Displaying items by tag: Aditya Birla

The UAE is having a moment. Over the last week Fujairah Natural Resources, a new entrant to cement, said it is going to build a clinker plant at Habbab in Fujairah. It’s also looking likely that Raysut Cement might buy UAE-based Fujairah Cement Company’s shares in Sohar Cement in Oman. Then, Ras Al Khaimah (RAK) Cement announced that it had purchased the Newtech cement plant. What’s happening here?

The last couple of years have been tough ones for Emirati cement producers, which have been fighting falling sales and beleaguered profits. The largest producer, Arkan Building Materials - a group majority controlled by the Abu Dhabi government, reported flat sales growth for the first nine months of 2018. It blamed this on falling sales of clinker due to imports from Iran and a tough pricing environment. Its profits were hit by rising clinker production costs due to its reliance on imported limestone from Oman whilst it resolves problems with its own local quarry. Arkan had closed its Emirates Cement plant in Al Ain following revenue and profit falls in 2016. This story thread reached its end earlier in February 2019 when Arkan sold the closed plant for around US$14m. National Cement reported a similar experience in its nine months results, with growing revenue but sales sapped by mounting costs.

Data from Riyad Capital in early-2018 suggested that the UAE only consumes about half of its own cement production. The rest is exported to the Middle East and North African region, particularly Oman and Egypt, and African countries. The country has 14 integrated cement plants with a production capacity of 31.4Mt/yr and eight grinding plants with a capacity of 10.4Mt/yr. These are owned by a mixture of local companies and multinationals.

The European producers still have a presence through LafargeHolcim’s Lafarge Emirates plant in Fujairah and a grinding plant run by Cemex. Although how long LafargeHolcim will remain seems uncertain given a report by Bloomberg earlier in February 2019 suggesting that the group is seriously looking at exiting the Middle East and Africa. Oman’s Raysut Cement holds a plant too via its Pioneer Cement subsidiary but the majority of the foreign-owned plants are Indian. Their presence has been steadily growing.

Aditya Birla/UltraTech Cement, JK Cement and Shree Cement all run plants in the UAE and JSW Cement said in mid-2018 that it was going to build a 1Mt/yr integrated plant in Fujairah. UltraTech Cement renamed its grinding plant UltraTech Nathdwara Cement in December 2018. This plant was formerly a Binani Cement plant and part of the rancorous bidding war between UltraTech Cement and Dalmia Bharat.

The background to all of this has been a country that is very willing to spend big on infrastructure projects when the need arises. Forbes reckoned, for example, that the UAE had awarded US$20.7bn on infrastructure projects in 2018 in the first nine months of 2018. Impending projects like the Expo 2020 are still generating construction activity and longer ones like Dubai Metro are in progress. However, the country is in a dynamic place geographically between the two-major economic and cement-producing powerhouses of Saudi Arabia and Iran. For the cement industry this explains the prominence of the grinding sector and the growing interest from Indian companies looking to expand overseas. For the new project and acquisition this week it’s looking more like local variation in the market at this stage. In this context though the fourth quarter results from local producers will make interesting reading to see if anything bigger is going on.

India: Grasim Industries plans to invest up to US$870m in its cement business by the end of 2021. The subsidiary of Aditya Birla that also operates UltraTech Cement, wants to modernise its existing cement plants, carry out environmental upgrades and increase the production capacity of the units it acquired from Jaiprakash Associates, according to the Mint newspaper.

Aditya Birla Group’s chief financial officer Sushil Agarwal said that the company wants to increase the capacity utilisation rate of the former Jaiprakash Associates cement plants to over 85%, the standard level for the other UltraTech Cement plants. He added that on average cement plants in India have a capacity utilisation rate of 75%.

India: UltraTech’s net profit has risen by 27% year-on-year to US$209m for the first half of its 2017 financial year from US$164m in the same period of the previous year. Its sales revenue grew slightly by 1% to US$2.08bn from US$2.06bn. However, its sales revenue fell by 13% year-on-year to US$967m for the quarter that ended on 30 September 2016 from US$1.11bn.

