Displaying items by tag: India

India: Lafarge is focused on expanding its own operations in India and isn't considering any acquisitions at present, according to its chairman Bruno Lafont.

"We will continue to grow, mostly through internal growth and by expanding our existing cement plants and growing through several green-field plants," Lafont told reporters on the sidelines of an event.

He said the company will continue with its program to increase production capacity in India by 2Mt/yr, but he didn't say when the expansion will be completed. Lafarge has increased its capacity in India from 6.5Mt/yr in 2010 to 8Mt/yr in 2012. Lafont said the company will continue investing in its concrete and construction aggregates businesses in India.

The company recently expanded its capacity through new production lines at Jojobera in Jharkhand and at Mejia in West Bengal. Its four greenfield projects in Rajasthan, Karnataka, Meghalaya and Himachal Pradesh are in different stages of progress. Lafarge entered the Indian market in 1999 with the acquisition of Tata Steel's cement business. This was followed by the purchase of the Raymond Cement facility in 2001. Lafarge currently has four cement plant across the country - in Sonadih and Arasmeta in Chhattisgarh, Jojobera and Mejia.

India: The Union Budget for 2012-13 has divided the cement industry on the likely impact of its new measures. An increase in excise and service tax is expected to increase the price for consumers, whilst an expected demand increase for cement will be driven by housing and infrastructure development.

Finance Minister Pranab Mukherjee proposed to exempt imported non-coking coal from the current basic duty of 5%. It is anticipated that this will have a positive impact of 1-1.5% on the industry's operating profit. The cement industry is the third largest consumer of coal after power and metallurgy, requiring about 15-20Mt/yr. At present, the industry meets close to one-fourth of its total coal requirement through imported coal.

Cutting the duty on imported non-coking coal has been offset by an increased excise and service tax of 2%. This hike in excise duty is expected to increase the cost of cement for consumers as manufacturers pass on the impact. One positive feature is the 30% abatement on the retail sale price, a long pending demand of the industry.

Meanwhile on the demand side the measures set to encourage housing and infrastructure development are expected to boost sales.

Overall opinions on the Union Budget have remained neutral for the cement industry, as the increase in excise duty combined with the recent increase in the cost of rail freight will result in a considerable increase in the cost of delivered cement. This will then impact upon the cost of construction. Although welcome the 30% abatement of the retail sale price will also pose some practical difficulties as the sales price changes with different markets.

India: The Cement Manufacturers Association of India (CMA) has asked the Railway Board of India to reduce the cost of freight haulage. The CMA raised the issue in the wake of the board's decision to raise freight rates by 24%, which came into effect on 6 March 2012.

The CMA highlighted the disparity in the transportation costs of cement by rail compared to road. Other key concerns included the need to reduce the total cost by suitably lowering the classification for cement and clinker and by curtailing penalties, wharfage/demurrage charges and terminal charges.

The CMA now expects that cement prices will rise. "With this steep hike, the rail transportation cost of cement, which is already very high, will go up further including the transportation cost of input materials like coal, slag, gypsum assuming an average rail lead of 600km for the cement industry," said the CMA's President MMAR Muthiah.

According to Muthiah, transportation contributes about 20% to the operating cost of the cement industry. In addition, the industry has been highly taxed at over 60%. In the last couple of years railways have revised the classification of cement and clinker consistently from class 130 to 150 resulting in indirect freight hikes. In addition, a further burden on cement industry has been imposed by levy of various surcharges like a busy season terminal surcharge and development surcharge in the last few years.

India: ACC Limited has announced plans to set up a new clinker production facility at Jamul in Chhattisgarh, replacing its existing line at the plant. Currently the plant can produce 1.6Mt/yr of cement. The expansion will see this figure rise to 5Mt/yr by mid-2015. The existing line will be phased out as the new one is commissioned.

Along with the announcement, ACC also said that it is planning to set up decentralised grinding stations, which will use clinker produced at Jamul. These will be implemented in a phased manner and are scheduled for completion by March 2015.

At the same time, ACC will also increase its existing grinding capacity at its Sindri plant in Jharkhand. Another new grinding plant is currently being built at Kharagpur in West Bengal. Both installations will source clinker from the new Jamul plant.

The overall capacity of ACC will increase to 35Mt/yr when all these projects are completed, helping the company to meet the demand for cement in the east of India.

India: In a clear move away from its traditional engineering, procurement and construction (EPC) business, Shriram EPC, part of the financial services major Shriram Group, is ready to pick up a majority stake in Sree Jayajothi Cement. The company's board approved picking up a significant equity share capital of Sree Jayajothi by partially converting the dues owned by Sree Jaya Jothi into equity.

Shriram EPC, which provided EPC services to the latter's cement plant at Yanakandala village in Andhra Pradesh, has invested its own money for the project. Shriram EPC hopes to complete the deal by mid-April 2012, according to its managing director and CEO, T Shivaraman.

"For us it is a strategic move," explained Shivaraman. "For the group it is a diversification to get into the cement business. This move will have long term benefits for us. Since Sree Jayajothi could not return the money that we invested over the years, we thought it fit to convert the dues into equity. We are converting part of the dues into equity and it will be for majority stake."

