Displaying items by tag: Goa
Seeking a stake in Sanghi Cement
26 July 2023Adani Group and JK Lakshmi Cement were reported to be leading the race to acquire Sanghi Cement this week. The Economic Times newspaper reported sources who said that both companies are about to start due diligence processes ahead of making formal offers in the next few months. The enterprise value of Gujarat-based Sanghi Cement is around US$730m. Shree Cement, Nirma Group and Dalmia Bharat were said to have been interested previously, but no longer at this stage. However, none of the companies involved have commented directly on any bidding process so far.
Coverage in the India-based press earlier in July 2023 suggested that Shree Cement had dropped out of the bidding process for a 40 - 70% stake in Sanghi Cement. Although the exact reasons for Shree Cement withdrawal were not expressed, it was noted that the enterprise value for Sanghi Cement included debts of around US$220m. In late 2022 the Kotak Mahindra Bank made an investment of around US$67m in Sanghi Cement to ‘help the company's liquidity profile and enhance its operations.’ The head of the bank’s Special Situations Fund added that the cement producer’s performance had been under pressure due to high energy costs and that this had been further exacerbated by impending debt repayments stemming from expansion capital expenditure.
Sanghi Cement had the misfortune of commissioning a new line at its integrated plant during the Covid-19 pandemic. The subsidiary of Sanghi Industries operates a 6.6Mt/yr unit at Kutch in Gujarat, with a 130MW captive power plant and a 13MW waste heat recovery (WHR) unit, making it one of the largest plants in the country. It also owns three cement terminals in Gujarat, Maharashtra and Goa. Its annual power and fuel costs rose by 79% year-on-year to US$49.9m in the year to March 2022. Then its finance costs tripled to US$29m in the year to March 2023. Some of the increased fuel costs may have been down to the new production line but its total income in the year to March 2023 was lower than in the year to March 2019.
Adani Group and JK Lakshmi Cement both operate plants in Gujarat. Adani Group runs one integrated and one grinding plant in the state via its Ambuja Cement subsidiary. JK Lakshmi Cement owns a grinding plant. A number of other companies additionally manufacture cement in the state. The biggest of these is the country’s largest cement producer, UltraTech Cement, with three integrated plants and two grinding ones in Gujarat. It would be a surprise if this company tried to buy a share of Sanghi Cement. One prominent India-based cement company that does not have a manufacturing presence in the state is Shree Cement. This made it a compelling candidate for the acquisition before it ruled itself out.
On the national stage, ratings agency ICRA’s June 2023 cement sector report forecast a ‘stable’ outlook for the sector, with cement volumes expected to grow by 7 - 8% in the 2024 financial year. This should be supported by the residential market and infrastructure projects. Crucially, it also noted that power and fuel costs, which peaked in the July - December 2022, eased in early 2023 and are anticipated to further soften in the 2024 financial year. The agency’s view was that this would help company earnings margins, but not to the levels seen in the five years prior to the Russian invasion of Ukraine. This may be cold comfort for Sanghi Cement, but it may have implications for any bidding process.
Lastly, ICRA also warned of the weakening effects that El Niño could have on the monsoon season and, in turn, rural house building during this period. The weather has been a ‘hot’ topic globally this year, as various records have been broken. Yet on a day-to-day basis the weather can also affect the business of making and selling cement. ICRA’s concern was for the latter. An example of the former occurred in June 2023 when Cyclone Biporjoy caused disruption at Sanghi Cement’s Sanghipuram plant. The unit was shut down in mid-June 2023 to protect the staff. Some damage was reported and the plant reopened at the end of the month. Again, as with fuel prices, the weather may also play a part in the calculations of any company considering buying a stake in Sanghi Cement.
India: The Bureau of Indian Standards has granted a licence to Counto Microfine Products (CMP), a joint venture of Ambuja Cements and medical company Alcon Group, for the production of micro-fine Ordinary Portland Cement (OPC) and ground granulated blast furnace slag (GGBFS) cement. The Times of India newspaper has reported that CMP operates a grinding plant in the state of Goa.
JSW Cement launches slag cement in Goa
12 March 2019India: JSW Cement has launched its ‘Comp Cem’ product in Goa. It is a blend of clinker, ground granulated blast furnace slag and fly ash, according to the United News Of India. The new product is intended to help the cement producer expand its distribution network in the southern and western parts of the country.
Goa plant to go-ahead with waste fuels
05 June 2013India: The Goa State Pollution Control Board (GSPCB) has signed a memorandum of understanding (MoU) with a cement company to use the plastic waste generated across the state as fuel for its manufacturing plant. Vasavadatta Cement, a company with its plant in Karnataka, would procure the plastic waste collected by the state agencies and villages in Goa.
State Environment Minister Alina Saldanha said that the plastic waste collected from the highways and other internal roads would be baled before being handed over to the cement company. Goa State Infrastructure Development Corporation, a state run agency, has already taken up the task of collecting garbage from the highways, while villages would be asked to clean up their own roads.
"Two baling machines have already been installed one each in North and South Goa to treat the plastic before handing it over to the cement company," said GSPCB Chairman Jose Manuel Noronha. "The state requires six such machines to bale all of its plastic waste."
ACC and Goa sign alternative fuels deal
16 June 2011India: A Memorandum of Understanding (MoU) was signed on 13 June 2011 for the disposal of plastic waste between the Department of Environment, Government of Goa, and ACC's Wadi Cement plant. The MoU was signed by Michael D' Souza and M Sai Ramesh from ACC in the presence of Minister for Environment Aleixo Sequeira.
The MoU envisages establishing a collection and segregation mechanism for plastic waste from non-biodegradable solid waste for disposal through co-processing at the plant. It will be valid for a term of three years from the date of execution with an option of renewal by mutual consent on agreed terms and conditions. ACC will provide the services free of cost to the Department of Environment and to the state government.