Practically impossible for an outsider to set up a greenfield plant

Despite multiple incentives to setup Greenfield plants in NER, it is practically impossible for an outsider to do this. Many describe the effort as nightmarish. There are several instances of cement manufacturers trying to set up greenfield capacities here and failing miserably. Even big boys such as UltraTech and Holcim have attempted to venture into this region but have not yet tasted success. None of the mainstream cement manufacturers (barring Dalmia Bharat) have any manufacturing facilities in NER. Since these majors have not succeeded in greenfield plants, they are now determined to establish themselves in this region through acquisitions and alliance partners. A few are actively scouting deals or partnerships with existing cement manufacturers of NER. Dalmia Bharat initially planned a greenfield, but faced many hurdles. Changing tacks, it made two sizeable acquisitions – Calcom Cement and Adhunik Cement – and is now well established in NER.

Motivations of local entrepreneurs setting up cement plants

Given the various disadvantages that NER faces (geographical isolation, transportation bottlenecks, small market size, low investments and virtual absence of private sector),the central and state governments announced various incentive and subsidy schemes to attract investments and capital into the region. The first such instance was the Transport Subsidy Scheme in 1971. This scheme was introduced to develop industrialisation in the remote, hilly, and inaccessible areas by providing subsidy in the transportation cost incurred by industrial units so that they could compete with other similar industries that were better off geographically. Subsequently, other incentive plans such as NEIP 1997 and North East Industrial and Investment Promotion Policy (NEIIPP) in 2007 (which itself was an extension of NEIP, 1997) were also announced to attract investments from industries in NER.

Given these benefits, many local business entrepreneurs who owned mining lands contemplated venturing into cement manufacturing. Star Cement was among the first to take initiative and others followed. More interestingly, almost all of these plants were initially setup only to cash in on incentives with a plan of seeking a lucrative exit later. Today, Star Cement, Dalmia Bharat, and TopCem (three largest) are the only players that appear committed to remain in the business of cement manufacturing for the long term. Although others may yet continue, it is too premature to assume that they will make their mark in the region. It does appear that all other brands / cement manufacturers are available for sale.

If plants are available, then why aren’t deals happening?

Despite multiple plants being available for sale, barring Dalmia’s acquisition of Calcom Cement and Adhunik Cement, no other deal has gone through. There are multiple reasons for this:

Star Cement – Star Cement is among the oldest and largest cement manufacturer in NER. Its current capacity is about 3mn tonnes. It has a state of art integrated setup in Lumshnong, Meghalaya, (1.4mn TPA) and a split-grinding unit in Sonapur, Assam (1.6mn TPA). It is also considered to be the most cost efficient producer of cement in NER.

Amrit Cement Industries – Its current capacity is ~1mn TPA and it has long-term ambitions to increase its size to 3mn tonnes in NER and set up split grinding units in Bihar. This company also wants to set up an integrated cement unit in neighbouring country Nepal. It sells cement under the brand name Amrit Cement.

Magic Cement – This is the flagship product of RNB Group (Meghalaya).

Dalmia Cement – Dalmia Bharat ventured into NER by acquiring Calcom Cement and Adhunik Cement. It is currently the largest cement capacity in NER (3.6mn TPA). While Adhunik’s setup is in Meghalaya, Calcom has recently commissioned an integrated setup in Assam. Dalmia Bharat sells its produce under its national brand Dalmia Cement. It also owns one of the premium product lines Dalmia HALC Cement in this region.

Taj Cement – This is a product of Hill Cement Company, which has and integrated site at Meghalaya. It started in 2007 and has plans to scale up its capacity to 1mn TPA.

Barak Valley Cement Ltd – This is a small listed cement manufacturer (400,000TPA capacity) based in NER. Its sells its products under the brand Valley Strong Cement. This is the farthest cement site in Meghalaya – about 70km ahead of Star Cement’s Meghalaya site.

TopCem Cement – This is a product of Meghalaya Cements. It is an integrated cement plant in Meghalaya with clinkerisation capacity of 2,600TPD and 3600TPD of cement. It has a grinding unit in Amingaon, Guwahati, Assam. This is the third largest brand in NER.

Best Cement – A product of JUD Cements, which has an integrated setup in Meghalaya with a capacity of 500,000TPA. It has ambitions to scale this up to 2mn TPA

Surya Gold Cement – Surya Gold is a grinding setup in Assam and is the first to introduce the concept of bulk cement to NER. It sells products under Surya Gold Cement and Surya Concretec.

