Cement, Trending in the Economy

Nuvoco Vistas: Largest Cement Co in East India

Nuvoco vistas Corporation Ltd -

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(A) About Nuvoco Vistas Corporation Ltd

Nuvoco Vistas Corporation Ltd (NVCL) is the fifth-largest player in India and the largest cement company in East India, in terms of capacity, with a consolidated capacity of 22.32 MTPA (Million Tonnes Per Annum) as on 31-Mar-21.

The Nirma Group forayed into the cement business in 2014 through a greenfield cement plant in Nimbol. Thereafter, the Company grew its cement businesses, through acquisitions such as the acquisition of the Indian cement business of Lafarge Holcim in 2016 and in 2020 by acquiring NU Vista.

Currently, the Company offers a wide variety of products such as Cement, Concrete and Modern Building Materials such as Wall Putty, Tile Adhesives, Wall-fill solutions etc.

On the other hand, Company has 11 Cement Plants all over India which includes 5 integrated units, 5 grinding units and 1 Blending unit. The cement Plants are located in the states of West Bengal, Bihar, Odisha, Chhattisgarh, Jharkhand in East India and Rajasthan, Haryana in North India.

Nuvoco Vistas Corporation Ltd listed on 23 August 2021 on NSE & BSE.

(B) Journey Since Inception

Nuvoco Vistas Corporation Ltd Journey since inception

(C) Board Members of Nuvoco Vistas Corporation

(i) Mr. Hiren Patel - Chairman

Mr. Hiren Patel is the Chairman and a Non-executive Director of the NCVL and managing director of Nirma Limited . He has been on the Board since November 11, 2017.

He holds a bachelor’s degree in engineering from Stevens Institute of Technology, New Jersey, USA.

Also, Mr Patel has a master’s degree in business administration from Drexel University, Pennsylvania, USA.

He has been associated with the Nirma group since the year 1997. Moreover, at present he is the Managing Director of Nirma Limited.

Further, he has experience in the cement, consumer goods, chemicals, and health care industry.

His remuneration for FY 21 was Rs 2 Crore i.e 0.027% of Net Sales. The Company incurred a Net Loss of Rs 25.95 Crore during FY21.

(ii) Mr. Kaushikbhai Patel

Mr. Kaushikbhai Patel is currently the Non-executive Director in the Company. He holds a bachelor’s degree in commerce and qualified Chartered Accountant.

He has been on the Board since November 9, 2017.

Additionally. Mr. Patel has rich experience in strategy, financial planning, mergers and acquisitions, direct tax and capital markets.

Moreover, he is currently associated with The Kalupur Commercial Co-operative Bank Limited as a director.

His remuneration for FY 21 was Rs 11.75 Lakh.

(iii) Mr. Jayakumar Krishna Swamy - Managing Director

Mr. Jayakumar Krishnaswamy is the Managing Director of the Company and has been on the Board since September 17, 2018.

He holds a bachelor’s degree in engineering (mechanical) from the University of Delhi.

Moreover, he is responsible for the cement, RMX and modern building materials divisions of the Company and has well experience across FMCG and paint and coating industry.

Prior to joining Nuvoco, he has been associated with Hindustan Unilever Limited and Akzo Nobel India Limited.

His remuneration for FY 21 was Rs 5.21 Crore i.e. 0.07% of Net Sales.

(iv) Mr. Suketu Shah - Non-Executive Director

Mr. Suketu Shah is currently a Non-executive Director in the company. He is a qualified Chartered Accountant, Cost & Works Accountant, and Company Secretary as well.

He joined Nirma Limited in 2013 and is presently part of its Strategic Opportunities and Finance teams.
Moreover, Mr. Shah has expertise in Business and Financial Consulting, Capital Market Advisory, Business and Financial Due Diligence Reviews.

Further, his areas of specialization include M&A, Valuations and Corporate Finance.

Prior joining Nuvoco he had experience of two decades of consultancy; including sixteen years at Deloitte India.

