Displaying items by tag: ACC

India: Adani Group subsidiary ACC has started commercial clinker production from the kiln of its new Ametha cement plant in Madhya Pradesh’s Katni District. BQ Prime News has reported that the kiln line has a clinker capacity of 3.3Mt/yr. It is capable of co-processing up to 15% alternative fuel (AF). The plant is also equipped with a 1Mt/yr grinding unit and a 16.3MW waste heat recovery (WHR) plant.

The Ametha cement plant raises ACC’s installed cement and clinker capacity by 9.8% to 37Mt/yr.

India: The National Green Tribunal (NGT) has asked the Ministry of Environment, Forests and Climate Change to take necessary actions against what it says is illegal mining carried our without valid environmental clearance in the buffer zone of the Ranthambore Tiger Reserve in Rajasthan.

The call followed an application by Devidas Khatri regarding alleged illegal mining by ACC Cement (now an Adani group company) without environmental clearance and without permission to do so within 10km of the national park and wildlife sanctuary, according to the Times of India newspaper. It was also submitted by Rohit Kumar Tuteja, counsel for the petitioner, that the company continued illegal mining for more than five years, but no action was taken by the Rajasthan State Pollution Control Board.

India: Bokaro Steel Plant has won granulated blast furnace slag (GBFS) supply contracts with ACC and UltraTech Cement. Under the contracts, Bokaro Steel Plant expects to supply 1.3Mt of GBFS from its facilities in Jharkhand for use in cement production in the state. The Pioneer newspaper has reported that the contracts will run until August 2026.

India: Adani Group recorded earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$2.85bn in the first quarter of the 2024 financial year, up by 42% year-on-year. The conglomerate’s cement business contributed an EBITDA of US$235m, up by 54% year-on-year. This represented 8.2% of the quarterly total. The group sold 15.4Mt of cement.

Financial Express Online News has reported that Adani Group said “The robust portfolio performance was primarily driven by the renewable power business under Adani Green, the infrastructure businesses under Adani Enterprises and the cement businesses under Adani Cement.”

Adani Group announced this week that it was set to acquire a majority stake in Sanghi Cement. Its subsidiary Ambuja Cements said it was going to spend an enterprise value of just over US$600m on buying a 57% share in Sanghi Industries. The acquisition will be fully funded through internal accruals. The transaction works out at about US$99/t of clinker production capacity, a similar amount to what Adani Group paid Holcim to buy Ambuja Cements and ACC in 2022.

The acquisition has generally been perceived as consolidation in a crowded market. Profits have been under pressure in recent years due to the coronavirus pandemic lockdowns, logistics issues and then energy and other input price rises. However, commentators from ICICI Securities, cited in the local press, took the alternative view that Adani Group might be trying to start a price war in the west of India. They noted that demand for cement was 70Mt/yr in the region versus a production capacity of 82Mt/yr. Yet Sanghi Cement has reportedly been operating at less than a third of its capacity. Adani Group also revealed its intention to increase the cement production capacity at Sanghi Cement’s Sanghipuram plant to 15Mtyr by mid-2025 from 6.1Mt/yr at present. If the plant were upgraded it would potentially increase Adani Group’s market share from 19% to 37%.

Another aspect to consider with any large corporate action by Adani Group is the political angle. Adani Group’s chair Gautam Adani is often linked in the local press to the country’s ruling Bharatiya Janata Party (BJP) and Prime Minister Narendra Modi. So, every time Adani Group does something newsworthy, opponents of the BJP play up the perceived connections. This time the Indian National Congress (INC) simply noted publicly that a rival bidder for Sanghi Cement had encountered a tax investigation before it withdrew from the auction. There is no evidence suggesting that anything underhand happened here. Yet the point to consider going forward is that anything that Adani Group does is likely to be subject to more scrutiny than its peers. This may have unexpected consequences.

The financial results for the India-based cement producers covering the first quarter of the 2023 - 2024 year have been released in recent weeks. Generally, revenue and sales are up strongly but profits less so. Due to this, there has been a lot of attention placed on the costs these companies are incurring. Inflation on energy costs reportedly peaked in late 2022, but as Graph 1 below shows, it has been a mixed situation for the larger cement companies.

Graph 1: Comparison of Power & Fuel costs for selected Indian cement producers in first quarter of 2021, 2022 and 2023 financial years. Source: Company financial reports.

UltraTech cement said that its energy cost grew by 3% year-on-year in the first quarter of the 2024 fiscal year and it blamed this mainly on negative currency exchange effects. It also reported higher raw material costs due to the growing price of fly ash and slag. Ambuja Cements (and subsidiary ACC) managed to cut both its fuel costs and increase its earnings, which, while impressive, is not entirely unexpected following the takeover by Adani Group in mid-2022. Similarly to UltraTech Cement, neither Shree Cement nor Dalmia Cement were able to grow earnings faster than revenue, so earnings per tonne of cement fell. Birla Corp, however, did manage to pull off this trick due to a “substantial decline in fuel and power costs.”

