Displaying items by tag: India
UltraTech Cement profit falls by 24% to US$103 in Q4
27 April 2015India: UltraTech Cement has reported a 24% drop year-on-year in consolidated net profit at US$103m for the fourth quarter of 2014 - 15, mainly due to a US$18.5m fine imposed by the Competition Commission of India for cartel accusations. This compared to a US$136m net profit for the same period in the 2013-14 year. Turnover rose by 4.47% to US$1.04bn for the fourth quarter from US$993m.
During the quarter, the company commissioned a 2Mt/yr cement plant and a 10MW waste heat recovery system in Rajasthan, and a 6MW waste heat recovery system in Karnataka.
For the financial year that ended on 31 March 2015, the Indian cement producer reported a 4.88% drop year-on-year in its net profit to US$330m. Its turnover rose by 12.5% to US$3.83m. Cement and clinker sale of grey cement rose to 44.9Mt during the year from 41.5Mt in 2013 – 14. White cement sales rose slightly to 1.22Mt from 1.14Mt. The company raised its cement production capacity to 60.2Mt/yr during the 2014 – 15 financial year after it acquired cement plants from the Jaypee Group.
"With the focus on development of the infrastructure and housing sector, the company is positioned across the country to meet the rise in demand and participate in the next phase of growth in the country," said UltraTech Cement in a statement.
Century Textiles to sell cement business to UltraTech
22 April 2015India: Century Textiles & Industries is reportedly planning to sell its cement business and merge it in an all-share deal with India's largest cement maker UltraTech. Both companies are in the final stages of a plan to merge the cement businesses, according to local media.
Once approved by shareholders, the merged entity's cement production capacity would total 87M/yr. This would help UltraTech achieve 100Mt/yr ahead of its target of 2020. UltraTech would gain access to the eastern market while strengthening its presence in Maharashtra, Chhattisgarh and Madhya Pradesh.
Shree Cement ramps up production capacity at Ras plant
16 April 2015India: Shree Cement has completed the second phase of its Ras plant in Rajasthan, which will take its cement production capacity up by 2Mt/yr. "The company has completed the phase two of Ras New Cement Unit at Bangur City, Ras, Rajasthan and enhanced its cement production capacity by 2Mt/yr with effect from 9 April 2015," said Shree Cement in a statement.
CMA seeks import duty on cement
15 April 2015India: The Cement Manufacturers Association (CMA) is seeking a tax on cement imports to provide a level playing field to the industry.
In a memorandum to various Union Ministries on 10 April 2015, the CMA said that cement was allowed to be imported into India at zero import duty, whereas all the major raw materials required to make cement such as limestone, gypsum, pet coke and packing bags attract import duties.
"To provide a level playing field, the basic customs duty should be levied on imports of cement into India and import duties on goods required for the manufacture of cement be abolished and freely allowed without levy of duty," said the CMA. The CMA also said that there is a case for rationalisation of domestic taxes on the cement sector in order to make it competitive.
"The value-added tax (VAT) on steel is only 4% whereas it is 12.5 – 15% on cement and clinker in different states. Thus there is a need to slash the tax burden by 20 – 25% through rationalisation and lowering of the excise duty to 6 – 8% without the addition of any specific duty," said the CMA. It also demanded that cement be stipulated as 'declared goods' to put it on equal footing with goods like coal and steel and an element of royalty be included in the calculation of drawback rates.
ACC’s net profit hit by low demand
15 April 2015India: ACC has reported a 40.8% drop in its consolidated net profit to US$37.9m for the quarter that ended on 31 March 2015 owing to slack demand in the domestic market. It had posted net profit of US$64.1m during the same period of 2014.
"With slack demand for cement from infrastructure and the general construction sector in the January - March quarter, the overall cement sales volumes registered a decline compared with the corresponding period of 2014," said the company in a statement. "The overall operating costs for cement business registered an increase of 3.6% year-on-year."
The company's total consolidated turnover for the quarter saw a 2.75% decline to US$462m compared with US$475m in the same period of 2014. Sales volumes declined to 5.82Mt as against 6.48Mt in 2014. Its total income from operations increased by 1.75% year-on-year to US$493m. Earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 18.3% to US$79.7m. "EBITDA for the quarter reflects continued margin improvements," said ACC's statement. During the quarter, ACC also received US$22.4m as an incentive from the Jharkhand government following a high court order, which helped push up its EBITDA.
ACC is hopeful that cement demand will improve in the next two quarters and said that its focus will continue to be on performance. "We see a modest but steady revival for the Indian economy in 2015. This will have a positive impact on infrastructure, housing and construction sectors and will increase the demand for cement," said ACC chairman NS Sekhsaria. The company is now looking forward to commission its clinker plant and allied grinding plant at its Jamul plant in Durg, Chhattisgarh by the end of 2015.
Chinese firm keen to invest in Andhra Pradesh
13 April 2015India/China: China's Sinoma International Engineering Co Ltd is keen to invest in cement and wind energy projects in Andhra Pradesh. Song Shoushan, Sinoma's chairman, told the delegation that it sees India as a potential market for the cement industry and that Sinoma sees Andhra Pradesh as a potential state for their biggest manufacturing facility in India.
Mumbai Port Trust allots land for cement terminal
10 April 2015India: The Mumbai Port Trust has allocated allotted 25,000m2 of land at Petroleum Godown to UltraTech Cement for 30 years, from which cement can be shipped in from other states and distributed to users across the city, according to trust chairman and managing director Ravi Parmar.
