Covid-19 impact: Cement companies resume ops with minimal production

UltraTech Cement, as well as other companies like Dalmia Bharat Cement, Heidelberg Cement India and others, said that partial operations at some of the companies' plants have resumed

Following relaxation by the Centre to continuous process industries, cement companies have restarted operations across the country, although it is primarily limited to dispatch and sales with minimal production activity.
 

Sector leader UltraTech Cement as well as other companies like Shree Cement, Dalmia Bharat Cement, Heidelberg Cement India and others said partial operations at some of their plants have resumed. Cement majors like Ambuja Cements, JSW Cement, JK Cement and others are in the process of obtaining permissions from various state governments to open plants.
 

JK Cement, in a notification to the BSE, said it is seeking necessary permission and approval from the appropriate government authorities for resumption of production facilities in Rajasthan, Haryana and Madhya Pradesh.
 

Sources said although UltraTech has resumed operations, it is primarily on the sales front. Limited manufacturing activities are under way in nearly all cement companies which have resumed production. Usually, it takes 2-4 days for companies to resume production after starting the kilns.
 

“We have resumed operations but it is limited to dispatches directly to consumers. We will take a call on manufacturing after some time,” said Mahendra Singhi, chief executive officer (CEO) at Dalmia Bharat Cement said.

JK Lakshmi Cement has also resumed operations at its integrated plants at Jaykaypuram in Rajasthan and Durg in Chhattisgarh but it is also limited to dispatches. H M Bangur, managing director (MD), Shree Cement, said, “We have got permission to open our plants except in Delhi-NCR and Rajasthan. We are resuming packing operations and will decide on production after analysing the market conditions.”
 

Heidelberg Cement said it will gradually step up operations, depending upon the directions being issued by the government from time to time and the market demand.
 

Sandip Ghose, chief operating officer (COO) at Birla Corporation, said the decision to ramp up plant operations and resume production hinges on the market demand, which is expected to be sluggish. It also depends on how the pandemic unfolds in the country.
 

“There is no notification yet to allow dealers to operate and open their stores. So, initially, only large construction sites will start - but that is subject to availability of labour and other construction materials like sand and aggregates. Starting production is less of an issue. Demand will be the main driver,” said Ghose.

Dealers carry 7-10 days of stock with them and it is obvious that if allowed to operate and if construction activity picks up, they will first try to clear their own stock before asking for supplies from cement producers. “So it will be a bit of a wait and watch situation,” added Bangur.
 

Singhi is of the view that the individual house builder, the largest consumer for the sector, primarily uses local labourers. This is being gradually permitted by various states and thus demand will recover.
 

“It is expected that during May, 40-50 per cent of construction work can start and highway construction is also showing healthy signs of revival,” added Singhi.
 

Logistics is another area where companies are likely to face serious challenges. According to brokerage firm Anand Rathi Share and Stock Brokers, logistical issues will persist as the railways is being utilised to supply essential commodities; hence wagons will not be available.