(D) Shareholding Pattern of Nuvoco Vistas Corporation

Nuvoco vistas Corporation Ltd - Shareholding pattern

In Nuvoco Vistas Corporation Ltd, Promoter has a very good weightage of shareholding of 71.03%.

Nuvoco vistas Corporation Ltd - public and promoters Shareholding more than 1%

(E) Business Segments of Nuvoco Vistas Corporation

Nuvoco offers more than 50 range of products to meet with everyone need as per customer's affordability and specialty. Nuvoco Vistas Corporation Ltd (NVCL) caters its products through 3 portfolio.

The company operates across 3 (three) business divisions:

  • Cement
  • Ready-Mix Concrete (RMX) and
  • Modern Building Materials (MBM)

(i) Nuvoco Vistas Corporation: Cement Portfolio

Nuvoco vistas Corporation Ltd - products under cement portfolio

The cement portfolio includes different types of Cement like Ordinary Portland Cement (“OPC”), Portland Slag Cement (“PSC”), Portland Pozzolana Cement (“PPC”) and Portland Composite Cement (“PCC”).

Interestingly, the Company has leading brands including Concreto, Duraguard, Premium Slag Cement, Nirmax, Double Bull, Infracem and Procem.

Additionally, Concreto and Duraguard are market leaders in their respective regions and have a large and growing loyal base of users.

Concreto is a Gold Standard in slag cement, and one of the best cement brands available in the Indian market. Its specifications exceed all BIS standards.

Moreover, The Company launched 1 (one) new product in this business division in the year under review, namely, Duraguard Silver cement.

(ii) Ready-Mix Concrete (“RMX”)

Nuvoco vistas Corporation Ltd -  products under RMX

Company’s RMX products are trusted alike by large developers and small contractors, builders, architects, government agencies, as well as Individual Home Builders (“IHB”) who are building their dream home.

The Company offers standard concrete in a number of strengths ranging from M5 to M40 (and above, if required).

Moreover, The RMX business clubbed its various offerings in verticals that clearly enunciated the customer benefit.
Concreto (Performance)
InstaMix (Convenience)
Artiste (Aesthetics)
X-CON (Professional)

on the other hand, The Company had launched 4 new products in this business division namely, InstaMix Xpress, Artiste Signature Collection, Concreto Permadure and Concreto Ecodure.

(iii) Modern Building Materials (“MBM”)

Nuvoco vistas Corporation Ltd - products under modern building materials

The Company’s MBM business division covers new-age innovative products that deliver unique customer-centric solutions. This business division has 2 brands ; Zero M and InstaMix.

The Zero M consists of Construction Chemicals like an integral water-proofing compound and multipurpose agents like Acrylic Power and Latex Expert; as well as Wall Putty, Tile Adhesive and Cover Blocks.

Whereas, InstaMix consists of dry pre-mix cement application products that are convenient while promising consistent and reliable quality.

On the other hand, In FY21, Company unveiled 3 innovative products under the Zero M brand and 1 under the Insta Mix.

(F) Revenue Segmentation of Nuvoco Vistas Corporation

(i) Cement Segment - Revenue Breakup

NVCL generates revenue from its two segments:

a) Trade segment: which is mainly to individual home owners through our distribution network.

b) Non-trade segment: which is mainly direct sales to institutional and bulk buyers

(ii) Geographical wise revenue Breakup

Nuvoco Vistas Corporation has revenue from operation only within in the India. Company doesn't caters to overseas clients at presently.

(G) Manufacturing facilities and Capacity Utilization of NVCL

(i) Geographical presence over Pan-India

Nuvoco has 11 Cement Plants including Five integrated units, five grinding units and one blending unit.

Additionally, Company has 49 Ready-Mix Concrete Plants and Construction Development & Innovation Centre.

Nuvoco Vistas Corporation is the 5th largest cement company in India and the largest cement company in East India,
in terms of capacity.

. Also, it has extensive distribution network in East India, provides with an opportunity to further consolidate and enhance its position in this key market.

