Displaying items by tag: Dalmia Cement

India: Dalmia Cement (Bharat) has successfully launched its new fleet of 35 liquefied natural gas (LNG)-fuelled trucks from its Murli cement plant in Maharashtra. The trucks are of two types, covering ranges of 50 - 600km, and will transport bagged cement and bulk raw materials. They have 28% lower CO₂ emissions than conventional diesel-powered trucks, and are thus able to eliminate 840t/yr of CO₂ emissions, while also reducing emissions of nitrous oxides (NO_x) by 59% and particulates by 91%, and eliminating emissions of sulphur oxides (SO_x).

Dalmia Cement (Bharat) says that its next move will be to launch a second fleet of 25 trucks from its Ariyalapur cement plant in Tamil Nadu. By April 2024, it plans to convert 10% of its 3000 truck-strong fleet to LNG fuel.

A spokesperson for the company said “Dalmia Cement has been following the business philosophy of Clean & Green is Profitable and Sustainable. Our overall CO₂ emissions have come down from 670kg/t to 467kg/t – one of the lowest globally – and we are focusing on realising our carbon negative goal by 2040. We are delighted to partner with GreenLine Logistics for further reduction of our Scope 3 greenhouse gas emissions.”

India: The Competition Commission of India (CCI) has approved a US$684m deal related to Dalmia Cement’s acquisition of cement, clinker and power plants of Jaiprakash Associates Limited (JAL).

Dalmia Cement says that the acquisition - which includes 9.4Mt/yr of cement capacity, 6.7Mt/yr of clinker capacity and 280MW of power generation capacity - will allow it to expand its footprint into the central region and transform into a pan-Indian company. More than half of JAL’s cement capacity is in central India. Dalmia Cement anticipates reaching a cement production capacity of 75Mt/yr by the 2027 fiscal year and, due to other expansion plans, 110 - 130Mt/yr by the 2031 fiscal year.

This latest transaction, once approved by the relevant regulators, will see the complete exit of JAL from the cement business.

UK: The World Cement Association (WCA) has appointed three new directors: Fabien Charbonnel, the chief executive officer (CEO) of Cem’In’Eu; Xu Gang, the chair of the board of Maweni Limestone and Vice President and Head of Overseas Area of its parent company Huaxin Cement; and Kevin Lunney, the chief operations officer of Mannok Holdings. The appointments were agreed at the WCA General Assembly Meeting, which took place in January 2023.

At the same time Mohammed Ali Al-Garni, the CEO of Saudi Cement, and Roland van Wijnen, the CEO of PPC, were re-elected to the board of directors. Vincent Lefebvre, the founder and executive chair of Cem’In’Eu, and Mahendra Singhi, the managing director and CEO of Dalmia Cement, have also resigned as directors. They joined the board of directors of the WCA in 2019 and 2020 respectively.

Further consolidation of the Indian cement sector looked closer this week with the news that Dalmia Bharat’s cement subsidiary has agreed to buy the remaining cement plants from Jaiprakash Associates. The US$685m deal covers cement and power plants in Madhya Pradesh, Uttar Pradesh and Chhattisgarh. It includes clinker production capacity of 6.7Mt/yr, cement capacity of 9.4Mt/yr and 280MW of captive power capacity.

Chart 1: Map of Dalmia Bharat’s cement plants in November 2022 with region of proposed new plants highlighted in orange. Source: Adapted from Dalmia Bharat investor presentation.

The acquisition gives Dalmia Bharat the opportunity to draw level with Shree Cement in terms of cement production capacity. If the deal completes, then both cement companies will hold a capacity of around 46Mt/yr. This puts them behind UltraTech Cement and Adani Group nationally. In terms of the cost, the proposed acquisition works out at around US$73/t of cement capacity, although this doesn’t take into account the additional captive power generation capacity. This compares to US$119/t for UltraTech Cement’s purchase of Jaiprakash Associates plants in 2017 and US$97/t for Adani Group’s purchase of Holcim’s Indian-based business in September 2022.

Dalmia Bharat’s rationale for its move this week was that it wants to grow in the Central Region of the country and work towards a capacity target of 75Mt/yr by the 2027 financial year and at least 110Mt/yr by the 2031 one. It backed this up in an investors’ presentation by saying that cement consumption was around 170kg/capita locally and that the region represented about 15% of national demand at 54Mt/yr. This roughly checks out with regional integrated/clinker production capacity distribution analysis that Global Cement Weekly carried out in June 2022. Only the East region was lower, but this didn’t take into account grinding plants or new projects.

Completion of the agreement is planned by December 2023 and is subject to the usual regulatory approvals. However, readers may recall the difficulties UltraTech Cement had in the mid-2010s when it attempted to buy two plants from the subsidiary of Jaypee Group. Problems stemming from an amendment to the Mines and Minerals (Development and Regulation) (MMDR) Act caused the original proposal to be rejected by the Bombay High Court in early 2016. UltraTech Cement bounced back though with a deal to buy far more plants instead. This deal completed successfully in mid-2017.

