Lignite Project for Power Plant
In February 2007, the Government of India allocated a lignite block of
56.4 sq Km to Binani Cement at Nimbri Chandrawatan in Nagaur district of
Rajasthan for using the lignite as captive raw materials for power generation.
The company has acquired 72 hectares of private land within the mining lease
area. The company has obtained most of the government clearances and has
almost finalized the site for the location for a 120 MW pit head power plant.
The public hearing for the mine and the power plant has been completed.
4.4.7 Domestic markets
The company’s products are marketed under the premium brand “Binani
Cement”, which enjoys a significant market share of 13.9 percent in
Rajasthan, 10.2 percent in Gujarat, 5.7 percent in Haryana and 4 percent in
Delhi. The company has a large distribution network in place with more than
68 depots and 2808 dealers, and 76 market organizers.
After well establishing in the North India and Gujarat, the company
entered the lucrative markets of West Bengal in the year of 2008-09. It
transports the cement bags through railways to a hub in Burdwan and
eventually they reach all the markets including Kolkatta and Greater Kolkatta,
Durhapur, Asansol, Bankura and Purulia. The company has also planned to
enter the newer markets of Punjab, Western UP and Maharashtra.
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4.4.8 Operational Performance
The company has been continuously improving its capacity, operational
efficiency and continues to increase the productivity. In the year 2010-11, the
company’s production and sales figures have surpassed all the previous
highs. The company produced 5.46 million tonnes of cement compared to
5.28 million tonnes in 2009-10, registering an increase of 3.4 percent over the
previous year.
In line with the industry trends, the company registered a much lower
profitability compared to previous year due to lower cement price, increase in
costs of fuel, raw material and logistics. During 2010-11, the company has
registered a net profit of Rs 90.51 crores compared to Rs 281.92 crores in
previous year.
4.4.9 Entry in RMC
Moving a step ahead in supporting the construction industry, Braj Binani
Group had made yet another strategic move by entering into Ready Mix
Concrete (RMC) Business. Binani Ready Mix Concrete, a subsidiary of Binani
Industries Ltd, has been recently floated with its bare at Mumbai.
The objective of forward integration inti the RMC business is to
maximize the Group’s share and optimize returns at a lesser investment.
Managed by highly experienced professionals from the industry, the company
is set up in to penetrate the Maharashtra markets. The RMC Company has
adapted state-of-the-art technology for optimal production at a minimal cost
with logistic process in place.
Ready Mix Concrete industry is perhaps among the fastest growing
sector in India. Over the next 5 years, the size of the RMC industry is
estimated to grow at 20 percent, from Rs 155-160 billion in 2009-10 to Rs
395-400 billion in 2014-15. During the same period, demand in volume terms
is estimated to increase at a CAGR of 18 percent, from 48-50 million cubic
metres to 105-110 million cubic metres.
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4.4.10 Future plans
The company has plans to expand its capacity to 20 million tonnes by 2015.
In addition, the company has also initiated action for developing of 10 million
tonnes reserves lignite mine at Nimbari Chandawatan in Rajasthan.
Companies chairmain Braj Binani said “It is with pride I would like to highlight
that we have strengthened our position in the cement sector with continued
growth and shall continue to do so in the future as well. While strengthening
our domestic base beyond 6 million tonnes of cement per annum, we are
consolidating our presence across the seas- in Dubai at 2 million tonnes and
China at 0.5 million tone. Our focus is to expand further in the specific
emerging markets of Africa and Mauritius including enhancing capacities in
UAE by one million tonne and explore potential in establishing our presence in
Europe as well. The company is poised to attain a cement production capacity
of 20 million tonnes in the specifically focused countries emerging across the
globe by 2015 if not earlier.”