Nuvoco vistas Corporation Ltd - geographical Presence

(ii) Nuvoco Vistas Corporation: Clinker to cement Ratio (Plant wise)

The company has a total of 11 Cement plants and 5 Clinker units.

Nuvoco vistas Corporation Ltd - Clinker to cement ratio plant wise

Cement is a manufactured product made by blending different raw materials and firing them at a high temperature in order to achieve precise chemical proportions of lime, silica, alumina and iron in the finished product, known as cement clinker.

Cement is therefore essentially a mixture of calcium silicates and smaller amounts of calcium aluminates that react with water and cause the cement to set.

(H) Cement Industry Analysis

(i) Player-wise domestic capacity of the key players in the industry

Player-wise domestic capacity of the key players in the industry

As on Dec 2020, Ultratech has the highest Capacity, whereas Nuvoco Stands at position 5th in terms of Capacity.

(ii) Region-wise Capacity basis Market Share Breakup of Large Players

As on Dec 2020, Nuvoco had the highest capacity in the Eastern part and Northern part of India with the capacity of 17% and 5% respectively.

Whereas another player like Ultratech Cement has 15% of capacity in East India.

Nuvoco is one of the Major Player in the Eastern Region with 17% Market share Capacity wise.

Moreover, the other major players in the region are Lafarge Holcim group, Dalmia & Ultratech holding 16%, 16% and 15% share respectively. In terms of absolute consumption, West Bengal, Bihar and Odisha are the major consumers in the East.

The company has a pan India market share of 4.2%, whereas it is more dominant in the east with a market share of ~17% in terms of capacity on a consolidated basis as of December 2020.

Moreover, the Company also has good presence in North India with ~5% market share in terms of capacity.

Some of the other prominent players in the North are Shree Cement and Ultratech, with 23% market share each.

(I) Cost Structure of Nuvoco Vistas Corporation

(i) Cost Structure % of Net Sales

Nuvoco vistas Corporation Ltd - Cost Structure

In FY21, Selling and Distribution expenses comprised 28.24% of the total cost of Net sales. on the other hand, Raw Material consumed Expense comprised 14.42% of the total cost.

(ii) Sales and Distribution Expense Break up - Nuvoco Vistas Corporation

Over the time, the company had a moderate expense on Freight and forwarding.

In FY21, Company incurred 27.10% of total sales on Freight and forwarding and 1.14% of total sales on Advertisement and sales promotion expense.

In the Year 2018, Company had partnered with an IPL team Royal Challenger Bangalore (RCB) as a priniciapal and Back of jersey sponsor to promote its Duraguard Cement brand.

Further, even in FY21, NVCL was the associate sponsor for the Royal Challengers Bangalore (RCB). Moreover, to promote its association, the Company ran three different campaigns namely, RCB Forecast, Spot Nuvoco and Meet and Greet with RCB players (Kohli and Chahal) on its social media pages.

Further the Company took following measures to strengthen its brand:

  • Brand promotion through Television, Radio and Print advertisements
  • Over 15,200 spots for Radio Campaigns on Doublebull brand in priority markets including engaging the channel partners “on-air”
  • Virtual Connect programs for Dealers, Retailers and Influencers
Nuvoco vistas Corporation Ltd - Advertisement

(iii) Raw Material Consumed: Nuvoco Vistas Corporation

Limestone is the principal raw material used in the production of clinker, which in turn, is the base of all cement

Moreoever, there are some other major raw materials that are being used by the company are gypsum, slag, water and fly ash) and fuel (including coal and pet coke).

Nuvoco vistas Corporation Ltd - Raw Material Consumed

Over the past 6 years, the % of Raw Material Expense to Net Sale has declined.

Further, for cement operations, the raw material cost of the Company have decreased by 4% from H 529/T in
FY 2019-20 to H 508/T in FY 2020-21.

Raw Material cost reduced mainly due to decrease in mineral gypsum prices and reduction in flyash prices.

(J) Distribution Network of the Company

Nuvoco Vistas Corporation distribution network

The company has a different distribution network for both the segment that is Traded segment and Non-Traded Segment.

