Displaying items by tag: India

India: Gangotri Cement has appointed Rajendra K Shah as an additional Independent Director with effect from 25 November 2013. Shah has also been appointed as a member of the Audit Committee and Shareholders' Grievances Committee of the Board of Directors of the Company. Gangotri Cement said that Ravi Kamra had resigned as a Director due to personal and professional commitments.

Minority shareholders have bowled a googly at Holcim's attempt to simplify its business structure in India.

Or for readers unacquainted with cricket terminology, domestic institutions which hold about 9% in Ambuja Cements have been widely reported in the Indian media as having voted against a move to merge the cement producer with its parent company, Holcim India. The final results of the shareholders vote will be publicly announced on 21 November 2013. The shareholders actions follow Holcim's recent approval by the Indian Foreign Investment Promotion Board for the merger.

That this is bad news for Holcim is not in doubt given that the multinational cement producer has taken a hit in its Asia-Pacific region, particularly in India. Overall for the region its operating profit fell by 32.5% year-on-year to US$333m for the quarter to 30 September 2013.

Specifically, Ambuja Cements managed to maintain its sales volume of cement and clinker year-on-year at 4.89Mt for the third quarter. However, its net profit after tax fell by 45.4% to US$27m. It blamed the decline on subdued demand due to overall economic slowdown combined with higher input costs. Meanwhile, ACC saw its sales revenue from cement fall slightly to US$388m for the third quarter while its profit for cement before costs and tax fell by 57% year-on-year to US$22m.

As mentioned in August 2013 when this column last looked at India, the parallels to cement industry consolidation in China are telling. In China guidelines have been issued to cut overcapacity in the cement industry, with the Ministry of Industry and Information Technology releasing lists of companies that should cut excess production. Alongside this, the country's leading cement producers have reported a return to profit so far in 2013. Who exactly is taking the loss from this production retraction in China, if it is happening, remains unreported and unclear.

In India, much more light has been shone upon an over-producing cement industry. Holcim and its subsidiaries are just some of the companies reporting falling profits at present. Ambuja's minor shareholders look like they have made a decision that is counter to the best interests of the Indian cement industry.

In a recent UK newspaper article, political theorist David Runciman compared the respective merits of democratic and more autocratic modes of government. Unsurprisingly for a British academic Runciman came out in favour of democracies, yet the advantages of more centralised governments were noted, such as the ability to make wide-reaching decisions faster and more comprehensively.

In light of this, comparing the Indian and Chinese cement industries in 2040 will be fascinating. Minor shareholder tussles will likely be forgotten but cement (and hopefully cricket) will be as vital then as they are now.

India: Suman Mukherjee, CEO and Managing Director of Shree Digvijay Cement Company, has resigned from the cement producer due to personal reasons. His resignation takes effect from 31 October 2013. He will also leave the board of directors at this time.

'Below expectations' was the headline message from Holcim's half-year results this week. Canada, Mexico and Morocco were all singled out as problem areas for Holcim but surely India represents the biggest headache for the debt-reducing multinational.

How badly its bottom line was hit by India in particular, Holcim declined to say. Overall its entire Asia Pacific region saw sales volumes of cement fall by 3.7% to 37.8Mt to 36.4Mt for the first six months of 2013. In 2012, India represented over half of the group's Asia Pacific installed cement production capacity. This suggests that the actual drop in sales in India was probably at least 6%, more if the other countries in the territory did better than in 2012. Overall profits for the Asia Pacific region fell by 14% to US$650m. What we do know is that Holcim announced major restructuring to its businesses in India in late July 2013 to cut costs.

The other major cement producers in India have fared similarly badly. UltraTech's first quarter profit, for the period ending on 30 June 2013, fell by 13.5% to US$111m. Its revenue fell by 2% to US$820m. Jaiprakash Associates also reported a 2% dip in its cement sector revenue to US$247m in the quarter ending on 30 June 2013. Profits fell by 24% to US$27m. India Cements' sales revenue rose by 3% to US$196m. Yet its operating profit fell too, by 41% to US$19.8m.

Both Holcim and India Cements blamed falling cement prices in the south of India. India Cements directly mentioned overcapacity. The only explanation UltraTech offered for its poor performance was rising input and logistics costs.

Problems in India are not unexpected. Overcapacity has loomed over the Indian cement industry for some time as the race for growth far overtook the increase in demand. In the wider economy, India hit its lowest gross domestic product increase in a decade, 'just 5%', for the financial year ending on 31 March 2013. Meanwhile the Indian Rupee fell to a record low of 61 against the US Dollar in late June 2013. Not good news at all for any cement producers looking to offset energy or raw materials costs from abroad.

As predicted in our overview of the Indian cement industry back in February 2013, the smaller cement producers are now likely to get picked off by the larger firms as capacity utilisation falls and fuel costs rise. It is interesting to compare this free-market led cement industry consolidation to the state-directed one happening in China.

The Indian media are certainly wise to this with reports and speculation on endless takeover rumours. One example of this is the Irish building materials conglomerate Cement Roadstone Holdings's (CRH) decision to purchase Sree Jayajothi Cements that was announced in early August 2013. However with CRH itself having just reported that it made a loss in the first half of 2013 it may be regretting that it finally has a presence in the south of India.

Half-year results from some of the major global cement producers are starting to present a detour from the usual European doom-and-gloom and optimism for the BRIC economies (Brazil, Russia, India, China and South Africa) of recent years.

Yes, Europe is dragging balance sheets down (particularly certain countries), but some indicators are starting to stabilise following a good second quarter. Very possibly the cost cutting programmes of the multinational cement producers are starting to kick in. Alternatively, perhaps these cement markets have finally bottomed out.

