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Displaying items by tag: India
Attacks on cement dealers reported in Kerala
11 April 2012India: Keralan cement dealers have condemned attacks on cement shops and cement vehicles allegedly carried out by workers attached to the railway goods sheds in the towns of West Hill and Kallai. They have warned they will retaliate if the attacks continue. The Kerala Vyapari Vyavasayi Ekopana Samithi (KVVES) has declared support to the dealers, organised under the banner of the Kerala Cement Dealers Association.
T Naziruddin, KVVES president, inaugurating the general body meeting of the Kerala Cement Dealers Association's Kozhikode unit, demanded the intervention of the authorities to settle the issue. District president of the association MV Sakeer Hussain, who presided over the meeting, called for an immediate end to the attacks, which he said were being carried out to press for higher unloading charges for cement at railway goods sheds.
The association has alleged that the workers were insisting that cement should be brought to the city only by trains and that vehicles bringing cement by road were being attacked to create an artificial scarcity of cement. He said that this in turn would cause hardships to those who depended on the construction sector for livelihood.
ACC to upgrade and consolidate
04 April 2012India: Associated Cement Companies Ltd (ACC) is reportedly planning to boost its capacity by 16% to 35Mt/yr from existing 30Mt/yr at present. The expansion will entail an investment of around US$650m, which would be funded entirely from internal accruals.
To achieve this, ACC plans to set up a 4Mt/yr cement unit and a 2.79Mt/yr clinker unit at Jamul in Chattisgarh. The company will also stop its existing production line at Jamul. Grinding units are also planned at Sindri in Jharkhand and Kharagpur in West Bengal. The company also proposes to develop four coal blocks in Madhya Pradesh and one in West Bengal for its raw material requirements.
India or bust
28 March 2012It's official: the big boys are heading to India this week.
First Lafarge head Bruno Lafont announced broad expansion plans in the subcontinent. Then a Holcim presentation emerged from earlier in 2012 projecting that the company expects India's overall construction market to take the global third position after China and the US by 2020.
With the Indian construction share set to rise from US$360bn in 2010 to US$840bn in 2020 that's one massive market share up for grabs. Throw in some interpretation from India's 2011 census and the signs are that its population could overtake China's by 2030. Sounds like an absolutely perfect opportunity for your average embattled European cement corporation!
Except that there's no such thing as a sure bet. As we covered previously, Indian cement consumption fell for the first time in 20 years in August 2011. The cause was put down to political problems holding up infrastructure in key states. In March 2012 we've had two stories that have impacted upon the local industry. First the Railway Board of India hiked the freight rates by 24%. Then the Union Budget for 2012-13 increased the excise and service tax. Clearly everybody wants a piece of the 'inevitable' bonanza. If anything impedes India's growth in the next decade there may be bargains going for cement on the export market.
Elsewhere this week we have stories on the potential cost of a proposed air pollution ruling upon two plants in the US state of Montana, more information on a revival in the Gulf Cooperation Council region and more capacity growth in Indonesia.
India: Holcim expects the Indian construction market to more than double by 2020. According to one of the company's presentations made earlier in 2012, the Indian construction market will replace Japan as the third largest, after China and the US, by 2020, by which time, emerging markets will outweigh mature markets.
At US$360bn, India accounted for 5% of the US$7.2tn global construction market in 2010. However, by 2020, India is likely to capture a 7% market share, at US$840bn, of the US$12tn global market.
Holcim, which entered India post-2000, has its presence in the country through two established brands: ACC and Ambuja Cements. Collectively, these companies have the largest market share in India. The company currently has an Indian capacity of close to 57Mt/yr and is ahead of domestic giant Aditya Birla Group's UltraTech Cement, at 52Mt/yr.
Both have plans to augment capacities. UltraTech has plans to take its overall capacity to 75Mt by 2015. Holcim's Ambuja Cements will pump in around US$365m by 2013 to add more capacity.
According to India's 12th five year Plan (2012-17) document, the two segments most important to construction activity are infrastructure and housing. Since infrastructure spending is expected to go up to 9% of gross domestic product (GDP) or US$1tn for the Plan period (2012-17), this should translate into double-digit growth for the demand segment.
The Indian cement sector is the world's second largest, after China. During the current Plan (2007-12), cement players invested around US$10bn to add fresh capacities of 150Mt. According to the 12th Plan documents on the industry, the sector would need to increase capacity to 470Mt by 2017.
Lafarge focused on India
28 March 2012India: 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.
Prices set to rise amidst mixed Indian Union Budget
21 March 2012India: 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.
ACC to implement massive upgrade at Jamul
08 March 2012India: 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.
Shriram EPC to pick up majority stake in plant
22 February 2012India: 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.
New head for CMA
25 January 2012Mr 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.