One consequence of a competitive cement market with lower profits than previously, is a renewed emphasis on marketing. Adani Group’s subsidiaries Ambuja Cements and ACC both highlighted the companies’ branding and marketing activities in the first quarter. Ambuja Cements has resurrected its television advert with wrestler The Great Khali, ACC is highlighting its part in the building industry since the 1930s with its own campaign and both companies are targeting sporting events such as the India versus Australia World Test Championship. Adani Group is building up brand awareness following the acquisition and potentially leading up to a name change in the future.

The other companies are also doing this but one campaign that sticks out has been Shree Cement’s use of classic video games such as the ‘Shree Cement Bros” video on its website. Computer game character Mario has done a lot of things in his time but he also worked in a cement plant back in the 1980s Game & Watch title ‘Mario’s Cement Factory.’ We are still waiting for the 4k remake with online multiplayer for some reason! Until then, it is worth reflecting that brand awareness is important in the world’s second largest cement market and it may become more so as Adani Group continues to establish itself.

India: Amubja Cements has appointed Hitesh L Marthak as its company secretary and compliance officer. Hitesh holds 25 years professional experience. He was appointed to the same positions at subsidiary ACC in late July 2023. Both Ambuja Cements and ACC are part of Adani Group.

India: ACC says that it will not carry out an independent investigation into its parent company Adani Group. US-based short-seller Hindenburg Research accused the group of stock manipulation and accounting fraud involving a 'labyrinthine network' of shell companies in January 2023. Prior to making its accusations, Hindenburg Research obtained a short position on Adani Group. An investigation into Adani Group's activities by the Securities and Exchange Board of India will conclude on 14 August 2023. Filings have also been submitted to the Supreme Court of India.

The Business Standard newspaper has reported that ACC said "Pending final outcome of regulatory investigations and related proceedings, the company has decided to not carry out any separate independent investigation in the matter, and the financial results do not carry any adjustments in this regard." It added "The expert committee submitted its report in the matter dated 6 May 2023, finding no regulatory failure."

Adani Group's original rebuttal of the allegations can be read online here.

India: ACC recorded sales of US$632m in the first quarter of the 2024 financial year, which began on 1 April 2023. This corresponds to a year-on-year rise of 16% from US$545m. The Economic Times newspaper has reported that ACC increased its cement and clinker sales volumes by 23% to 9.4Mt. The producer reported earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$103m, up by 77% year-on-year. It attributed this to lower costs, including fuel costs, and increased operational efficiencies. Its net profit more than doubled during the quarter, to US$56.6m from US$27.6m in the first quarter of the previous financial year.

ACC said "The cement industry is in positive cycle of demand, as well as cost factors. This comes at the most apposite time, when the company is in a transformation phase, buoyed by synergies with the group. We expect the positive trend of industry to continue in the second quarter of 2023."

Gujarat-based conglomerate Adani Group completed its acquisition of ACC on 16 September 2022. It subsequently began to relocate 'significant roles' from the cement producer's headquarters in Mumbai, Maharashtra.

India: Adani Group subsidiary ACC says that it will add 16Mt/yr-worth of new cement capacity in the five years up to the end of the 2028 financial year in March 2028. CEO Ajay Kapur said that the producer may implement the expansion plan in as short a time as two years. Reuters has reported that the company expects cement demand in India to rise by 7 – 8% between the 2023 financial year and the 2028 financial year.

India: Ambuja Cements and its subsidiary ACC have transitioned to reporting their results in line with the (April - March) Indian financial year. As such, they have published 15-month results for 2022 and the first quarter of 2023. During the period, Ambuja Cements reported sales of US$4.75bn, up by 34% year-on-year from US$3.53bn. Its cement volumes rose by 28% to 68Mt, while its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 11% to US$714m. Meanwhile, ACC recorded sales of US$2.71bn, up by 38% from US$1.97bn in 2021. Its cement volumes rose by 31% to 37.9Mt, while its EBITDA fell by 30% to US$275m.

ACC announced its goal to become India's 'most profitable cement company.' To realise this, the company will implement a three-pronged strategy of capacity expansion, efficiency improvements and development of its distributor and dealer network. Under the capacity expansion heading, the producer will double its production capacity through the construction of new cement plants and the expansion of existing ones. In this, it will lay special emphasis on securing supplies of renewable energy and supplementary cementitious materials, including fly ash from its own power plant segment. The company noted that it recently secured access to 1Bnt-worth of new limestone reserves in Maharashtra, Odisha, Karnataka and Rajasthan. It will also seek to increase its coal production to avoid the rising cost of imports.

In the 2024 financial year, the government of India plans to invest US$11.4bn in the construction of new housing, roads and sanitation infrastructure nationally. Ambuja Cements has forecast an increase in domestic cement consumption of 6 - 8% to over 390Mt/yr. It expects Indian cement production to rise by 8 - 10% year-on-year to 390Mt in the 2024 financial year.