Jaypee Group’s debts have also caused problems along the way. Indeed, this is the reason why it has finally decided to leave the cement business altogether. In early December 2022 it reported its latest default on interest payments towards some of its loans. Overall its outstanding debt was US$3.39bn. Due in part to this, there have been plenty of stories in the local press over the last decade on whoever was reputedly buying the Jaypee Group’s cements assets. In October 2022, for example, Adani Group was reportedly in advanced talks to buy Jaypee Group’s remaining cement business until it denied it publicly. One deal that did reach fruition was Dalmia Bharat’s purchase of Bokaro Jaypee Cement back in 2014 from a joint-venture majority controlled by Jaypee Group. That agreement gave it full control of the 2.1Mt/yr Bokaro grinding plant in Jharkhand. Looking at the current proposed acquisition, one commentator from HDFC Securities in the local business press noted that detail on the transaction is lacking, such as what will happen to existing limestone reserves. Another pointed out that the deal was probably 30 – 40% below the replacement cost because the plants were old, lack of interest from potential buyers and due to the “likely need for additional CAPEX to run operations.”

If the Dalmia Bharat - Jaiprakash Associates deal completes then it marks the end of an era for the Indian cement industry as one of the big players bows out of the sector. It shows once more that, despite the mounting fuel and raw material costs in 2022, companies are still seeing big opportunities. In its December 2022 report, the ratings agency ICRA found that cement sales volumes grew by 11% year-on-year to 187Mt in the first half of the 2023 financial year. The acquisition might also, hopefully, put an end to the endless speculation about who Jaypee Group might be selling its cement plants to! Although, of course, the question then becomes who else might be considering divesting cement assets.

India: Dalmia Cement (Bharat) has concluded a contract for the acquisition of cement and other assets from Jaypee Group for US$684m. Mint News has reported that the deal will bring Dalmia Cement (Bharat) into control of an additional 9.4Mt/yr of cement production capacity, including 6.7Mt/yr of clinker production capacity, as well as 280MW-worth of fossil fuel-fired power capacity. All cement and grinding plants included under the deal belonged to Jaypee Group subsidiaries Jaiprakash Associates and Jaiprakash Power Ventures and are situated in Chhattisgarh, Madhya Pradesh and Uttar Pradesh.

India: Dalmia Cement (Bharat) is among buyers which will receive a supply of renewable energy from Sunsure Energy's new 74MW Tirunelveli open access solar power plant in Tamil Nadu. Press Trust of India News has reported that the solar power provider built the plant in three phases, with the first commencing in January 2022.

Project head Tarunveer Singh said "This is our largest single-site installation and one of the largest open access projects in the renewable energy-rich state of Tamil Nadu. Credit goes to our on-site team for completing this project in time, despite execution challenges posed by the weather and the daunting supply chain constraints plaguing the solar sector."

Sunsure Energy commands 250MW of solar power across 16 Indian states.

India: Dalmia Cement (Bharat) has won the Climate Orientated award at the Confederation of India Industry (CII)'s Third Climate Action Programme Awards. The awards aim to help companies to prepare scenario analyses, implement climate-related financial disclosures recommendations and calculate internal carbon pricing. This marks the second time that the producer has prevailed in the category. Dalmia Cement (Bharat)'s efforts along these lines include promoting and incorporating its own ‘Waste to Prosperity’ philosophy, through which it engages with waste generators, policy makers and stakeholders. Industrial waste streams constituted 40% of raw materials used in the company's cement production during the second quarter of the 2023 financial year. Municipal solid waste (MSW) provided 18% of heat in its kilns. Its CO₂ emissions per tonne of cement during the quarter were 467kg/t.

India: Dalmia Bharat sold 12Mt of cement during the first half of its 2023 financial year, up by 20% year-on-year from 10Mt in the first half of the 2022 financial year. Its income was US$757m, up by 21% year-on-year from US$624m. Meanwhile, the company's earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 28% to US$116m from US$161m. The company noted the growth effects of 'fuel price corrections' during the second quarter of 2022, which it expects to increase its profitability during the second half of year.

Managing director and CEO Punit Dalmia said “We are pleased with the performance of the first half of this year despite the intense inflationary environment, and are confident that we will be among the best in the industry, leaving the bad times behind. While the geopolitical turmoil continues, we are confident in the resilience of the Indian economy, which is further cementing its position at the centre of global growth and consumption.” Dalmia continued “In view of the government's continued momentum in the infrastructure sector, driven by the revitalisation of the housing sector, we expect the demand for cement to grow rapidly. Looking ahead, we will remain focused on our capacity expansion progress.”

Dalmia Bharat's 14 integrated cement and grinding plants span 10 Indian states and have a capacity of 37Mt/yr, India's fourth largest.

India: Dalmia Cement (Bharat) and Sagar Cements have submitted acquisition offers to Andhra Cements' administrator and committee of creditors. The Business Standard newspaper reported that the company owes its lenders total debts of US$118m and is valued at between US$42.5m and US$48.6m.

India: Dalmia Bharat sold 6.2Mt of cement in the first quarter of its 2023 financial year, up by 27% year-on-year from 4.9Mt in the first quarter of its 2022 financial year. Its sales revenues also rose by 27%, to US$417m from US$327m. The growth failed to translate into increased profitability, however, with the company recording a profit after tax of US$25.9m, down by 27% from US$35.3m.

Dalmia Cement (Bharat) Managing Director and CEO Mahendra Singhi said “I am pleased with our performance this quarter. Our sustained efforts on operational efficiencies and cost rationalisation have enabled us to mitigate the adverse impact of inflation and deliver our lowest total cost of production. Our capacity expansion projects are on track, and we have added 2Mt/yr of clinker capacity and 1.1Mt/yr of cement capacity, which takes our cement capacity to 37Mt/yr. We remain firm on our Carbon Negative Roadmap, and during the quarter have installed 41.4MW of renewable energy infrastructure.”