Table 22: Binani’s Performance for Four years at a glance
Particular unit 2010-11 2009-10 2008-09 2007-08
Cement Capacity MTPA 6.25 6.25 6.00 4.80
Cement
Production
Mn Tons 5.46 5.28 4.29 2.96
Capacity
Utilisation
Percent 87.36 84.48 71.50 61.66
Power
Generation
Mn Units 305.67 244.90 187.64 151.15
Total Income Rs Crs 1743.45 1872.16 1502.70 991.81
Profit before Tax Rs Crs 82.27 408.00 154.56 244.84
Profit after Tax Rs Crs 90.51 281.92 108.67 175.82
Dividend Percent 25 35 21 25
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
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4.5 J.K. LAKSHMI CEMENT
JK Lakshmi Cement is one of the few cement companies, which have
opted for 'green practices'. The company has initiated examplary measures
for energy and water conservation, emissions and effluents reduction, waste
heat and material utilization. Its Sirohi plant has been rated as the third
greenest cement plant in India. The US based Frost & Sullivan has honoured
the company with "Green Manufacturing Excellence Award-2011", leaving 44
other contenders for the same. The company is also the first to introduce
green colour coding for cement bags.
At present, JK Lakshmi has three cement plants with an annual
capacity of 5.30 million tonnes. The company has planned to double its
capacity by 2013-14.
The Delhi based JK Lakshmi Cement Limited is a part of the century
old eminent industrial group – JK Organization. The Rs 10,500 crore JK
Group has multi-business, multiproduct and multi-location operations. The
Group's half a dozen companies, namely: JK Tyre & Industries Ltd, JK Paper
Ltd, JK Lakshmi Cement Ltd, JK Agri Genetics Ltd, Fenner (India) Ltd, JK
Sugar Ltd, are well known entities in the country. They are having leadership
position in their product lines like automotive tyres and tubes, paper and pulp,
cement, hybrid seeds, v-belts, oil seals, power transmission systems, sugar
etc. The group's exports span over 80 countries across six continents.
4.5.1 Origin
In 1982, the group diversified into cement business and setup
J.K.Lakshmi. Cement, which today is a blue chip company with an annual
turnover of about Rs 1900 crores. Originally, the company's cement business
was under the aegis of JK Corp Limited, a multi-product company, but in
2005, it de-merged its paper and investment business and became a cement
focused company with a new name – JK Lakshmi Cement Ltd. Over the
years, the company has emerged as a leading player in the Indian cement
industry.
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The company split its equity share of Rs 10 into two equity shares of
Rs - each in 2009. Its market capitalization has grown to about Rs 800 crores
in March 2012 from Rs 342 crores in March 2005. Padma Bhushan Hari
Shankar Singhania presides over the company as Chairman, Bharat Hari
Singhania – Vice Chairman cum Managing Director, and Mrs. Vinita
Singhania – Managing Director. It also has two Whole Time Directors –
Shailendra Chouksey and Sushil Kumar Wali.
By now, the company's cement business has completed about 30
years of its existence but in the last nine years, it has registered a remarkable
growth. During this period, the company has become an independent
company, increased its cement plants to three from one and doubled the
capacity to 5.30 million tonnes from 2.40 million tonnes in 2003. The company
has planned to invest Rs 1800 crores to double its production capacity to 10
million tonnes. Adds Mrs Vinita Singhania – Managing Director: “At present,
our installed cement production capacity stands at five million tonnes, which
we would expand to 10 million tonnes."
4.5.2 Cement Plants
At present, JK Lakshmi has three cement plants, comprising one
integrated plant at Sirohi in Rajasthan and two grinding units, one each at
Kalol in Gujarat and Jhajjar in Haryana, with a combined capacity of 5.30
million tonnes. Further, it has one 2.70 million tonnes integrated Greenfield
project under implementation in Chhattisgarh. This plant is scheduled to
commence operation in December 2013.
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Table-23
JK Lakshmi’s cement plants at a glance – alphabetically listed
Sr.
No.
Cement
Plants District State
Capacity
MTPA
Jan 2010
Capacity
MTPA
Mar-2012
Year
1 Jhajjar
Grinding Unit
Jhajjar Haryana ---- 0.55 2012
2 Kalol
Grinding Unit
Gandhinagar Gujarat 0.55 0.55 2009
3. Sirohi
Cement
Plant
Sirohi Rajasthan
4.20 4.20 1982
Total 4.75 5.30
Under Implementation
4. Drug
Cement
Plant
Drug CHG
----- 2.70 Oct
2013
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
Million Tonnes per Annum
4.5.2.1 Sirohi Cement Plant
Located at Jaykaypuram on Sirohi Road in Rajasthan, a remote area in
the zero-industry district of Sirohi, JK Lakshmi's Sirohi Cement Plant is an
integrated cement plant. It was commissioned in 1982 with an initial capacity
of 0.5 million tonne and now it has a capacity of 4.20 million tonnes.