The land will be used to build a fully-automated cement handling terminal devoid of air pollution. In 18 months, when the terminal will be completed, it will engage in the transport of cement required for Mumbai's consumption via the coastal route. The estimated cost of the development of the facility, duly equipped with portable unloaders, 30,000t silos, bagging facilities and other ancillary facilities is about US$16.1m.
Mumbai city consumes approximately 1.25Mt/yr of cement. Currently, this cement is moved by road and rail through neighbouring states, necessitating the entry and exit of nearly 350 trucks per day, congesting the already strained city roads.
Indian inefficiency and China running out of options
08 April 2015The news this week that construction companies in the Indian state of Telengana are considering cement imports from China in order to circumvent a local dispute over cement prices highlights several issues. Firstly, state politics in India can create some interesting and not altogether logical situations. Secondly, it throws the spotlight on the changing situation in China, where the cement industry will be increasingly squeezed from all sides in the coming years. Thirdly, it shows that the global cement industry is exactly that – Global.
The first reaction when hearing of Chinese imports into India might reasonably be one of shock. How can it be that it is cheaper (21% less by local estimates) to import cement from 5500km away, into the world's second-largest cement producer, than it is to send it down the road from Andhra Pradesh? Overall, India is 'swimming in' excess cement capacity, which should make it cheap across the board. Large, well-run and efficient plants, coupled to current low diesel (transport) prices, should give the industry significant advantages on the international stage. So what's going on?
Poor local and national infrastructure is the 'obvious' culprit here, but it is only part of the story. The Telengana state government has imposed extra taxes on trucks bringing cement into the state from neighbouring Andhra Pradesh. By suggesting imports from China, it is possible that the Real Estate Developers' Associations of India (CREDAI) wants to make a point to the state government. Spotting a local imbalance of cement supply and demand, Telengana appears, in this instance, to have acted to make a quick buck. However, it has done so to the detriment of many other stakeholders. The extra tax deprives cement producers of higher sales, robs hauliers of business and stops the public getting a fair market price for cement. This highlights that India has not only physical infrastructure to build (in terms of highways and new railways), but also a more effective political infrastructure that can put aside state-on-state one-upmanship. This is a long-term task and not straightforward when you consider India's 1.25 billion inhabitants.
Of course the fact that China has been mentioned by CREDAI as a likely source of cement is far less surprising. The largest cement producer in the world has had excess capacity for several years now (regardless of who is supplying the statistics) and takes the opportunity to export whenever it can.
However, the sands are shifting under China at the moment. The country has not been able to rely on domestic demand to keep its over-inflated cement industry in business for many years now. It is indeed highly questionable whether it ever needed a cement industry the size of the one that it built.
Indeed, economic growth is slowing for the economy as a whole and this week there were even calls for the national housing bank to reduce interest rates for lower and middle income earners, effectively propping the sector up. This comes on top of tax breaks for home-buyers, which came in at the end of March 2015. Falling house prices have bred uncertainty and a lack of demand for new constructions and hence cement. Could China's absurd cement demand bubble finally be about to pop?
Whether or not the bubble pops next week or in a couple of years, the government has long been making preparations, in the cement sector at least. It has started to aggressively remove older and inefficient capacity, encourage cement exports and helped finance new plants overseas. China is changing its emphasis from cement production to cement plant project management. This is a good move, especially as there will be fewer opportunities for conventional exports in the coming years. Neighbouring Vietnam expects to have an incredible 20Mt of cement for export at less than US$50/t in 2015, flooding China's traditional sphere of influence. At the same time, the number of countries that are self-sufficient in terms of cement production are on the rise, meaning fewer importers.
Even opportunities for Chinese firms to build cement plants outside China are likely to become fewer and further between in the future. The most promising markets in Africa already have Chinese cement plants or cement plant projects, joined this week by Zambia. Chinese cement and cement engineering firms also have interests in Central Asia, Nepal, Mongolia and elsewhere. These markets, while promising, will have nothing like the potential to consume cement like China did in the recent past. As China reduces its capacity, its growing cement plant engineering sector may well find it hard to do enough business to survive...
India: The Confederation of Real Estate Developers' Associations of India (CREDAI) has said that it plans to import cement from abroad, particularly China, in order to overcome the rising prices faced by builders and the Telangana government's decision to impose extra costs on trucks coming from the neighbouring state of Andhra Pradesh.
With trucks owners deciding to suspend their operations in protest at the move, there have been reports of cement shortages. "The cost of premium cement in the retail market is set to increase steeply, as transportation costs will shoot up with the government's decision to impose road tax on trucks from Andhra Pradesh," said CREDAI Vijayawada chapter president C Sudhakar. "To avoid this, there are plans to import cement from China."
Sudhakar estimated that the cost of importing Chinese cement could be 20 – 21% lower than getting it from Andhra Pradesh, a clear benefit to CREDAI members and local homeowners.
LafargeHolcim merger receives clearance in India
01 April 2015India: Lafarge and Holcim have received clearance from the Competition Commission of India (CCI) for their proposed merger.
A package of asset divestments has been agreed with the CCI which includes Lafarge's Sonadih cement plant and its Jojobera grinding station, with a total of approximately 5Mt/yr of production capacity, in Eastern India. LafargeHolcim will have a cement capacity of around 68Mt/yr in India.
The divestment process will be carried out in the framework of the relevant social processes and ongoing dialogue with the employee representatives' bodies. The divestment process will be completed subject to the closing of the merger between Lafarge and Holcim.