Wonder Cement, part of marble leader RK Group, is widely lauded for its hi-tech, fully automatic cement plant in Nimbahera, District Chittorgarh in Rajasthan. Within two years of commencement of the first plant, the company began working on expansion with plans to double the capacity by setting up a second production line. What´s more, in a unique sports-based citizen engagement initiative, the company recently announced the launch of Wonder Cement Saath:7 Cricket Mahotsav, a tournament that will attract the participation of 39,840 cricket enthusiasts from over 249 tehsils across Rajasthan. While former Indian captain Kapil Dev rolled out the initiative in Jaipur along with Vivek Patni, Director, Wonder Cement; SHRIYAL SETHUMADHAVAN discussed the company´s plans and activities at the event venue with JC Toshniwal, Executive Director, Wonder Cement, and Vinay Wadhwa, Executive President-Marketing, Wonder Cement.
The company has plans to double its capacity. Please tell us more.
Toshniwal: The current annual capacity is 3.25 million tonne. We are doubling up and by January or February, we will fully stabilise the process. But this also depends on the market scenario, which is not so good. The country was expected to grow by 9-10 per cent, but this is not materialising and the demand for cement is not much. So if India achieves the desired GDP and the demand for cement picks up, we may consider expanding our third line.
Wadhwa: This expansion will be of 3.50 million tonne, after which the total capacity will be 6.75 million tonne by January.
You have developed a fully automatic plant, which is one-of-its-kind in northern India....
Wadhwa: We have adopted state-of-the-art technology where quality control checks are done through robotics without any manual intervention. Through robotics, samples are collected from the plant, tested and given to the system, and there is no room for manipulation. We consider our biggest strength to be our ability to have established a grinding unit in a short span of three years.
Toshniwal: Besides, we have all the latest vertical columns for energy-efficiency; we are going to commission our waste heat recovery, which will generate power from the waste heat process. A lot of heat is pumped into the atmosphere, and we recover the heat and generate power. This will save money and is eco-friendly.
You primarily supply to the western and northern parts of the country. Any plans to venture into the South and East?
Toshniwal: No. At present, our focus is West and North. Our aim is to reach 10 million tonne capacity at this location. We may add one or two grinding stations once we put up a third line. But our clinkerisation will remain only at Nimbahera. And once we achieve a reasonable size of capacity and build our financial strength, we will consider expanding to the East or West.
Wadhwa: Also, the cost incurred in logistics is crucial in cement. So, our marketing activities will be around the location of our manufacturing plant. Once we reach 10 million tonne capacity without which we cannot even plan to expand to the East or West, we could plan to move to another location for a separate clinkerisation plant.
Green cement is a popular material spoken about in the present day. Do you offer any products in this direction?
Toshniwal: We manufacture Portland Pozzolana Cement (PPC), which is green as we add to it 26-30 per cent fly-ash, the waste material generated from thermal power plants. So, at present we manufacture around 70 per cent PPC, and intend to increase this to 80-90 per cent in times to come.
Do you also supply to road projects? How has the current takeoff in this sector affected cement demand?
Wadhwa: We supply to a number of road projects. This demand primarily comes from contractors as they are involved in the procurement of cement. But in case of overall demand of cement, it has not taken off as anticipated. This is because several road projects have been awarded but work is yet to begin.
Toshniwal: Actual action is missing on the ground. We are all waiting for the awarded projects to be executed; we are certain that with execution, demand will follow.
How would you comment on the issue of fluctuating cement prices?
Wadhwa: Pricing is an outcome of demand and supply. And, when there is no demand or less demand, naturally we all compete. Also, there is excess capacity. The industry operates at less than 70 per cent. So this makes the situation very obvious.
Toshniwal: Prices are not sustainable for a long time. Companies who are interest-burdened cannot survive. Today, we have an interest burden of Rs 300 per tonne plus instalment, which would be another Rs 300. So there is no profit at all.
For cement, where is the maximum demand coming from?
Toshniwal: Traditionally, individual house builders constituted a major chunk of demand. This is followed by infrastructure, then industrial and other demands. At present, industry demand is negligible. In infrastructure, projects are awarded but nothing is happening on the ground level, barring metro projects. As for individual house builders, there is hardly any liquidity in the market. The NCR area û Gurgaon, Noida, Delhi - experiences unsold inventory, and the situation in Ahmadabad and Udaipur is similar. So unless we are able to liquidate the inventory, generate some money and put it into those projects, nothing is going to happen.
Wadhwa: We were actually surviving on rural demand. Unfortunately, this dried up as crops failed owing to the monsoons. So, even rural demand is registering a de-growth. All drivers of demand, whether it is infrastructure, individual house builders, rural demand or builders, are not in good shape.
With government initiatives like Housing for All and smart cities, how do you see the demand-supply scenario changing five years down the line?
Toshniwal: Five years down the line, we are certainly positive. India is a developing country and growth is a given. The government has introduced many initiatives and is working towards them. Although it is taking time, things will ultimately transform. Policies are being put in place and several infrastructure projects are on the drawing board. So they will definitely come through, though it is taking more time than anticipated. Five years down the line, we see good demand for cement. That is why we have plans for a third line for which engineering has been done and everything is ready. We are just awaiting a signal from the market and will begin operations of our third line.