Sirohi manufacturing facility has been rated amongst the greenest
cement plants of India by CSE GRP 2005, thus highlighting the company's
commitment to the environment even while ensuring the highest standards of
quality for its products.
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4.5.2.2 Kalol Grinding Unit
It is JK Lakshmi's first split location grinding unit at Kalol in Gujarat.
Commissioned in January 2009 at a cost of Rs 72 crores, the Kalol Grinding
Unit has a capacity of 0.55 million tonnes.
4.5.2.3 Jhajjar Grinding Unit
Jhajjar Grinding Unit is the company's second split location grinding
unit with a capacity of 0.55 million tonne. It was set up at a cost of Rs 80
crores in Jhajjar district of Haryana and completed in March 2012.
4.5.2.4 Durg Integrated Plant
The company is setting up a 2.7 million tonnes green-field cement plant
at Durg in Chhattisgarh at an investment of Rs 1250 crores. This capacity
includes two grinding units one each in Odisha and in West Bengal. The work
on Durg cement plant is progressing smoothly and will be completed by
March 2014.
4.5.3 RMC Plants
The company has also forayed into the ready mix concrete (RMC)
business and has set up eleven fully operational state of the art plants in cities
of Gujarat, Punjab Rajasthan and Uttar Pradesh. RMC is marketed under the
brand name of "JK Lakshmi Power Mix". The RMC business contributes over
Rs. 150 crores to the company’s total turnover.
4.5.4 Plaster of Paris
‘JK Lakshmiplast’ is another value added product, which was launched
by the company in the year 2006. It is the first premium branded plaster of
Paris (POP) and is being marketed in Northern India.
4.5.5 Captive Power
In 2007, the company installed a 36 MW thermal captive power plant at
its Sirohi plant by investing Rs 152 crores. Later in 2010-11, the company
added one 18 MW thermal power plant at a cost of Rs 81 crores and another
12 MW green power plant involving an investment of Rs 125 crores. This has
145
increased the company's thermal captive power capacity to 54 MW and the
total power capacity, inclusive of 12 MW green powers, to 66 MW from 36
MW. Additionally, the company has also entered into a long term agreement
on private partnership basis for supply of 21 MW power at substantially lower
rate compared to the power supply by the State grid. This raises the
availability of captive power to company further to 87 MW.
4.5.6 Green Power
JK Lakshmi Cement is among the first few in Indian cement
companies, which have realized the potential of energy loss through hot air
being exhausted to atmosphere. Experts in this field expressed difficulty to
design a system for waste heat recovery from such pre-heaters where the
waste gases are emitted comparatively at lower temperature. The company in
collaboration with Taiheiyo Engineering Corporation and Thermax Limited
developed a custom built waste heat recovery plant for power generation from
the pre-heaters and clinker coolers.
The 12 MW waste heat recovery plant (green power) was
commissioned in 2011 at a capital outlay of Rs 125 crores. It generates power
at substantially lower cost and also helps in reducing the greenhouse gas as
no coal is used for this power generation.
To make it further green, the air-cooled condenser technology was
installed in the green power plant to conserve the water, which is a very
scarce resource in Rajasthan. In fact, all the company's power plants in its
cement plant have been using air-cooled condenser technology since 2007,
thereby saving 20 lakh liters of water every day.
4.5.7 Market Development
The company markets its cement under brand of "JK Lakshmi
Cement", which is one of the most preferred brands in North India, Gujarat
and Mumbai. It is also the first cement manufacturer to use colored bags to
help the customer in segregating different products. Over the years, the
company has built up a strong network of 70 cement dumps and over 2200
146
dealers spread over 10 States, namely: Rajasthan, Gujarat, Delhi, Haryana,
Uttar Pradesh, Uttaranchal, Punjab, J&K, Himachal Pradesh and Maharashtra
(Mumbai).
It also has a vast pool of highly trained and dedicated marketing and
technical service team to help the customers at their doorstep.
The company's rural marketing campaign, launched in 2010-11, is
serving its objective of reinforcing the brand “JK Lakshmi” in the minds of its
rural customers. During the year, its rural penetration has increased from 25
percent to 30 percent.