Moreover, Company has developed strong relationships with its channel partners over the years and built a loyal base of customers across its operational markets with the aim to achieve both customers’ and our own growth objectives.

The company has more focus on the Trade Segment, where its distribution channels are a mix of wholesale and retail dealers and a sub-dealer network.

As of March 2021, Nuvoco has 244 Carrying and Forwarding Agents (162 in East India & 82 in North India).

Additionally, Company has currently total of 16076 Dealers over Pan India ( 10091 in East India & 5985 in North India)

(K) Group Structure of Nuvoco Vistas Corporation

Nuvoco vistas Corporation Ltd - organizational Structure

(L) Competitors of the company

The cement industry is one of the challenging industries because of the large number of players. India has over 20 large and medium cement producers and more than 50 smaller producers.

Cement brands are largely classified into three brands - Category A, B and C brands (“CAT A, B and C”). CAT A producers are considered to be premium cement brands, whereas CAT B and CAT C producers sell at par or below the price of the base brand of a CAT A player.

Moreover, the industry is dominated by popular brands such as Ultratech, ACC, and Ambuja which have the highest market share in terms of capacity and utilization.

Nuvoco vistas Corporation Ltd - Peers or Competitors

The Following Data represents the sales of cement players over the year in terms of Million Tonnes.

As per 9M of FY21, Ultratech reported the highest sales with 54.2 Million tonnes, and the Nuvoco group reported sales of 11.7n Million tonnes.

Installed capacity of other Players

In FY16, Nuvoco Vistas had an installed capacity of 11 Million Tonnes. whereas till Dec 2020, the installed capacity was doubled to 22.3 Million Tonnes.

Nuvoco vistas Corporation Ltd - installed Capacity of Different players
Nuvoco vistas Corporation Ltd - Player wise Sales

(M) Financial Parameters of Nuvoco Vistas Corporation

The FY 2020-21 was a very challenging year for the Company due to COVID-19. Govt. of India announced nation-wide lockdown in 1st half of Q1 FY 2020-21 to contain the spread COVID-19 pandemic.

In FY 2020-21, the Company achieved cement production of 11,138 KT (12,607 KT in previous year) and clinker production of 6,497 KT (7,298 KT in previous year).

Further, the revenue from operations for FY21 increased from Rs 6,793.24 crores to Rs 7,488.83 crores; an increase of 10%
over FY20. The increase in revenue was mainly on account of revenue from NVL w.e.f. July 14, 2020.

The Company produced 15,475 KT of Cement in FY21 as against 12,607 KT in FY20.

Clinker production increased to 8,888 KT as against 7,298 KT in the previous year.

Cement Sales volumes increased from 12,242 KT to 15,913 KT; an increase of 30% over the previous year.

Although the production increased by 13.3% during March 2021, due to peak season dynamics, the second wave of COVID-19 associated regional lockdowns during April- May 2021 has adversely impacted the cement production.

RMX market got severely affected due to the lockdown on account of COVID-19 pandemic.

During FY 2020-21, RMX production has reduced by 67% from 2711 Km to 904 Km.

The PAT of the Company reduced by ~110% on a Y-o-Y basis. PAT decreased primarily due to decrease in RMX sales volumes mainly on account of nationwide lockdown due to outbreak of COVID-19 in Q1 FY 2020-21. Another major reason was lower sales due to the country-wide lockdown on account of COVID-19.

(N) Management Discussion and Concall Highlights

Acquisition of NU Vista Limited (formerly known as Emami Cement Limited) (“NVL”):

NVL became the wholly-owned subsidiary of Nuvoco Vistas Corporation w.e.f. July 14, 2020. This acquisition gave the Company many competitive advantages like:

  • Making the Company, the 5th largest cement company in India, and the largest cement company in East India, in terms of capacity
  • Grinding units in the states of Bihar and Odisha, helped the Company to achieve Cement plants in all states in East India
  • Implementation and application of best practices in manufacturing across all the plants
  • The inclusion of the brand “Double Bull” Cement and its variants in the Company’s brand portfolio

Cement demand is closely linked to the overall economic growth, particularly of the housing and infrastructure sector. Increasing demand from affordable housing and construction work for other government infrastructure projects like roads, metros, airports, irrigation etc. are demand drivers which support cement demand.

