Raghu Nandan Maru, newly elected President of the Cement Manufacturers Association, is an expert and enthusiast who has made a tremendous impact on the industrial growth of JB Maru Group. A meritorious student from the University of Kolkata, he holds a B.Com (Hons) degree and is an ICWA from the Institute of Cost Accountants of India (ICAI). He is also the Director of Shivam Cement. The holding company behind Shivam Cement owns a 30% stake in Hongshi Shivam Cement.
Nepal’s cement industry has made significant strides over the past decade, making the country self-reliant in cement. However, there are still challenges in sustaining this progress. The HRM Nepal spoke with Raghu Nandan Maru to gain insights into the cement industry. Here are the excerpts:
Q. Nepal has achieved significant growth in cement manufacturing over the past 10 years. What are the prospects and challenges you see in the cement industry?
A. Nepal once relied on imports, but today, we are fully self-reliant in cement and clinker. We’ve been net exporters of cement for the past two years, making notable exports. If infrastructure development picks up pace, the demand for cement will rise. I believe hydropower development will accelerate in the coming days, especially since the Nepal Electricity Authority (NEA) has signed Power Purchase Agreements (PPA) with hydropower projects totaling 2,000 MW in capacity. Additionally, around 3,300 MW of projects are under construction. In this regard, the prospects for the cement industry are great. However, we face downside risks such as production capacity exceeding demand, a slowdown in the construction industry, and high production costs due to saturated demand, among other challenges.
Q. Has underutilisation of production capacity prevented cement industries from benefiting from economies of scale? What are you doing to address this challenge?
A. Nepal’s cement industries have the capacity to produce 25 million tonnes annually, but demand is only eight million. This underutilisation raises production costs and impacts cash flow management.
Q. Do you think a cement industry should explore export markets if domestic demand stagnates?
A. Absolutely, we need to explore export markets. Nepali cement is highly regarded in the Indian market for its quality. We have significant potential to export both clinker and cement to India. If Nepali trucks and lorries were allowed to transport loads 150-200 km into Indian territory from the border, cement exports from Nepal to India would increase substantially. Another major obstacle is obtaining certification from the Bureau of Indian Standards (BIS), which is currently on hold. The Cement Manufacturers Association is in constant consultation with the government to resume the issuance of certificates. The Ministry of Industry, Commerce and Supplies (MoICS) has assured us that this issue will be resolved during the upcoming commerce secretary-level talks between Nepal and India.
Q. Shivam Cement has partnered with Hongshi Cement, and foreign investment and technology have significantly impacted the quality and price of cement. However, there is ongoing debate about bringing in foreign investment and technology in the Nepali cement industry. What is your stance?
A. It’s true that foreign investment and technology have helped the cement industry make great strides. However, given the current circumstances, we don’t foresee any further foreign or domestic investment in this sector. Cement manufacturers are navigating tough times. Initially, investors were attracted to the sector because the government encouraged investment in cement manufacturing, providing incentives like constructing access roads to mines and supplying electricity. Another key factor is the adequacy of mines. But due to a lack of demand, the capacity of cement manufacturers remains largely underutilised. Of the 40 factories, only 18 produce both clinker and cement, while the rest are limited to grinding.
Q. It is said that there is no disruptions for clinker export to India. Is it true?
A. Nepali clinker is being exported to India. Mainly, clinker is supplied to some of the grinding units of Uttar Pradesh and Bihar of India. In Nepal, 18 industries produce clinker. Among them around 3 Vertical Shaft Kiln Cement manufacturers have remained shut due to high cost of production.
Q. Do you see prospects for diversifying products from the raw materials used to produce cement?
A. If the limestone is iron-free, we could produce white cement in Nepal, and there is significant demand for white cement in India due to the limited availability of limestone mines. I believe Nepali cement manufacturers might already be researching this possibility. Currently, we produce two types of cement: Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC). We could also produce Portland Slag Cement (PSC); however, we focus on OPC and PPC based on market demand. Shivam, for instance, only produces OPC.
Q. As the President of the Cement Manufacturers’ Association, what are your priorities?
We are lobbying with the government to eliminate bureaucratic hurdles, particularly the complex process of obtaining mining licenses. Additionally, the government should support demand generation. For example, in addition to highways, feeder roads should be built using concrete for safety and durability. If the government aims to protect domestic cement manufacturers, generating demand is crucial. The slowdown in construction has caused a steep decline in cement demand, which is why we are urging the government to introduce a Bill in parliament to mandate concrete feeder roads. Instead of importing bitumen, developing concrete roads would add significant value to the country and extend the lifespan of roads. Given Nepal’s topography, concrete roads are the most suitable option.
Q. The government and vigilance agencies have been discouraging the private sector in several ways, such as filing charges over exceeding limestone excavation limits and alleging industrialists of not settling outstanding electricity tariffs. What is your take on this?
A. If a mine has a 20-year lifespan, and in the initial stage, a manufacturer excavates 1.1 million tonnes in a year when the ceiling is 1 million tonnes, but properly submits the revenue, the government could reduce the license period to 19.5 years instead of 20. Filing charge sheets against manufacturers in such cases discourages industrial operations in the country. When we have sufficient limestone deposits, this shouldn’t be an issue that leads to legal action against industrialists. Regarding electricity tariffs, industries have been paying regularly based on invoices and receiving rebates. During the load-shedding period, the Nepal Electricity Authority (NEA) asked for a settlement of premium charges, claiming it missed generating invoices three years ago. We have asked NEA for evidence. When electricity is supplied through a dedicated line, there should be an uninterrupted 20-hour supply. NEA has not provided any evidence of ToD (Time of Day) metering to the industrialists. Industrialists, who are contributing to the economy by paying taxes, stabilising production, and creating jobs, are being unfairly disheartened by negative publicity. While the Lal Commission Report has provided a solution, NEA’s reluctance to abide by it is quite surprising.
Q. As the vice chairperson of JB Maru Group, what are your plans for expansion in coming years?
A. We are producing construction materials, including CPVC, UPVC pipes and fittings and PVC floorings. We are top manufacturers of minerals such as talcum and dolomite powder which is being used in paper, soap and paint industries. We’ve been in minerals business since last four and half decades. Without improved investment climate, it is difficult to expand. If the investment climate is improved, we’ll definitely think about expansion.
Q. As the President of the Cement Manufacturers Association, what would you like to recommend the government to create a better destination environment for industrialisation in the country?
A. Those who are migrated, I would like to tell them that Nepal is a country of immense opportunities. We’ve to explore opportunities in the country and I would like to urge the government that if anyone wishes to embrace entrepreneurship, it is duty of the government to make amiable investment climate. They should have red carpet welcome and they should feel proud. Entrepreneurs shouldn’t treat as criminal, if entrepreneurs disheartened they don’t spend in Nepal. The government must think about providing policy stability, tax holiday and incentives. It is because; remittance can’t provide stability in the economy. Industrialisation is a key for overall stability, jobs creation and growth. Youth migration is not only limited among job-seekers, entrepreneurs also started migrating to explore opportunities. If the government does not make any intervention for positive impacts, the situation could worsen further.