It has regular contact programmes with masons, dealers and architects
to keep in tune with their needs and requirements. One of the many
innovative initiatives the company took was to have a mason's club that now
has over 15000 members. Under this programme, the masons are given an
insurance cover against accidents absolutely free of cost, besides educating
them on the latest in construction activities.
J.K. Lakshmi Cement has received" "Star Brand-2011 Award", which
was chosen based on research across India on three parameters: product
innovation, recall and impact by Indian Council for Marketing and Research
(ICMR). It is a pioneering project on India's 100 most impactful brands across
all industries and sub-industries.
4.5.8 Performance
Year after year, the company is improving its performance consistently.
In the last four years, it has increased its annual capacity from 4.74 million
tonnes to 5.30 million tonnes and sales from Rs 1404 crores to Rs 1900
crores.
4.6 GUJARAT SIDHEE
Gujarat Sidhee, a subsidiary of Saurashtra Cement, is a BIFR case
since 1990 and continues to be under rehabilitation.
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The Gujarat Sidhee Cement Limited and Saurashtra Cement Limited
are part of the Mumbai based Rs 2000 crores Mehta Group. Founded in 1900
by Late Nanji Kalidas Mehta, today the Group has presence in four continents
- Africa, Asia, Europe and North America. The Group has business interests
in sugar, cement, building materials, packaging, electrical cables, engineering,
consultancy, management, financial services, international trade, floriculture,
horticulture, etc.
The Gujarat Sidhee Cement and Saurashtra Cement have two cement
plants in Gujarat with a combined capacity of 2.7 million tonnes. Incidentally,
both companies are registered with BIFR and are under rehabilitation. Jay
Mehta heads both companies as Executive Vice Chairman.
4.6.1 Gujarat Sidhee in retorspect
Gujarat Sidhee Cement Limited has a 1.2 million tonnes capacity
cement plant in Gujarat and is registered with BIFR since 1990. It has been
getting the rehabilitation schemes modified from time to time to make the unit
viable.
Originally, the Gujarat Sidhee was promoted by Gujarat Industrial
Investment Corporation (GIIC) as a subsidiary company, known as Cement
Corporation of Gujarat Limited. Incorporated in 1973, the project’s
implementation remained dormant for seven years. In 1980, GIIC obtained a
letter of intent for setting up one million tone of cement plant. A year later,
Mehta International Limited joined hands with GIIC as a co-promoter making
the company – Cement Corporation of Gujarat Limited, a joint venture
enterprise. The company went public in 1987 to raise funds.
The original plan was to set up a split location plant with clinkerisation
at Veraval and cement grinding unit at Rajkot. But ultimately, only the
integrated plant was set up at Veraval with a capacity of one million tonne at a
cost of about Rs 170 crores, which included a cost over run of Rs 46.50
crores. Located at Sidheegram in Veraval taluka of Junagadh district Gujarat,
148
the plant was commissioned in 1988 with dry process calcination technology.
As the plant is closely located to Porbandar Pipavav ports, it has advantage
accessing large export markets in the Middle East countries, Sri Lanka
Bangladesh via the economical sea route: The company markets cement
under the brand name "Sidhee".
Table-24
Mehta Group’s Cement Plants at a glance
Sr.
No. Cement Plants District State
Capacity
MTPA
Jan 2010
Capacity
MTPA
Jan 2012
Year
1 Gujarat Sidhee
Cement
Junagadh Gujarat 1.2 1.2 1988
2 Saurashtra
Cement
Porbandar Gujarat 1.5 1.5 1959
Total 2.7 2.7
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012 :3rd Edition
MTPA Million Tonnes per Annum
Since Gujarat Sidhee’s plant had no balancing equipments, it had
frequent breakdowns. This was further aggravated by the adverse market
conditions resulting into low capacity utilization and poor price realisation. As
the company failed to generate adequate operating profits to service the debt,
there was a large erosion of its net worth and it became sick. In 1990, the
company was registered with BIFR as a sick company. In 1992, as per the
MOU entered into by GllC and Mehta International, the management of the
company was vested with the Mehta Group. In 1994, the Mehta Group
changed the company's name from Cement Corporation of Gujarat Limited to
Gujarat Sidhee Cement Limited.