Term Loans and NCDs

During the year under review, the Company has prepaid Non-Convertible Debentures (“NCDs”) of Rs 1,600 crores,
Inter Corporate deposit of Rs 661 crores and Term loan of Rs 83 crores. The Company has issued NCDs of Rs 2,750
crores and taken Term loans of Rs 1,660 crores during the year, out of which Rs 1,000 crores of NCDs have been
prepaid during the year.

Launch of new products by Nuvoco Vistas Corporation

In FY21 the Company launched 4 (four) new products in this business division in the year under review, namely, InstaMix Xpress, Artiste Signature Collection, Concreto Permadure and Concreto Ecodure.

Fastest Growing Cement Company

NCVL is the fastest growing cement company in terms of capacity addition on percentage terms with installed capacity doubling over the last five years post the acquisition of NU Vista.

Further, the Company has plans to focus on the Trade segment.

Concalls Highlights

Decline in Cement demand in Q2 FY22

  • Over the years, the demand for cement improved but in Q2FY22, demand for cement declined due to heavy rain in the state of West Bengal.
  • Moreover, Company suffered a cyclone impact in Orissa during the month of August.
  • Additionally, Company suffered with unavailability of sand in principal market Bihar due to ban on sand mining.
  • Further, there was transporters strikes which accounts for 40 Days long in month of August & September.

Passing of High Costs

The cost pressures of coal, transport and other cost lines cannot be sustained by the industry and in October, the management increased the price of Rs. 15 to Rs. 20 per bag in East and Rs. 10 to Rs. 15 per bag in North over September.

Launch of 3 new products in Q2 FY22

In Q2FY22, Company launched three new products (i) Zero M water shield 2K in the MBM range, And (ii) Speedex Tile Grout. And (iii) Germicheck in the putty segment.

Further, in Q2 FY22, Company reported 34% share in premium products of the company.

Costs for the Company

In Q2 FY22, Company's raw material cost reduced to Rs 551/ Tonne against Q1 of Rs 555/ Tonne.

Further, Company reduced its distribution cost to Rs. 1,298 per Tonne (Q1FY22 Rs.1,343 per tonne).

Power & Fuel cost: Q4 of FY21 Company incurred Rs. 854 per tonne. Q1-FY22, the fuel cost went to Rs. 917, Q2-FY22 it was Rs. 1,008. Moreover in Q3 its likely to increase by another Rs. 200.


In Q2 FY22Company spent about Rs.120 crore of capex, and in H1 Rs. 230 Cr. The projects in Arasmeta was commissioned. The grinding unit in Jojobera was commissioned including others.

As per the company Plan post the IPO on CAPEX is around 4750 Cr out of Rs. 1525 cr company is planned to spent on FY23.

In FY23 the said capex is towards capacity expansion and debottlenecking, which shall result in enhanced capacity and higher clinker availability and benefit NVCL over a longer duration.

IPO Proceeds

As regards to the deleveraging and IPO proceeds deployment, the Company deleveraged to about 0.6x in Q2 FY22. In terms of IPO proceeds deployment in Q2 FY22, the Company deployed Rs. 605 crore to square off some of the borrowings. ~Rs. 745 crore will be paid in H2 of FY22.

The Company aims to be a debt-free company in FY26.

(O) Opportunties - Nuvoco Vistas Corporation

(i) Recovery in Rural Economy

The rural economy is recovering as cement consumption is growing in the rural, semi-urban and retail markets.

Over the months, cement demand is being driven by rural India due to better labour availability, an increase in construction of rural infrastructure and low-cost housing. Moreover, Rural demand is usually with regard to the retail market largely which is the housing and repair and modification market.