Max Cement – Promoted by Green Valley Industries, it is a local brand with an integrated capacity of 1mn TPA in Meghalaya.

Raksha Cements – This is a small integrated unit – just 60,000 TPA capacity – based in Assam. Barring Calcom (Dalmia Bharat’s Assam unit), Raksha Cement is one of the few NER cement manufacturers with an integrated setup in Assam. It sells under the brand Raksha Cement.

Virgo Cement – This is another cement brand in NER that is now virtually absent. It is a 600 TPD cement-manufacturing unit located in Damas, East Garo Hills District, Meghalaya. In June 2015, five suspected AMEF militants lobbed two IED bombs inside this factory and fled into darkness under the cover of open fire. There were no casualties, but the plant was partially damaged. The belief is that the attack was because of rejected extortion demands.

Prithvi Cement – This unit is located in Lanka, Assam (near Dalmia Bharat’s Assam unit). It is a small cement manufacturer.

Cherra Cement: – This is the oldest cement brand in NER and a product of Mawluh Cherra Cement. This plant is now shut down, and barring a few hoardings advertisements around the plant area in Cherrapunji, its presence is virtually absent.

Goldstone Cement – Goldstone cement is an upcoming plant in Meghalaya with an integrated setup. The plant is likely to be operational in next 12-18 months. Scalability of this plant (as per sources) is likely to be upto 2.5mn TPA.

Purvanchal Infra & Industries: Yet another brand present in NER.

UltraTech Cement – It brings cement to NER from its Bangladesh facility (it has a small grinding setup in Bangladesh of 500,000 TPA).

Rhino Cement – This is a new brand and believed to be introduced in NER by a local cement manufacturer – some large hoardings of this brand were seen at a couple of places in Guwahati. Interestingly, Rhino Cement is also a brand owned by an African Major – Arm Cement. Branding of both these brands appear similar and hence a possible tie-up of this local manufacturer with African giant cannot be ruled out.

Ambuja Cement – Ambuja supplies cement to NER through its Farrakka plant in West Bengal, but in minuscule quantities.

Lafarge – Lafarge is also present in this region to a small extent, but interestingly, it is the only cement capacity to have a fully integrated facility in Bangladesh. Given the scarcity of limestone in Bangladesh, Lafarge Bangladesh has laid a 17km-long conveyor belt that runs from Meghalaya to Lafarge’s cement plant in Bangladesh to supply crushed limestone to its integrated facility.

Crown Cement – This is a product of M.I. Cement Factory, Bangladesh. It exports marginal quantities of its produce into NER. Its capacity in Bangladesh is ~1.7mn TPA.

Dragon Cement – This is a product of Dungsam Cement Corporation, Bhutan. It is an integrated cement plant located 150km northwest of Guwahati with an installed capacity of ~1.3mn TPA and exports minor quantities to NER.

Branding and advertising in NER

Though there are only three top brands, amusingly, all cement manufacturers tend to indulge in heavy advertising and branding – literally every second hoarding is a cement manufacturer’s. NER manufacturers have practically explored all kinds of local platforms to advertise their brands, especially the top three manufacturers. The branding campaigns are heavy on the local thrust with some unique attempts to connect with customers. Some such attempts include:

Surrogate branding

Star Cement initiated the concept of surrogate branding in NER – its aim was to increase visibility in places that its direct/indirect customers frequent (such as pan shops, dhabas, restaurants, plumbing shops, paint shops).

Radio advertising

Radio advertisements seems to be an excellent initiative to reach consumers,especially in underdeveloped and uncomfortable terrains such as NER – here, the reach of radio advertisements is much higher than other visual modes. This is a unique to this region – it is rare to hear cement advertisements on radios in other regions of India.

Campaigns for dealers / user segments and the general public

Large cement companies in NER indulge in advertising and branding practices that involve a lot of participation from its end users – especially by regional leaders such as Star Cement. For example, during the Durga Pooja Mahotsav the company organised campaigns in which it offered an all-expenses-paid trip to Kolkata (to participate in festivities there) for the world’s largest and biggest durga idol. It also offered additional prizes such as tablets, smartphones, silver coins, and cash prizes. These kind of advertisements and branding exercises are very well appreciated by the audience in NER, where even a small token of appreciation acts as a big morale booster.