149
Table-25
Gujarat Sidhee Cement's performance for four years at a glance
Particulars Unit
2010-11
Apr-Mar
12
Months
2008-10
Oct-Mar
18
Months
2007-08
Apr-Sep
18 Months
2006-07
Apr-Mar
12
Months
Cement Capacity MTPA 1.20 1.20 1.20 1.20
Cement
Production
Mn
Tons
1.21 2.05 1.75 1.28
Total Income Rs. Crs. 355.64 652.52 581.57 402.86
PBID Rs. Crs. 0.37 100.66 69.70 80.38
Interest Rs. Crs. 2.55 2.26 1.73 11.72
Net Profit / Loss Rs. Crs. (3.01) 57.29 48.78 52.36
Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
4.6.2 Rehabilitation Schemes
Gujarat Sidhee submitted a comprehensive plan for its modification in
the sanctioned scheme to reduce the cost of production. The State Bank of
India, operating agency, circulated their appraisal report on the proposal
submitted by the company to all the secured lenders and Government of
Gujarat stating that the scheme drawn under RBI parameters is a viable
scheme. However, in the meantime, the BIFR passed order on November 29,
2001, directing, and inter-alia, for issue of advertisement for change of
management and to prepare a Draft Rehabilitation Scheme (DRS). The
company challenged this order of BIFR before the Appellate Authority for
Industrial & Financial Reconstruction (AAIFR), which admitted the appeal and
stayed the order passed by BIFR.
AAIFR in its order of February 19, 2002, had concluded that in view of
the repayments made by the company and the scheme prepared by SBI
being viable, an opportunity should be given to Gujarat Sidhee's promoters to
implement the scheme.
150
The AAIFR directed the SBI to rework the DRS in accordance with the
decision taken in the hearing held on May 27, 2002. A rehabilitation scheme
was sanctioned for company's revival in November 2002, which had
envisaged construction of a Jetty with mechanised loading and unloading
facilities near the factory to reduce transportation cost, acquisition and setting
up of DG sets to reduce cost of power and granting necessary relief and
concessions by the banks financial institutions and Government of Gujarat.
Since the company could not implement the cost saving projects as
envisaged, in September 2008, the BIFR circulated a Modified Draft of
Revival Scheme (MDRS). Accordingly, the company had proposed to submit
the modification in sanction scheme (SS) involving reorganization of existing
share capital in the shape of de-rating of the shares and allotment of
additional shares on preferential basis.
According to Director's report 2010-11, the company has installed DG
sets at the factory and paid the dues of the banks, financial institutions and
government of Gujarat. However, the construction of jetty is pending and the
company had therefore submitted a proposal for a modification in the
sanctioned scheme to facilitate construction of jetty, re-organization of existing
share capital by de-rating of existing equity and allotment of shares at par on
preferential basis.
4.6.3 Performance
Earlier in the year of 2007-08, the company had changed its financial
year ending in March 31 to ending in September 30; therefore the year was
for 18 months. However, the company has decided to revert back to its
original financial year ending on March 31 and accordingly, once again its
financial year will be for 18 months, from October 2008 to March 2010. From
2010-11, it has restored the financial year from April to March.
151
In the last four years, the company has improved its performance by
working at 100 percent capacity utilization. However, it could not sustain its
profitability owing to bad market conditions.
Future Plans
The company has plans to add new production lines at Gujarat Sidhee
and also to install a captive power plant.
4.7 SAURASHTRA CEMENT
Saurashtra Cement Limited is part of the Mumbai based Rs. 2000
crores Mehta Group. It is the first company of the Group. Later, the company
added one more cement company – Gujarat Sidhee Cement Limited, which
was acquired as a sick company from its joint venture partner – Gujarat
Industrial Investment Corporation (GIIC). Jay Mehta heads the company as
Executive Vice Chairman.
Incorporated in 1956, Saurashtra Cement commenced commercial
production in 1959. Located at Ranvav in Porbandar district of Gujarat, the
company has a capacity of 1.5 million tonnes. Since it is in the proximity of the
Porbandar and Veraval / Okha ports, it enjoys competitive access to the large
export markets in the Middle East countries, Sri Lanka and Bangladesh
through the economical sea route.
