Displaying items by tag: CMA

UK: The Competition and Markets Authority (CMA) has issued Initial Enforcement Orders (IEOs) to Breedon Group and Cemex over the former’s acquisition of a minority of UK ready-mix and aggregates operations, as well as a cement terminal, belonging to the Mexican cement giant for Euro211m. Breedon Group said that the IEO was expected and would govern, among other things, the ‘form and scope of the information that can be shared between Breedon and Cemex’ in defence of customers’ interests, according to The Construction Index website.

UK: The Competition and Markets Authority (CMA) has welcomed the sale of plants by Lafarge Tarmac and Hanson.

In the Competition Commission's (CC) market investigation published in January 2014, the CC had ordered Lafarge Tarmac to sell one of two cement plants and Hanson to sell one of its ground granulated blast furnace slag (GGBS) plants to enhance competition in the cement and GGBS markets in the UK. Lafarge Tarmac appealed the CC's decision to the Competition Appeal Tribunal. However, in December 2014, the European Commission cleared the merger between Lafarge and Holcim, provided it divest certain assets to a new market entrant. In accordance with those commitments, the Lafarge Tarmac business in the UK, with the exception of the Cauldon cement plant, was sold to CRH and the legal challenges brought by Lafarge Tarmac to the CC have been withdrawn.

In addition, Hanson completed the sale of its GGBS plant in Scunthorpe, as required by the CC's report, to Francis Flower on 31 July 2015. This news means that the Competition and Markets Authority (CMA) has completed the divestment remedies arising from the CC's report.

India: The Economic Times has reported that the capacity utilisation in India's cement industry has fallen 70% from 94% in 2007 - 2008 because of a supply and demand mismatch, according to data from the Cement Manufacturers' Association (CMA). As such, the cement industry is staring at a 'dead investment' of US$8.66bn in the near term due to 100Mt/yr of unused capacity.

"Installed capacity stands at 380Mt/yr and utilisation is about 275Mt/yr. This extra capacity of 100 – 105Mt/yr has cost about US$8.66 – 9.45bn of investment," said Shailendra Chouksey, whole time director at JK Lakshmi Cement and vice president of the CMA.

The slump in the real estate industry has not helped matters as it accounts for about 15 - 20% of all cement demand in the country. About 55 - 60% of cement consumption comes from the retail segment, followed by real estate at 15 - 20%, infrastructure at 13 - 15% and the commercial factories segment at 10 - 12%.

The demand by real estate players has fallen by 40% in the last three to four years, according to Chouksey. The slowdown in the sector is coupled with weakness in rural demand and infrastructure development. Faced with the scenario, capacity addition is also expected to take a hit in the next few years. From about 25Mt/yr of capacity added in 2013 - 2014, new capacity additions will come down to 19Mt/yr and 14Mt/yr in 2015 - 2016 and 2016 - 2017, respectively, according to industry estimates.

"The capacity addition will go down as banks are not lending to cement companies as they know they will not get returns in such a scenario," said Anil Kumar Pillai, director and CEO of JSW Cement.

Now the cement industry is looking towards major government infrastructure and housing programmes to boost demand. To bring about major infrastructural development in the country, the government has announced The Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for 500 cities and the Smart Cities Mission. It has approved a US$15.7bn spend for the two schemes. It also aims to build 20 million houses by 2022 under the Housing for All initiative. "The cement industry is likely to improve by the second half of the current fiscal year on the back of huge infrastructure push by the government," said Pillai.

However, not all cement manufacturers are optimistic. "These programmes are good, but the question is how and when will they be implemented. There has been no off-take of cement for highway construction so far," said Chouksey. Transport minister Nitin Gadkari said in January 2015 that Indian highways would be constructed using cement instead of bitumen and launched a website in March 2015 for cement procurement and delivery for the purpose.

India: The Competition Commission of India (CCI) has imposed the penalty on Shree Cement while issuing the final order in a case against cement manufacturers and their trade body, the Cement Manufacturers Association (CMA).

"The Commission has imposed a penalty on Shree Cement Ltd at the rate of half of its profits for the years 2009 - 2010 and 2010 – 2011, aggregating to US$66.2m," said the CCI. The CCI added that it had, "Found 11 cement manufacturers, including Shree Cement and the CMA, in contravention of the provisions of the Competition Act 2002, which deal with anti-competitive agreements, including cartels." It asked Shree Cement to refrain from such anti-competitive activities in the future.

With regard to the other companies, the CCI said that as they were fined earlier, it was not imposing any penalty on them again for the same period of contravention. In June 2012 the CCI imposed a US$1.05bn fine on 11 leading cement makers, including ACC, Ambuja Cements, UltraTech, India Cements, Binani Cement, JK Cement, Madras Cement, Lafarge and Jaypee Cement. The industry body CMA was also fined US$121,717.

India: The Competition Appellate Tribunal (COMPACT) has ordered cement producers to pay 10% of a US$1.15bn fine imposed on them by the Competition Commission of India (CCI) for a price-fixing cartel. The tribunal asked 11 Indian cement producers to pay the fine within 30 days otherwise their appeal against the fine will be dismissed.

