Displaying items by tag: Birla

India: The acquisition of Lafarge India's two cement plants by Birla Corporation may come unstuck. According to local media, there are questions being raised on the outcome of the deal, which is the biggest acquisition in the 96-year history of Birla Corporation.

The ownership dispute between the Birla family and the Lodhas, who currently manage Birla Corporation, could create obstacles for the deal. After the death of Priyamvada Birla in 2004, the widow of M P Birla, her will had named R S Lodha, a chartered accountant and close confidant of the family, as the heir to her entire estate which ran into billions of US Dollars. This was hotly contested by the Birla family on the legal front. Today, the late R S Lodha's son, Harsh Lodha, is the chairman of Birla Corporation. The M P Birla Group has around a 63% stake in Birla Corporation.

There are now doubts whether the Birla Corporation's deal to acquire Lafarge India's assets may be consummated, given the continued ownership dispute. However, Debanjan Mondal, a partner in Fox & Mondal, the legal counsel of Harsh Lodha, said that, "If required, appropriate shareholders resolution will be taken for the acquisition. This has nothing to do with the will dispute and it will not come in the way of the deal." Analysts have highlighted that Birla Corporation would have to raise funds to finance the transaction, requiring the mortgage of assets, which may be difficult given the ownership dispute.

India: LafargeHolcim has entered into a letter agreement with Birla Corporation Limited, subject to approval by the Competition Commission of India (CCI), for the divestment of certain assets in India as part of the merger for US$768m. The proceeds from the sale of the divestment business will be used to further reduce debt.

The assets include Lafarge's Sonadih cement plant and Jojobera grinding plant in Eastern India, which have 5.15Mt/yr of cement production capacity. The transaction with Birla Corporation will be submitted to the CCI for approval and is subject to other regulatory approvals and customary conditions. Following the divestment, LafargeHolcim will have around 68Mt/yr of cement capacity in India.

India: Birla Corporation has witnessed a sharp drop in its first quarter profit to US$2.55m from US$15.2m a year ago. Income stood at US$119m against US$132m.

Harsh V Lodha, Birla Corporation chairman, said that poor demand in the company's major markets in the north and central regions put cement prices under severe pressure. He added that, though realisations during the quarter were very low, BCL could partially mitigate its impact on profitability by improving operational efficiencies in various areas. The resilient markets in east provided some relief. Lodha said that the company was installing equipment to set up the alternative fuel and raw material system to increase the use of alternative fuel on a continuous basis at its clinker units. This initiative to utilise agricultural waste and will be operational by the first quarter of its 2017 fiscal year, which ends on 30 June 2016.

India: According to the Financial Chronicle, Birla Corporation plans to increase its cement capacity to 15Mt in the next four years.

"At present our cement production capacity is 9.3Mt/yr. We want to take it to 15Mt/yr in the next four years," said Birla Corporation chairman Harsh Lodha. He said that there is an oversupply situation in the cement market at present as capacities have been built in the last three to four years on higher demand expectations, but demand has not risen.

Meanwhile, Birla Corporation is awaiting a limestone mining lease from Assam Mineral Development Corporation (AMDC). It had earlier signed a Memorandum of Understanding (MoU) with AMDC to set up a 1Mt/yr plant there. Once it gets the mining lease from AMDC, it will form a joint venture company with the state-run corporation and get the project off the ground. AMDC will hold 12.5% of the equity and Birla Corporation will hold the remaining 87.5%. Lodha said that the proposed plant would be set up with a capital outlay of US$94.5m.

India: Aditya Birla Group´s UltraTech Cement plans to merge the cement division of BK Birla-owned Century Textiles and Industries, Century Cement, in a share-swap proposal with a deal value of US$1.64bn. The transaction, if approved by the boards of both companies, would help UltraTech add 13Mt/yr to its existing capacity of 65Mt/yr, taking it to the total of 78Mt/yr.

India: Birla Corporation has reported a 9% growth in its standalone net profit at US$4.45m for the quarter that ended on 31 March 2015. Its total standalone income rose marginally to US$125m in the quarter of the last fiscal from US$124m in the prior year period. During the fourth quarter of its 2015 financial year, cement production declined by 2.7% year-on-year to 1.87Mt. Cement dispatches also fell by 1.31% to 1.88Mt during the period.

During the 2014 - 2015 financial year, cement production was up by 3.77% year-on-year to 7.62Mt, while cement dispatches rose by 4.42% to 7.67Mt. Birla Corp's consolidated net profit during the year rose by 35% year-on-year to US$27.4m from US$20.3m in the same period of the previous year. Revenue grew by 6% year-on-year to US$502m.

"Barring the first quarter of the current financial year, cement demand and prices remained sluggish. East, North and Central markets, in particular, were the worst hit," said Birla Corp. Weak monsoon and widespread unseasonal rain during the last quarter of the year in the North and Central parts of the country reduced cement demand.