4.7.1 under BIFR
The company is a sick company and is registered with Board for
Industrial and Financial Reconstruction (BIFR). At the last hearing, BIFR had
directed the company to submit revised Draft Rehabilitation Proposal and also
to the Government of Gujarat to expedite its decision on the proposal of one
time settlement field by the company. IFCI, the lead financial institution and
operating agency was asked to submit a duly tied up scheme to BIFR, after
conducting a joint meeting of persons.
Saurashtra Cement markets its cement under the brand name of 'Hathi
Cement'. Keeping in tune with the recent market trends, the company
152
launched cement packed in 1 kg, 2 kg, 5 kg and 10 kg bags in the retail
cement market under the brand name 'Chhotu Hathi'.
4.7.2 Performance Review
In the year of 2010 - 11, the company achieved a production of 1.16 million
tonnes of cement as against 1.61 million tonnes in the previous year of 15
months ended on March 31, 2010. The total sale of cement was 1.37 million
tonnes as compared to 1.87 million tonnes in the earlier period of 15 months.
4.7.3 Future Plans
The company has plans to add new production lines at Saurashtra Cement.
4.8 SANGHI CEMENT
In 2003, when Sanghi Industries set up its 2.6 million tonnes cement
plant in Gujarat, then the company was hailed as the third largest player in the
State, while the first and second being: L& T Cement {now Ultra Tech) and
Gujarat Ambuja (now Ambuja Cements). But with the entry of Jaypee Cement
in Gujarat, Sanghi Industries has been pushed to 4th place in the State, while
the first three being, Ultra Tech - 7 million tonnes; Ambuja - 6.70 million
tonnes; and Jaypee - 4.80 million tonnes. Sanghi Industries Limited, which
was originally set up by the Hyderabad based Sanghi Group, is now a Ravi
Sanghi Group Company. It has re-loacted its corporate office at Ahmedabad.
Founded in 1978 by the late Ramsharan Sanghi, the Hyderabad based
Sanghi Group was a multiproduct industrial conglomerate in Andhra Pradesh.
The Group had nine companies under its umbrella with major operations at
Sanghi Nagar, about 30 Kms from Hyderabad. The companies promoted by
the Group are managed by the founder's four sons - Anand Prakash Sanghi,
Sudhir Sanghi, Ravi Sanghi, and Gireesh Sanghi.
Over a decade ago, the Sanghi Group decided to diversify into cement
sector under the aegis of Sanghi Industries Ltd, headed by Ravi Sanghi as
Managing Director. Now the Sanghi Industries is a Ravi Sanghi Group
Company. Further, Ravi Sanghi has inducted his two sons - Aditya Sanghi as
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Executive Director - Production, and Alok Sanghi as Executive Director -
Marketing.
As on September 30, 2011, the promoters holding in Sanghi Industries
stood at 51.06 percent, foreign financial investors (FFI’s) 17.01 percent and
foreign institutional investors (FIl’s) 1.42 percent. The remaining 30.51 equity
was held by others.
4.8.1 Cement Plant
Sanghi Industries strategically located its cement plant at Sanghinagar
in Motiber village, Abdasa taluka in Kutch district of Gujarat. By the time the
company completed its cement plant, the project cost got escalated to Rs
1300 crores from the revised cost of Rs 775 crores. The company spent over
Rs 1100 crores, while the FL Smidth had contributed Rs 26 crores till the end
of 2000 by picking up a 14 percent stake in the company.
The cement plant was commissioned in March 2003 with a capacity of
2.6 million tonnes. Then its kiln measuring 6 x 84, was considered to be the
largest in India. There was only one such other kiln at ACC's New Wadi Plant
in Karnataka. According to Alok Sanghi, the company's present capacity is 3
million tonnes.
The Kutch has vast limestone deposits, spread across hundreds of
miles in the desert. The company has limestone mining area of over 20
square kilometers. The limestone found here is very soft and chippable with
low overburden, obviating the need for blasting or drilling.
The Sanghi's plant is the country's first port-based mega cement plant.
The port is just 14 kilometer from the site of the plant. While its clinkerisation
plant is mine based, the cement grinding and packaging units are port based.
The packing and loading of cement into the ship is totally automated with
state-of the-art packers and ship loaders. This saves substantially to company
on cement transportation through sea routes, instead of road and railways as
done by others.