In a results presentation the cement producer said that the industry had been hit by low cement demand, low capacity utilisation rates and rising operating costs, including petcoke prices in the latest quarter. It added that its capacity utilisation had fallen by 6% to 70% in the first half of its financial year from 76% a year earlier as its production capacity grew to 66.25Mt/yr from 63.05Mt/yr. Its sales volumes grew by 4% to 24.4Mt from 23.5Mt, with a particular boost in exports.

India: Dilip Gaur has replaced K K Maheshwari as the managing director of Grasim Industries, with effect from 1 April 2016. Maheshwari will remain on the board as a non-executive director.

Gaur was previously the deputy-managing director of Ultratech Cement. Before that he worked for Birla Copper, Alexandria Carbon Black and Pan Century Edible Oils. He also worked for over 20 years with Hindustan Unilever. Gaur holds a bachelor of engineering degree in chemicals and took the Advanced Management Program at Harvard, US.

India: Kumar Mangalam Birla, Chairman of the US$40bn Aditya Birla Group, has been appointed as Vice Chairman of Century Textiles and Industries. KM Birla is grandson of 94-year-old BK Birla, who is the Chairman of Century Textiles. In BK Birla's absence, KM Birla was chairing the board meetings.

For the quarter that ended on 30 September 2015, Century Textiles posted a net loss of US$3.69m compared to a net profit of US$117,422 for the same quarter of 2014. Total income grew from US$262m in the 2014 quarter to US$299m in 2015.

India: Aditya Birla Group´s UltraTech Cement plans to merge the cement division of BK Birla-owned Century Textiles and Industries, Century Cement, in a share-swap proposal with a deal value of US$1.64bn. The transaction, if approved by the boards of both companies, would help UltraTech add 13Mt/yr to its existing capacity of 65Mt/yr, taking it to the total of 78Mt/yr.

India: Aditya Birla's Hindalco Industries has won the Gare Palma IV/5 mine in Chhattisgarh, outbidding a number of companies, including Ambuja Cements, on day five of India's coal mine auction. The winning bid was US$56.4/t and the mine has extractable reserves of 42.4Mt. This is Hindalco Industries' second winning bid in the auction.

India: Kumar Mangalam Birla has said that the Aditya Birla Group will invest US$3.19bn in Gujarat State to ramp up capacities across various existing facilities.

"We will be continuing to grow our businesses here," said Birla. "On the anvil are brownfield expansions at our cement plant in Sevagram, the viscose staple fibre (VSF) plants in Vilayat and Bharuch and expansions of our metal plants, among others. Our investments will be close to US$3.19bn."

He added that Gujarat is the group's preferred investment destination in India. "We're greatly impressed by the proactive approach of Government of Gujarat. I have a personal bias for the state," said Birla. He added that it was not tax sops, but delivery of high-quality infrastructure that makes it the group's preferred state.

India: UltraTech Cement, part of the Aditya Birla Group, is working on environmental clearance for a new US$415m cement plant in Tamil Nadu, according to Indian media. The project will have a cement production capacity of 5.5Mt/yr, a clinker production capacity of 4.5Mt/yr, a 75MW captive power plant (with additional power from diesel generating sets of about 18MW) and a 15MW waste heat recovery facility.

The public hearing for the project was conducted in May 2013 as part of the environment impact assessment and management plan. The plant is intended to two have two production lines. The total project area is about 263 hectares with a plant area of about 86 hectares.

UltraTech is one of the largest cement producers in India with a total capacity of around 52Mt/yr.

India: The talks between Jaypee Group and Aditya Birla Group regarding the sale of the former's Gujarat based cement units have finally moved to the final stages, according to local media. It was reported that valuations of the deal, which had already resulted in failed acquisition attempts by others, have continued to cause delays.

Birla has been negotiating the cost of Jaypee's Gujarat cement units with the aim of paying a total of US$800m. The reports say that Birla had offered to purchase the units at US$160/t of installed capacity. This is significantly lower than the US$200/t paid during deals between Holcim and ACC.