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Trinidad Cement’s manager appears on US$50m fraud charge 22 January 2015
Trinidad & Tobago: The manager of Trinidad Cement Limited's Employees Credit Union, Darren Singh has been denied bail after he appeared before a Port-of-Spain Magistrate charged with fraudulently transferring US$50m from the credit union's Unit Trust Corporation account to a Republic Bank account.
It is alleged that Singh, with intent to defraud, caused the transfer of US$50m from the credit union UTC's account to a Republic Bank account at Tropical Plaza, Pointe-a-Pierre in the name of TCL Credit Union on 18 January 2013, using a forged UTC wire transfer.
Prosecutor Callister Charles objected to bail being granted on the basis of the nature and seriousness of the offence, as well as allegations that threats had been made to witnesses in the case. Singh's attorney Candice Lopez countered that her client was a married man with five children and was the sole breadwinner of the family. She also said that Singh was the manager of the TCL Credit Union, had no previous convictions and was prepared to abide by any condition laid down by the court.
India: Cement companies that operate in East Jaintia Hills District, Meghalaya State face a precarious situation due to a ban imposed by National Green Tribunal (NGT) on the extraction and transportation of coal. As coal is a major fuel used by the cement plants in the region, its non-availability threatens to close the plants.
"Coal demand from cement plants is huge and if there is no supply, all the cement companies will have no other option but to shut down their plants," said a representative at one of the cement plants affected by the ban. He lamented that the NGT court had lifted the ban on transportation of the assessed and extracted coal for transportation to Beltola District, Assam State, only. "However, the cement plants in East Jaintia Hills have not received any coal due to the non-availability of a weighbridge in the district," he said. "Approximately 2000 - 2500 trucks are seen transporting coal to Assam every day."
Lafarge India to buy back 14% stake from Barings Asia 22 January 2015
India: Lafarge India has begun the process of buying back the 14% stake it sold to global private equity investor Barings Asia in May 2013 for US$265m. This comes about nine months after Lafarge and Switzerland's Holcim announced their intention to merge their global assets, including those in India.
The move is part of the sale agreement that Lafarge signed with Barings Asia, which said that any changes in shareholding structure will trigger the buy-back clause. According to local media, the process has just started and may take a few months. Once the Competition Commission (CC) has cleared the LafargeHolcim merger proposal, the process is expected to gather steam.
JK Lakshmi's US$276m Durg cement plant starts production 22 January 2015
India: Built at a cost of more than US$276m, JK Lakshmi Cement's new Durg cement plant in Chhattisgarh has started production.
The plant has an installed capacity of nearly 2.7Mt/yr. Following commissioning, JK Lakshmi Cement's installed cement production capacity stands at 9.3Mt/yr. A part of the US$4bn JK Organisation, the Durg plant will produce various types of cement, including Ordinary Portland cement, Portland pozzolana cement and slag cement.
The Durg project had in 2013 attracted the wrath of the local inhabitants, who set fire to part of the under-construction plant. They were reportedly angered by the reluctance of JK Lakshmi Cement to give jobs to people affected by the project. This caused serious damages at the construction site.
What next? Expect the unexpected…
Written by Peter Edwards
21 January 2015
On 15 January 2015, the Swiss National Bank (SNB) abandoned the Euro1.20 cap on the Swiss Franc. The effects of the decision were immediate, with the value of a Franc dropping from Euro1.20 to just Euro0.99. The decision caused turmoil for currency brokers and big business in Switzerland's normally bullet-proof finance sector, with some brokers out of business by the end of the same day.
It is not hard to see why these brokers were caught out by the sudden change in the SNB's position. On 18 December 2014 Thomas Jordan, Chairman of the SNB's Governing Board, stated in no uncertain terms that, "The SNB remains committed to purchasing unlimited quantities of foreign currency to enforce the minimum exchange rate with the utmost determination." In research conducted by Bloomberg News on 9 - 14 January 2015, not one of 22 economists questioned expected the SNB to abandon the cap in 2015. That's quite an about-turn by the SNB in less than a month.
The decision to 'scrap-the-cap' shows the potential of outside influences to suddenly unseat even the most secure of businesses. Such companies include Holcim, the share-price of which went on a rollercoaster on the SIX Swiss Exchange in the immediate aftermath of the announcement. At one point on 15 January 2015 Holcim had lost 20% of its value before closing 11% down on the day. It has since recovered somewhat, although a whopping Euro3bn of its capital has been swallowed up due to the plummeting Franc.
Following the sudden changes to its circumstances, Holcim immediately reinforced its commitment to its merger with Lafarge. "Regarding a possible impact on the combination with Lafarge, what we can say is that we remain committed to the merger," said spokesman Eike-Christian Meuter. There was an almost simultaneous reciprocal statement from the French producer, also stating its commitment. No change there then.
The calmness of Holcim's statements was broadly in line with commentary from bankers, which stated that large deals were unlikely to be affected by the change. This is because Swiss firms can insure themselves against the effects of such moves. Another 'get-out of jail free card' could have been a material adverse change (MAC) clause. If in place a MAC would allow the merging parties to terminate a transaction if an external event significantly changes the outlines of the deal. It is not possible to know whether Lafarge and Holcim have such a clause due to confidentiality issues.
Despite the fundamentals of the LafargeHolcim merger appearing to be unaffected, the scrapping of the Franc cap is an excellent example of how external policy makers can have a direct and unexpected impact on the underlying conditions of the global cement industry. Another major external influence at present is the low oil price, mainly affected by the oil producing cartel OPEC. HeidelbergCement said this week that it expects the oil price fall to have a positive impact on its profit in 2015. It makes 80% of its revenue in oil-importing countries, which should see reduced transport and production costs. This will result in improved economic conditions, higher levels of construction and hence cement production. For HeidelbergCement 2015 could be a case of costs down, sales up.
That surely sounds like good news, for some stagnant 'old' developed economies at least. However, in the world of 'new normals' it is the IMF that has sounded the biggest warning this week. It dropped its 2015 global economic growth forecast from 3.8% to 3.5%. As fuel prices slump, so too has inflation. In the EU this has resulted in deflationary pressures that could yet stump the recovery. Consumers (and construction firms alike) may go from a position of not being able to afford things, to not wanting to buy them. In the longer term, this may be yet more bad news for the cement sector in established markets.