Global Cement News

Poland: Lafarge Poland has appointed Xavier Guesnu as the president of its management board. He succeeded Federico Tonettiego in March 2018. Tonettiego had held the role since 2014.

Guesnu has worked for LafargeHolcim for eight years. In 2010 he was responsible for Lafarge's strategy and development in global markets, acting as the Vice President for Strategy, Development, Acquisitions & Mergers. From 2013 he was the General Director of the aggregate business in eastern Canada. Previously he worked as a business consultant for Bain & Company. He is a graduate of Mines ParisTech engineering school in Paris, France.

US: Plibrico has appointed Norm Phelps as its new Vice President of Sales. Phelps will be responsible for aligning sales strategy and objectives with Plibrico's long term vision and corporate goals. He will be based in Atlanta, Georgia and will report to Plibrico president and chief executive officer Brad Taylor.

Phelps has worked in the refractory industry for 18 years, holding sales and marketing positions at Vesuvius and Zampell in the US. Later he moved to Europe to join Calderys as Global Market Manager responsible for the aluminum and boiler segments in 2011. In 2014, he took on the role of Business Development Manager, leading the Calderys expansion into North America, including the purchase and integration of Spar and the creation of Calderys USA. Most recently, he served as General Manager for Calderys North America.

Phelps holds a degree in Materials Science and Engineering from Pennsylvania State University and is a graduate of the Executive Development Program at the University of Chicago Booth School of Business.

Persistence has paid off for UltraTech Cement this week. Although the deal is not complete, all the signs are pointing towards India’s largest cement producer buying Binani Cement despite losing an auction for it last month. Here’s a recap of what has happened so far.

In July 2017 the National Company Law Tribunal (NCLT) in Kolkata, a semi-judicial body that rules on issues relating to companies, started insolvency proceedings for Binani Cement. It followed a plea by one of the cement company’s creditors, the Bank of Baroda, that had an outstanding claim of around US$15m. The Kolkata bench of the NCLT rejected Binani Cement’s argument that the debt was tiny compared to the assets of its parent company Binani Industries of US$2.15bn. It then appointed an administrator, or resolution professional, called Vijaykumar Iyer, a partner at Deloitte Touche Tohmatsu India. More on him later on.

The subsequent auction of Binani Cement raised lots of interest both internationally and locally due to its production base. The company operates a 4.9Mt/yr plant at Binanigram in Rajasthan with two kilns and four mills. It also runs a 1.4Mt/yr cement grinding plant at Sirohi in the same state. Unusually though for an Indian producer it also runs a 2Mt/yr grinding plant at Jebel Ali, Dubai in the UAE and a 0.5Mt/yr integrated plant, Shandong Cement, in China.

Its products domestically in India include 43 and 53 grades Ordinary Portland Cement and Portland Pozzolana Cement, with the Bollywood film star Amitabh Bachchan as its brand ambassador. On that last point the Indian Supreme Court chastised Binani Cement in 2014 for not paying sales tax in Rajasthan whilst being able to hire Bachchan! However, given the ferocity of the struggle to buy Binani Cement maybe all that marketing of the brand paid off, giving the producer a much higher profile than it might otherwise have had.

Anyway, lots of companies showed interest in Binani Cement in the first round of bidding in late 2017. CRH, LafargeHolcim, HeidelbergCement, India Cement, Orient Cement, Ramco Cement, Shree Cement, UltraTech Cement and Piramal Group were all linked to the auction. Eventually UltraTech Cement, JSW Cement, Ramco Cement, HeidelbergCement India, Dalmia Bharat and a pair of Indian investors all submitted bids and JSW Cement emerged as the winner with a bid of US$919m. However the emergence of an additional liability of around US$250m scuppered that auction when it turned out that Binani Cement had offered a corporate guarantee for the acquisition of a fibreglass asset in Europe known as 3B in 2012 by Binani Industries. By February 2018 the next auction was in progress and this time Dalmia Bharat Cement and UltraTech Cement led the race. Dalmia Bharat won the second auction with a bid of around US$1.03bn made in a consortium with Bain Capital’s India Resurgent Fund and Piramal Enterprises.