Sree Jayajothi has been struggling to find a suitable investment partner for its cement business, with repayment so far taking longer than expected. Over recent years Shriram EPC has invested over US$100m in the plant.

Mr M A M R Muthiah, the current managing director of the Chettinad Cement Corporation has taken over as president of the Cement Manufacturers' Association (CMA). Muthiah said that the association acts as a bridge between the industry and the Government with an objective to promote the cement sector's growth, protect consumer interests and collaborate with international counterparts outside of India.

Mr O P Puranmalka, a whole-time Director of Ultratech Cement, has taken over as the CMA's new vice-president.

India: After UltraTech Cement announced a 93% improvement in its net profit for the quarter ending 31 December 2011, Hyderabad Industries has also reported an improvement. The company posted a near 60% surge in its net profit to US$2.03m for the same quarter. Its total income has increased by 15% year-on-year from US$33.8m to US$38.7m in the quarter under review.

Shree Cement has also reported results for the quarter, which show a massive 115% surge in its net profit to US$11.8m compared to US$5.5m for the same quarter of 2010. Shree's total income increased by 61% year-on-year from US$156m to US$252m in the quarter under review.

Meanwhile, data from the Indian Cement Manufacturers' Association (CMA) has shown that cement sales grew by 5.3% percent to 159.7Mt during the period 1 April 2011 to 31 December 2011, up from 151.6Mt in the same period of 2010. The same CMA data showed that in December 2011, cement sales grew by 14% to 19.8Mt from 17.4Mt in December 2010.

India: Ultratech has posted a 93% rise in net profit for the fiscal quarter that ended on 31 December 2011 compared to the same period in 2010. India's largest cement producer by sales has attributed this rise to a low base of profit and revenue, improved demand and higher product prices.

Ultratech said that its cement sales rose by 6% to 9.72Mt in the third quarter. The company said that prices improved in the quarter but it didn't give exact figures. Net profit for the three months rose to US$120m from US$64m in 2010. Sales climbed to US$910m from US$740m.

The company said its variable costs increased by 16% in the quarter, largely due to higher prices of both domestic and imported coal. It added that India's monopoly coal producer raised its prices further in January 2012, which could hit its profit margin in the January-March 2012 quarter.

Looking ahead, Ultratech said that while India's cement demand is expected to grow at 8%/yr over the next few years, overcapacity in the cement industry and rise in cost of fuel and other raw materials could put pressure on margins. Ultratech reiterated that it will continue with its US$2.2bn expansion programme to increase its production capacity to 59Mt/yr by 30 June 2013. The company's current capacity is 50Mt/yr.

Most Indian cement companies are expected to post robust financial performance for the October-December 2011 quarter, as demand returned sharply after the seasonal monsoon rains ended in September, spurring construction activity. Cement prices have improved as a result of higher demand as well as rising costs.

India: Dalmia Cement Bharat Ltd. (DCBL), a subsidiary of Dalmia Bharat Enterprises, has picked up a 50% stake in Assam-based Calcom Cement India (Calcom) for an investment US$47m. Calcom is in the process of expanding its consolidated cement manufacturing capacity to 2.1Mt/yr.

Amit Chaudhery, group corporate communications at Dalmia Bharat Group, said, "DCBL has arrived at an in-principle agreement with Assam-based Calcom Cement for a 50% stake in that company. Calcom Cement has a robust presence in markets of the northeast. The 50% ownership of this 2.1Mt/yr semi-commissioned plant is the first concrete example of the non-organic, acquisition-based growth strategy of DCBL."

DCBL's move is part of its larger aims to expand its cement business to northern and northeastern. Dalmia has 9.5Mt/yr capacity and holds little over 45% in Orissa Cements, which has a capacity of around 5.5M/yr. The company is also looking to set up two greenfield plants in Karnataka with a capacity of 2.5Mt/yr each.

India: Aditya Birla Group is considering buying Lafarge's operations in South Africa to further bolster its presence overseas. The US$35bn conglomerate, which owns India's biggest cement producer Ultratech, is conducting an initial assessment for a possible bid for the Lafarge unit. Lafarge South Africa Holding has a value, comprising both equity and debt, close to US$800-900m according to a report from December 2011. It has a cement capacity of over 3Mt/yr and it operates 20 quarries and 55 ready-mix concrete plants.

The sell-off of its cement operations in the region is part of Lafarge's plans to restructure its global operations through a series of asset sales to retire debt, which currently stands at over US$18bn. Lafarge may also sell off its majority equity holding in Pan African Cement, which has its units in Zambia, Tanzania and Malawi.

A spokeswoman for the Aditya Birla Group declined to comment on the report. The group, one of the world's 10 largest cement producers, operates across 36 countries and has recently considered bids for overseas coal assets. Lafarge has also been unavailable for comment.

Another Indian company Shree Cement is also believed to have shown interest in the asset. "We have initially shown some interest in the project but we would not like to comment on the present status," stated an unnamed senior group official.