(ii) Increase in demand for own houses

Real estate markets in Tier-1 cities have been opening up and the adoption of "work from home" culture is most probably influencing consumers to buy own houses as part of the adaptation process to the new normal.

Cement demand in terms of low cost housing is showing green shoots of recovery riding on the back of cheap housing loans, extension of the CLSS and the need for dwelling space.

(iii) Urban Housing Scheme

As part of the Aatmanirbhar Bharat package, the government had made a provision for an additional outlay of Rs. 18,000 crore for the urban housing scheme (PMAY-U) during Q3 FY 2020-21.

In Union Budget FY 2021-22, the GoI extended benefits, under Section 80-IBA of the Income Tax Act, until March 31, 2022, to promote affordable rental housing in India.

(iv) Urban Rejuvenation Mission

The allocation of Rs 13,750 crores (US$ 1.88 billion) and H 12,294 crores (US$ 1.68 billion) for Urban Rejuvenation Mission: AMRUT and Smart Cities Mission and Swachh Bharat Mission, respectively and H 27,500 crores (US$ 3.77 billion) in the Union Budget under Pradhan Mantri Awas Yojana.

Demand is also getting influenced by the non-trade segment gaining momentum with the resumption of construction work of institutional infrastructure projects such as roadways and metros.

(P) Strengths

(i) Strong market position following acquisition of NVL

NVCL is a leading cement player in eastern India, with installed capacity (NVCL+ NVL) market share of 15-16%.

Earlier, NVCL was operating at about 95% utilization, which would have constrained growth given the favorable demand in the eastern market. However, following the acquisition, the market position of NVCL has improved, with overall capacity of 23-24 million tonne per annum (MTPA) across plants in Chhattisgarh, Jharkhand, Bihar, Odisha, Rajasthan and West Bengal.

NVCL has its own captive limestone mines and clinker capacity and is in the process of setting up CPPs and WHRSs, which are expected to be completed in fiscal 2022. The established market position is supported by strong brands, such as Duraguard, Double bull, Concreto and Infracem, and an extensive network of dealers and sub dealers of NVCL and NVL. Strong brand equity provides the ability to command a premium for products.

(ii) Healthy financial flexibility of Nuvoco Vistas Corporation

NVCL enjoys healthy financial flexibility being part of the Nirma group; it is strategically important to the group and, hence, financial oversight from the group would continue.

While there is financial flexibility, internal cash accrual and refinancing of the debt of NVCL will remain the primary source of funding for its CAPEX and debt repayment.

In FY22 the group has raised about Rs 5,000 crore through IPO/OFS. Of this, Rs 1,350 crore shall be used towards debt reduction in NVCL and the remaining would be partially used towards external debt reduction in Nirma and NEPL, which shall improve the financial flexibility of the group. 

(Q) Risk Concerns

(i) Delay in Projects due to COVID-19

With the resurgence of the new phase, the Indian government has reintroduced lockdowns across the country, which has impacted the availability of labour and consequently, bringing many industrial activities to a near standstill.

This led to a delay in the construction of the existing projects and launch of new ones. This could again have a short-term negative impact on the cement industry.

(ii) Unsustainable Price Increase

While the price increase towards the end of the fiscal year is likely to benefit the industry to absorb some of the cost increases, the trend may not be sustainable.

The industry is expected to witness a volume growth due to demand revival in infrastructure and urban housing segments, especially from the price conscious segment, driven from a low base.

Concurrently, power and fuel costs are further expected to rise, leading to a margin compression although higher volumes may compensate to some extent.

(iii) Susceptibility to variations in input costs and cyclicality in the cement industry

The cement facilities of NVCL are primarily in eastern India, which has seen relatively low price volatility and healthy demand in the past. 

However, realisations and profitability are constrained by demand, supply, sales and other regional factors. 

Moreover, susceptibility to fluctuations in the price of inputs, including raw material, power, fuel and freight, persists. In addition, the margin will remain sensitive to cyclicality in the cement industry.

Drop us your query at – info@pawealth.in or Visit pawealth.in

References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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