Lafarge has suffered a bad six months with cement sales down by 6%. However, its sales decline in Western Europe has slowed down with the worst news now coming from Central & Eastern Europe. Cemex has reported a better second quarter in 2013 with overall sales up by 4%. It too can show softened declines in its European territories. Italcementi and its subsidiary Ciments Français both saw revenues falling in the half year but either at a reduced rate or with a slowdown in the rate that earnings before interest, taxes, depreciation and amortisation (EBITDA) are declining.

Only HeidelbergCement's results have resisted any direct signs of an improvement in Europe. Overall revenue has remained stable for the half year with its profit up year-on-year. In Europe its revenue reduction has worsened to 4.7% for the half year. However it did observe a 'significant' improvement in cement sales in the UK.

Meanwhile, one of the cement industry's more reliable markets in recent years – India – is showing signs for concern.

As our news roundup this week reports, the country's largest standalone cement producer, UltraTech, had its profits drop year-on-year by 13.5% to US$111m for the most recent quarter and its net sales actually dropped slightly. Holcim has also been active in India with the announcement that it is simplifying its corporate structure to cut costs. In addition Lafarge reported that its market growth in India was 'subdued', considerably down from the 24% growth in cement sales seen in that country in the first half of 2012.

The news from UltraTech and Lafarge suggest that the rate of growth of the Indian cement industry is slowing. The unanswered question from Holcim's activity in India is whether they are doing it to counteract European losses or to counteract a loss of profitability in India.

Holcim's half-year results will make interesting reading when they are released in mid-August 2013 and may help to decide whether the worst is over in Europe.

India: JK Cement has appointed Shri Jagendra Swarup as an additional director on the board of the company until its next annual general meeting.

India: JK Lakshmi Cement Ltd has informed the Bombay Stock Exchange that Shri Hari Shankar Singhania, chairman of the board of directors of the company and president, JK Organisation, passed away on 22 February 2013 at the age of 80.

One of the comments on the Global Cement LinkedIn group about last week's column posted the US Geological Survey's (USGS) estimated cement production list for 2012.

John Kline commented that the report highlighted the increasing weight of developing countries. There is nothing surprising here, but it is worth noting the implications of this in Lafarge's financial results for 2012, which we report on today. 27% (Euro4.28bn) of the group's sales came from its Middle East and Africa region.

By cement volumes sales 63% or 89.5Mt came from its Middle East/African and Asian regions. Lafarge CEO Bruno Lafont explicitly acknowledged this in his statement accompanying the announcement saying, "Emerging markets continue to be the main driver of demand and Lafarge benefits from its well-balanced geographic spread of high-quality assets".

One of the other commentators remarked on the massive difference between the estimated productions of China (2.15Bnt) and India (250Mt). India was second in the list but has only an eighth of China's production!

Talking of India, our recent article 'The incredible Indian cement industry' in the February 2012 issue of Global Cement Magazine presents a good overview of the situation there. This week's news item on Madras Cements' third quarter results picks out a couple of threads from the complex Indian Picture. Firstly, Madras Cements was fined US$48m by the Competition Commission of India (CCI) for alleged price-fixing. Although the producer is growing its sales, this fine hangs ominously over the balance sheet.

Secondly, the producer's transportation and handling costs grew by a massive 37% year-on-year in the quarter. Rail freight prices increased in India in 2012. These kinds of increase cannot be welcome on cement producers' balance sheets. Unsurprisingly a 'marginal' reduction for cement is under consideration by the Indian Railways.

The Global Cement India Conference, was held in Mumbai this week on 18-19 February 2013, will update us on situation in India. Look out for the report soon.

India: The Chettinad Cement Corporation has appointed SK Prabakar to the board of the company as the nominee director of Tamilnadu Industrial Investment Corporation (TIIC). Prabakar is already the chairman and managing director of the TIIC. He replaces MD Nasimuddin.

A stark reminder came this week of the thankfully rare but potential risks of working in the cement industry. Five deaths were reported at Ambuja Cement's Bhatapara cement plant in India on 31 January 2013.

According to a press release Ambuja issued, the steel construction supporting a fly ash hopper located on top of a building, and connected to the cement mill, collapsed at the Bhatapara plant. Further details in local press reports added that about 200t of fly ash fell from a height of 15m. Five labourers and plant employees working at the site were buried under the debris and subsequently died. Four officials from the company have since been arrested and the plant closed while investigations are conducted.

Previously in January 2013 burn injuries were reported as another Ambuja cement plant, this time at Darlaghat. Eight workers received burns after a blast from a boiler unit.

However, despite these incidents the safety figures for Ambuja Cement and the other major Indian producers are high. In Ambuja Cement's 2011 sustainability report it recorded that its lost time injury frequency rate (LTIFR) was 1.04 for total employees and supervised workers. Its LTIFR has been dropping steadily since 2008, when it was 3.18.

This compares to other major Indian cement producers as follows. UltraTech Cement reported that its LTIFR for permanent employees was 0.82 in 2011-2012, a consistent drop year by year since 2008-2009. ACC reported that its LTIFR for its own and subcontracted employees was 0.31 in 2011. Shree Cement reported a LTIFR of 0.91 in 2010-2011 for employees and contractors. For international comparison the Mineral Products Association set a LTIFR target of 1.79 or lower for 2014 in the UK. Lafarge's global LTIFR in 2011 was 0.63 and Holcim's was 1.6.

An Ambuja's plant in Rajasthan picked up two national awards from the Government of India for Safety Performance in mid 2012. One was for first place for outstanding performance in Industrial Safety based on 'Lowest Average Frequent Rate'. The second was a runners-up prize for the category 'Accident Free Year'. Lafarge India, UltraTech, ACC and the other major producers all hold similar accolades. Sadly, any safety record is only as good as the shift that has just finished.