At this point the situation might have conceivably slowed down. Instead, UltraTech Cement kept on fighting and queried the entire bidding process. It then made a direct offer of US$1.11bn to Binani Cement in the form of a so-called ‘comfort letter’ that Binani Industries used to stop the insolvency process. At the same time it received approval from the Competition Commission of India in its bid for Binani Cement, the previous absence of which was one of the reasons its bid against Dalmia Bharat was rejected.

Indian company law now faced a dilemma over how a bankruptcy works given that the NCLT was meant to be in charge. A way out was found though when the NCLT in Kolkata and the National Company Law Appellate Tribunal both allowed the bidders to settle the dispute ‘amicably.’ To add further confusion the administrator Vijaykumar Iyer also alleged right in the middle of the final tussle between Dalmia Bharat and UltraTech Cement that fraudulent transactions had been made by Binani Cement! Whether this has any further implications remains to be seen.

At this stage nobody is likely to declare UltraTech Cement the winner of Binani Cement until it actually picks up the keys to the cement plants. Perhaps not even then in case of any lingering legal issues! UltraTech Cement clearly views Rajasthan as a growth area given the tenacity with which it has gone after Binani Cement. It operates two integrated plants in the state and is building two more of its own. After its long journey in buying plants from Jaiprakash Associates in 2017, UltraTech Cement is starting to look like the cement producer that simply won’t take no for an answer.

Switzerland: Thomas Schmidheiny has decided not to stand for re-election for the board of LafargeHolcim. In recognition of his years of service to LafargeHolcim and its predecessor company Holcim, the board of directors has decided to name Schmidheiny honorary chairman of the group. He will remain one of the group’s main shareholders. Fellow board member Bertrand Collomb has also decided to stand down.

“For almost 50 years Thomas Schmidheiny has made a significant contribution to the success of Holcim and later LafargeHolcim. He was instrumental in successfully expanding into promising growth markets and has made Holcim one of the leading companies in its industry. On behalf of the board and all employees I would like to thank Thomas Schmidheiny for his exceptional contribution to our company,” said Beat Hess, chairman of the board of LafargeHolcim. He also thanked Collomb for his contribution to Lafarge and then LafargeHolcim.

Schmidheiny began his career at Holcim in 1970. He became a member of the executive committee six years later and served as chief executive officer (CEO) between 1978 and 2001. After joining the board of directors in 1978 he was chairman of the board of directors from 1984 until 2003. Later, he was a key part of the merger between Holcim and Lafarge that completed in 2015.

Collomb joined Lafarge in 1975. After serving in different management positions, including Head of North American operations, he served as chairman and CEO of Lafarge from 1989 to 2003, as chairman until 2007 and then subsequently director until 2012. He was named honorary chairman of Lafarge in 2007 and joined LafargeHolcim’s Board in 2015. Collomb has also decided not to stand for re-election at the upcoming annual general meeting, in order to follow a customary age limit of 75 years.

All other current members of the board of directors will be proposed for re-election at the annual general meeting. This will include: Beat Hess; Oscar Fanjul; Paul Desmarais, Jr; Patrick Kron; Gérard Lamarche; Adrian Loader; Jürg Oleas; Nassef Sawiris; Hanne Birgitte Breinbjerg Sørensen; and Dieter Spälti. Following the election of the nominees the board of directors will drop in size to 10 members compared to 12 at present.

UK: Samson Materials Handling has appointed Karl Woodhouse as its sales director with effect from February 2018. Woodhouse’s career in materials handling started almost 27 years ago with B&W Mechanical Handling, which became Samson Materials Handling in 2013. Samson Materials Handling, a subsidiary of Aumund Group, sells products in the bulk materials handling sector.