The performance of the company was 'severely impacted' due to coal shortages. According to Birla Corp, it had to procure coal from the open market, including imports, at a substantially higher cost. "The grid power rates have gone up. Also, the cost of power generation by the company increased due to the purchase of coal from the open market. Though road freight cost came down during the year on account of lower diesel prices the saving was negated by higher railway freight," it added. High limestone costs also added to the production cost.

"With the prediction of weak monsoon in the current financial year, the demand from the rural market may be impacted adversely," said Birla Corp. However, initiatives such as developing infrastructure, smart cities, 'Make in India,' concrete roads and an increase in the allocation of funds to states is likely to help improve the demand. "While signals are positive, ground-level actions will help 'rev up' the economy. It is expected that the demand - supply mismatch will reverse for the better, with a slower pace of capacity addition. Proposed implementation of Goods and Services Tax (GST) is expected to simplify the tax structure, benefiting the cement industry."

India: The Aditya Birla Group has submitted bids to purchase global assets being divested from the LafargeHolcim merger. UltraTech and other companies that belong to Birla have put in bids for cement units of Lafarge and Holcim in Brazil and the Philippines at an enterprise value of US$1.4bn. The group had identified Brazil as a major place for expansion three years ago. The Philippines was among the overseas countries where the group started operations several years ago.

Birla is competing with rival cement companies and private equity funds for the units. Germany's HeidelbergCement has teamed up with Votorantim Cimentos of Brazil while Cemex has joined hands with CRH plc. Eurocement is also in the race. Birla's move is part of its overall plan to increase its cement capacity to 70Mt/yr by early 2016 from 63Mt/yr currently.

Over 50% of Birla's revenues come from its overseas operations. According to a consultant involved with the deal, Birla will be unable to bid for LafargeHolcim assets in some of the market, including India, as a purchase will lead to monopoly in those markets.

India: Orient Cement, a CK Birla Group company, is in talks with cement companies to acquire a cement plant as part of a plan to triple its capacity from 5Mt/yr to 15Mt/yr by 2020.

"We are in strategic discussions with three players to acquire a cement plant with a capacity of up to 2Mt/yr," said Deepak Khetrapal, managing director and CEO of Orient Cement. He declined to name the companies, but added that the plant would be ideally located in Madhya Pradesh or Chhattisgarh.

The expansion plan also involves setting up greenfield cement plants and expanding existing facilities. Orient Cement has set up a 3Mt/yr greenfield plant in Gulbarga, Karnataka, which will become operational shortly. The company also plans to open another greenfield plant in the next five years, according to Khetrapal.

Orient Cement has outlined a capital expenditure of around US$444m for the expansion plan, to be funded through internal accruals and debt. Currently the company operates in Telangana and three regions of Maharashtra: Khandesh, Vidarbha, Marathwada. The expansion will give Orient Cement access to markets in Karnataka and central India.

India: CK Birla group's subsidiary, HIL Limited, has announced that it has sold 100,000t of Charminar brand fibre cement roofing sheets in May 2014.

"This is the highest ever achieved by any brand globally," said HIL's managing director, Abhaya Shankar. He added that Charminar has been a household name, synonymous with asbestos roofing solutions across India, for nearly six decades. HIL has eight manufacturing plants, an installed capacity of 1Mt/yr and a 20% share in the US$669m market of asbestos roofing products in India.

Formerly known as Hyderabad Industries Limited, HIL launched Charminar asbestos roofing products 66 years ago. Shankar said the brand had attained market leadership some time in the late 1950s and retained that position thereafter. As a part of brand-building efforts, HIL has deployed campaign vans, relied on wall paintings and actively participated in village marts and other such events in rural areas. According to Shankar, the brand building involved three aspects: a strong relationship with distributors, a pan-Indian presence and consistent policies in respect of trade. HIL has also made use of a good supply chain and a robust system to get customer feedback. HIL spends about 2.5-3% of its revenues on brand building.

India: Legal metrology officials have conducted surprise checks on cement warehouses at Nacharam and Orient Cement facilities in the state of Andhra Pradesh. The officials registered six cases pertaining to various violations on 23 January 2013 and also suspended a district inspector from Adilabad for dereliction of duty.

Legal metrology representatives raided warehouses owned by Birla A1 Premium Orient Cement Ltd, Maha Shakti Cement and NCL Industries Ltd in Nacharam, Andhra Pradesh and found 50kg cement bags that were light by 20-1000g. Following the raids, the officials seized 8210 cement bags from three warehouses.

Also on 23 January 2013, metrology officials conducted searches on Orient Cement Industries in Adilabad, Andhra Pradesh. The officials registered cases for using packing machines without getting them verified by the department.

S Rajeshwar, district inspector of Adilabad, Andhra Pradesh state, was suspended for earlier visiting Orient Cement Industries and deliberately coming back without finding any violations.