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Adds Ravi Sanghi: “The real advantage in cement business lies in
lower transportation expenses. It is not viable if cement is to be transported to
longer distances by road. The logistics never work out favourably. The captive
port that we have developed helps us to transport our cement from Gujarat to
any place in Maharashtra, Kerela, and such other places. Similarly, the
product can be exported to Middle East and South Asian markets. This may
not be possible for any other cement plant that depends either on road or
other transportation facalities.”
4.8.2 Captive Power Plant
The company has a captive power plant with a capacity of 60MW. The
company has pioneered the usage of lignite as fuel in place of coal. The use
of lignite reduces the cost of fuel by almost 70 percent and also saves the
precious foreign exchange on coal imports. The lignite deposits are 25 Kms
away from the plant site. The company also has a desalination plant with a
capacity of 5500 cubic meters per day, which was set up in technical
collaboration with IDE of Israel, costing Rs 22 Crores.
4.8.3 Expansion
The company has plans to expand its capacity to about 7 million
tonnes by adding a unit II with a capacity of 4 million tonnes at the existing
location in Gujarat. It also proposes to increase its captive power caoacity to
120 MW by adding one more plant of 60 MW capacities. At present, it already
has a 60 MW plant in operation.
With the expansion of capacity, the company has plans to enter into
new markets of neighbouring states of Maharashtra, Rajasthan and other
coastal states. Further, the company is also planning to strengthen the
alternate routes of supplies, rail and sea routes, in order to reach far
destinations with required operationsl economy.
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4.8.4 Performance
In the year of 2010-11, the cement production was 2.32 million tonnes
against 1.82 million tonnes in previous year. The capacity utilization was
marginally better at 71 percent compared to 69 percent in previous year.
The company sold about 81 percent of the cement volume in the
domestic market, which was 76 percent in the previous year. The international
markets have been affected by financial crises starting in Dubai and political
unrest. These circumstances have affected both demand and prices for
exports.
The company has registered gross sales of Rs 980.56 crores against
Rs 709.01 crores in the previous year. The average realization for the cement
sales in the domestic markets was Rs 208 per bag compared to Rs 200 in the
previous year.
4.8.5 Future Plans
According to media reports, Sanghi Infrastructure Limited, a subsidiary
of Sanghi Industries, has announced to set up a 3.8 million tonnes cement
plant along with a power plant at Sanghigram in Katni district of Madhya
Pradesh with an investement of Rs 1180 crores.
An another subsidiary – cemtech Sanghi is all set to put up a 1.2
million tonnes cement plant at Pokot in Kenya at a cost of $ 175 million. The
Kenya plant is to be implemented in two phases. Under the first phase, a
capacity of 0.6 million tonnes will be commissioned. Under phase II, the
remaining capacity of 0.6 million tone will be completed. The company has
already received all the clearances from the Government of Kenya and it has
also procured 650 acres of land for the cement plant.
Sanghi’s investement in Kenya is considered to be the single largets
investment. It will be joining the Mombasa cement in Kenya’s Athi River as a
new cement player.
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4.9 Cement plants in India
India is having total 206 cement plants having capacity of 358.64 million tons
per annum out of these plants Gujarat is having 14 plants of different
companies generating 27.49 million tons cement in a year. The detail of
cement plants across the country is as follow:
Table - 26
State wise1 cement plants and their capacities
Rank State Capacity
MTPA 2012 No. of Cement
Plants 1 Andhra Pradesh 79.45 44 2 Rajasthan 45.62 21 3 Tamil Nadu 38.89 20 4 Gujarat 27.49 14 5 Madhya Pradesh 26.16 10 6 Kamataka 24.40 13 7 Maharashtra 23.00 10 8 Chhattisgarh 16.11 10 9 Uttar Pradesh 13.83 11 10 Jharkhand 13.04 07 11 West Bengal 8.60 04 12 Odisha 9.61 09 13 Meghalaya 7.79 05 14 Punjab 6.77 08 15 Uttarakhand 4.75 03 16 Haryana 4.00 03 17 Assam 3.52 04 18 Bihar 2.73 04 19 Jammu & Kashmir 1.00 01 20 Kerala 0.76 02 21 Delhi 0.62 02 22 Delhi 0.50. 01
358.64 206 Source: Labour and Industrial Chronical, Survey of Cement Industry &
Directory 2012:3rd Edition
Note: This table also includes eight plants, which are not in
operation.