Displaying items by tag: India
India: The Competition Commission of India (CCI) has found seven cement companies guilty of bid rigging and cartelisation and imposed a total fine of nearly US$30m on them. The accused companies are Shree Cement, UltraTech Cement, Jaiprakash Associates, JK Cement, Ambuja Cements, ACC and JK Lakshmi Cement, according to the Times of India. The fines are based on 0.3% of each company’s average turnover for three financial years. Each company has also been ordered to cease and desist such behaviour.
The ruling relates to a tender floated by a Haryana state procurement agency in 2012 that the CCI started investigating in 2014. Evidence cited in the CCI’s order includes text messages and phone calls made between officials of the companies.
UltraTech Cement and Shree Cement have issued statements saying that they will appeal against the fine.
India: The Competition Appellate Tribunal (COMPAT) has rejected an appeal by Binani Cement to waive paying a 10% deposit of a US$25m fine that was given to it by the Competition Commission of India (CCI) for cartel-like behaviour. COMPAT said that the cement producer had failed to add any further information to the situation or pointed out any errors in the procedure, according to the Press Trust of India. In August 2016 the CCI imposed fines of nearly US$1bn on cement producers including ACC, ACL, Binani, Century, India Cements, JK Cement, Lafarge, Ramco, UltraTech, Jaiprakash Associates and the Cement Manufacturers Association for alleged cartelisation activity.
In November 2016, the COMPAT delayed the CCI condition that the cement producers deposit 10% of the fine. However, Binani Cement requested to waive the deposit on grounds of severe financial hardship. Binani Cement now potentially faces interest charges on top of the deposit as its appeal was dismissed.
India: JSW Cement has increased the capacity of its Bellary cement grinding plant in Vijay Nagar to 3.4Mt/yr from 1Mt/yr. The cement producer said that the additional capacity would help it strengthen its distribution network throughout south of the country. The chairman and managing director of JSW Group, Shri Sajjan Jindal, and other dignitaries inaugurated the new unit.
India: The Ministry of Heavy Industries is planning to sell seven non-operational plants of the Cement Corporation of India (CCI) as part of the first phase of a scheme to sell the state-owned cement producer. However, due to on-going legal issues at some of the units the ministry wants to sell them in a piecemeal fashion or even individually, according to the Press Trust of India. The CCI operates 10 units of which seven are non-operational. The federal cabinet of India granted gave in-principle approval for the sale of certain state-owned companies in October 2016.
India: Anjani Portland Cement has commissioned a 16MW coal powered captive power plant at its cement plant in Anjani Puram. The cement producer operates a 1.3Mt/yr plant and is a subsidiary of Chettinad Cement.
India: JSW Cement has acquired a promoters' share in Shiva Cement and has also launched an open offer to acquire a 32% stake from public shareholders in the company. JSW Cement, with Sun Investments Private and Reynold Traders, has made an open offer to the public equity shareholders of Shiva Cement to buy up to a 32% share in the company at a value of US$12.8m. In late September 2016 promoters of Shina Cement held a 37.15% stake, while public shareholders held the remaining 62.85%, according to Indian media.
India: Burnpur Cement has blamed an ‘irregular’ non-payment to its lenders on demonetisation and a depressed market. It added that it was discussing the matter with its lenders, including the option of restructuring the debt. The cement producer operates two plants in the east of the country.
India: Petron Engineering Construction has received a letter of intent to build silos and other miscellaneous work at Shree Cement’s cement grinding plant near Cuttack in Orissa. The contract is valued at just under US$5m, according to Accord Fintech. In September 2016 Petron received letter of intent from Shree Cement for civil work at cement plants in Aurangabad, Bihar and Gulbarga, Karnataka with a contract value of just under US$7.5m.
A few days ago my family faced a financial crisis caused by demonetisation. The family piggy bank holds a number of one-pound sterling coins. However, the Bank of England is set to introduce a new 12-sided one-pound coin in March 2017 and withdraw the old type circular coin by the end of October 2017. Unfortunately the piggy bank in question is of the variety that can only be opened by smashing it. There followed various attempts to extract the coins via the narrow opening.
Now just imagine if a country of over 1.25bn inhabitants and a gross domestic product of US$8.7tr faced a similar problem. Well, you don’t have to imagine it because India’s demonetisation plan to remove 500 and 1000 rupee banknotes from circulation started in November 2016. Some commentators reckoned that the banknotes represented nearly 85% of its currency by value. Indian citizens then had until the end of December 2016 to take the old bank notes to a bank to have them exchanged. The government has said that the plan was conceived to cut corruption, increase tax revenue and reduce cash hoarding. However, critics have attacked the policy for unduly penalising the poorest members of society as they struggle to move from using cash to electronic methods.
That’s the background. Global Cement is interested in cement markets. Although its early days yet some reactions and data are starting to emerge. Ambuja Cement launched a marketing campaign in December 2016 to help its customers cope with a cashless business environment. The initiative has included working with a bank to operate a helpline assisting people in opening bank accounts as well as putting out the message in various media including sending one million text messages. Clearly, at least one of India’s major cement producers is taking the problems caused by demonetisation seriously.
Alongside this, various reports have trickled out since November 2016 trying to work out the effects of the financial transition on the cement industry. Firstly, the India Cements reported in mid-November 2016 in a financial report that demonetisation had not impacted its cement sales. Deutsche Bank Markets Research then predicted that the policy would reduce cement demand by up to 20% for the last few months of 2016 and then reduce growth by 3% in the first three months of 2017. Its analysts reckoned that the residential sector would suffer the most and that although infrastructure spending might offset this a little, reduced taxation from a punctured property market would also adversely affect infrastructure funding. A report in the Hindu newspaper in early December 2016 feared that cement demand might be reduced by up to 50% in November 2016. It also raised the concerns of the managing director of Shiva Cement who said that contractors were finding it difficult to buy raw materials and pay wages.
Now in early January 2017 the India Ratings and Research credit ratings agency released a research note predicting that cement production growth was likely to fall to 4% for the 2017 financial year ending on 31 March 2017 from a previous estimate of 6%. It reported that production growth rose by only 0.5% year-on-year in November 2016 following a growth rate of 4.3% from April to November 2016 and rates of 5.5% and 6.2% in September and November 2016 respectively. It added that the housing sector constitutes around 65% of cement demand and that this share is likely to fall.
After a strong start to the year the Indian cement industry was looking forward to a growth rate above 5% in its 2016 - 2017 financial year. The figures aren’t out yet and the year isn’t finished but it is looking likely that demonetisation, a direct government policy, has smashed demand for cement in India in the short term.
Indian credit ratings agency says that demonetisation to reduce cement growth by 2% in 2016 – 2017 financial year04 January 2017
India: The India Ratings and Research credit ratings agency has said that demonetisation of the economy is likely to reduce growth in the cement industry by 2% to 4% in the 2016 – 2017 financial year that ends on 31 March 2017. Previously it had predicted growth of up to 6% in this period. The agency reported that cement production grew by 0.5% in November 2016 following rates of 5.5% and 6.2% in September and November 2016 respectively. It added that all India volumes fell by up to 25% in November and December 2016. The agency expects demand for cement from the housing sector will to decline further from its current contribution of 65% of all demand.