COMPAT had reserved its order over a batch of petitions filed by various cement producers and the Cement Manufacturer's Association (CMA) on 18 March 2013 after hearing them on an interim plea. In the petitions, the cement producers had challenged US$1.15bn penalty imposed on them by the Competition Commission of India (CCI) and a US$133,000 fine imposed on the CMA. The cement companies charged with cartel behaviour include Lafarge India, India Cement, JP Associates, Binani Cement, Ambuja Cement, Madras Cement and J K Cement.

The CCI had found cement producers were in violation of the provisions of the Competition Act, 2002 which deals with anti-competitive agreements, including cartels. The order was passed following probe by CCI Director General (Investigation) on a complaint filed by Builders Association.

India: The Indian Cement Manufacturers' Association (CMA) has demanded a reduction in the excise duty for building materials from 12% to 6-8% in the next Indian Union Budget.

"To encourage cement industry and to bring it at par with other core and infrastructure industries, the excise duty rate be rationalised from 12% to 6-8%," said the CMA in a budget memorandum to the Finance Ministry. The CMA added that the excise duty rates on cement are amongst the highest, beaten only by the rates on luxury goods such as cars. It admitted that the Indian industry suffers from an 'excess of surplus capacity'.

"The levies and taxes on cement in India are far higher compared to those in countries of the Asia Pacific Region. Average tax on cement in the Asia Pacific Region is just 11.4%, with the highest levy of 20% being in Sri Lanka," said the CMA. According to the CMA the Indian cement industry had a production capacity of around 340Mt/yr in March 2012.

The CMA also pitched the idea of levying basic customs duty on imports of cement. Alternatively, it suggested that the import duties on goods required for manufacture of cement be abolished.

At present, the import of cement into India is freely allowed without having to pay basic customs duty. However, all the major inputs required for manufacturing cement - such as a limestone, gypsum, petcoke - attract customs duty.

India: Strong sales from India's two largest cement makers, Aditya Birla Group's UltraTech and Swiss major Holcim's Ambuja Cements, in May 2012 are likely to return the industry to growth figures above 10% after a gap of two months.

Following India's 'disappointing' GDP growth of 5.3% for the first quarter of 2012, strong dispatches just before the start of the monsoon season has given hope to cement industry experts for better growth in 2012-13.

Ambuja Cements sold 1.93Mt in May 2012 against 1.73Mt in May 2011, a rise of 11.9%. UltraTech Cement, registered sales growth of 10.6%. However, Ambuja's sister concern, ACC, could not match up with the other key producers and reported a growth of 3%. It sold 2.05Mt compared to 1.99Mt in May 2011.

"With 10-12% growth from country's two top cement makers, it seems the industry will hit growth of 11-13% in May 2012," said the research head of a Mumbai-based brokerage firm.

The Indian Cement Manufacturers' Association (CMA) will be releasing the sector's overall statistics in June 2012. UltraTech Cement, ACC and Amubja Cements collectively control close to one-third of the country's cement market, which has an overall capacity of 330Mt/yr.

India: Indian cement companies have slashed their prices in May 2012 due to poor demand, event before the monsoon season has started.

Prices declined in all regions, except the south and central regions of the country, where prices have been stable. Demand has slowed, compared with April 2012 levels. Most dealers in India expect prices to decline after mid-June 2012, said Jaspreet Singh Arora an analyst at Anand Rathi.

Vinita Singhania, managing director JK Lakshmi Cement, said that demand in April 2012 has gone 'absolutely haywire' due to a slowdown in construction activities and certain infrastructure projects not being implemented. A senior official of the Indian Cement Manufacturers' Association said that in 2012 cement prices have declined even before the arrival of monsoon due to oversupply. "The price correction has come a little earlier than expected because demand didn't pick up in line with our expectations," the official said.

India: The Cement Manufacturers Association of India (CMA) has asked the Railway Board of India to reduce the cost of freight haulage. The CMA raised the issue in the wake of the board's decision to raise freight rates by 24%, which came into effect on 6 March 2012.

The CMA highlighted the disparity in the transportation costs of cement by rail compared to road. Other key concerns included the need to reduce the total cost by suitably lowering the classification for cement and clinker and by curtailing penalties, wharfage/demurrage charges and terminal charges.

The CMA now expects that cement prices will rise. "With this steep hike, the rail transportation cost of cement, which is already very high, will go up further including the transportation cost of input materials like coal, slag, gypsum assuming an average rail lead of 600km for the cement industry," said the CMA's President MMAR Muthiah.

According to Muthiah, transportation contributes about 20% to the operating cost of the cement industry. In addition, the industry has been highly taxed at over 60%. In the last couple of years railways have revised the classification of cement and clinker consistently from class 130 to 150 resulting in indirect freight hikes. In addition, a further burden on cement industry has been imposed by levy of various surcharges like a busy season terminal surcharge and development surcharge in the last few years.

Mr M A M R Muthiah, the current managing director of the Chettinad Cement Corporation has taken over as president of the Cement Manufacturers' Association (CMA). Muthiah said that the association acts as a bridge between the industry and the Government with an objective to promote the cement sector's growth, protect consumer interests and collaborate with international counterparts outside of India.

Mr O P Puranmalka, a whole-time Director of Ultratech Cement, has taken over as the CMA's new vice-president.