Displaying items by tag: Dalmia Bharat

India: Dalmia Cement (Bharat), plans to spend around US$50m on a 2.3Mt/yr upgrade to its Bengal Cement Works plant in West Midnapore. The project will increase the unit’s production capacity to 4Mt/yr. The company says that it will make the cement plant the biggest in the state of West Bengal. It intends to take advantage of expected growth in cement demand, following the coronavirus-related slowdown, due to affordable housing schemes, real estate and infrastructure projects.

“We have deployed the latest machinery and technology for this addition and will be producing only 100% blended cement so as to ensure reduced carbon footprint as part of our commitment to become carbon negative by 2040,” said Ujjwal Batria, chief operating officer (COO) of Dalmia Cement (Bharat).

India: Dalmia Bharat Group has appointed Rajiv Bansal as a Senior Executive Director in the managing director’s office. The company said that he would work with Puneet Dalmia, managing director, and Mahendra Singhi, managing director and chief executive officer (CEO), to ‘strengthen our existing goals and strategies and in formulating and implementing newer initiatives that align with the long term goals and vision of the company.’

Bansal joins Dalmia Bharat Group from DXC Technology, an IT services company, where he served as the chief financial officer (CFO) for America. Prior to DXC, he was the CFO of Ola (ANI Technologies), an India-based mobility platform and ride-hailing companies. Before joining Ola, he was the Global CFO of Infosys, an India-based IT services company. He holds over 26 years of experience across various industries including power generation, telecoms, IT services and internet start-ups. Bansal holds a Bachelor of Commerce from Calcutta University and is a chartered accountant and a cost accountant.

India: Dalmia Bharat’s earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 15% year-on-year to US$177m in the first half of the 2021 financial year, from US$154m in the first half of the 2020 financial year. Overall sales were US$591m, down by 8% from US$644m, while cement sales fell by 5% to US$567m from US$596m. The company attributed this to “a seasonal weakness of cement prices during the second quarter especially in the eastern region” in addition to a fall in volumes by 6% to 8.46Mt from 9.02Mt in the first half.

Chief executive officer (CEO) and managing director Mahendra Singhi said, “The strength of our company’s foundation is visible in overall improvement in the operating metrics during the second quarter and during the first half of the 2021 financial year. Our team has truly been instrumental to our success and we are completely geared up for a successful integration of the new capacity and ramping up its utilisation levels. Our second quarter EBITDA of US$94.6m is the highest ever for the company.”

India: Dalmia Bharat plans to build an integrated cement plant in Kalaburgi, Karnataka. BusinessLine Online News has reported that the plant will cost around US$270m.

The company already operates the 2.5Mt/yr Belagavi plant in the state, which it commissioned in March 2015. Chief Minister Bookanakere Yediyurappa said, “Karnataka is proud to be home to Dalmia Bharat group and look forward to strengthening the relationship further.”

India: Dalmia Bharat’s chief financial officer Jayesh Doshi has submitted his resignation to the board of the company. Hi departure will become effective after 31 October 2020.

India: Dalmia Bharat subsidiary Dalmia Cement has joined five leading companies of other sectors in signing the Near-Zero pledge, an industry charter targeting “near-zero carbon dioxide (CO₂) emissions by 2050” at the virtual Climate Week NYC. The Times of India newspaper has reported that the pledge consists of a commitment to “undertake carbon sequestration efforts, if needed, and set reporting indicators and targets to enable tracking of corporate goals on the decarbonisation pathway.”

Dalmia Cement urged national governments to “positively enforce targets for efficiency, emissions reduction and circular economy to make carbon neutrality by 2050 a reality.”

India: Dalmia Bharat subsidiary Dalmia Cement has announced the launch of Dalmia Masters, an online platform for builders using Dalmia products. The company says that the platform “will offer opportunities for skill advancement, best-in-class construction practice sharing and a wide range of rewards.”

Chief operating officer (COO) Ujjwal Batria said, “As a leading cement brand, our product’s validation and recommendation by the contractor and technocrat community plays a large role in our success. Reaching out to thousands of contractors and masons, Dalmia Masters will help redefine what construction professionals can expect from cement brands.”

Executive director and head of marketing Pramesh Arya added, “Dalmia Cement’s outreach to construction professionals has always been pioneering. Dalmia Masters is a robust performance-linked loyalty programme, which will also expand our Future Today promise. The programme respects and celebrates the contractor community’s skill and vision, and will further strengthen the relationship we have built with it.”

India: Dalmia Bharat says that price rises and cost cutting helped it to improve its profits in the first quarter of the Indian financial year. Its income from operations fell by 22% year-on-year to US$263m in the quarter to 30 June 2020 from US$338m in the same period in 2019. Its cement sales volumes dropped by 20% to 3.66Mt from 4.55Mt. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) decreased by 8% to US$81.9m from US$88.9m. However, its profit after tax grew by 24% to US$25.1m from US$20.3m.

The group said that, once the coronavirus-related lockdown in April 2020 ended, cement demand picked up due to infrastructure projects and the residential sector, especially in east India, with an emphasis on rural markets. It also reported that the ongoing upgrade to grinding plants has been delayed by the health situation with completion rescheduled to December 2020.

India: In the fourth quarter of the fiscal year ending 31 March 2020 Dalmia Bharat sold 5.17Mt of cement worth US$326m, down by 13% year-on-year from US$374m in the same period of the previous fiscal year. Net profit for the quarter was US$3.16m. The company said that the figure was “not comparable to the previous year’s fourth quarter profit of US$34.6 due to a change in reporting standards, according to the Press Trust of India. Full year net profit fell by 32% to US$31.3m from US$45.9m and revenues grew by 2% to US$1.27bn from US$1.25bn.

Under the current circumstances it’s not surprising to see how much Indian cement production fell in April 2020. Like many other countries, its lockdown measures to combat the coronavirus outbreak suppressed industrial output. Yet seeing an 86% year-on-year fall in the world’s second largest producer is shocking. Cement production declined to 4.1Mt from 29.2Mt. Further data shows, as part of the Indian government’s eight core industries, that steel and cement production suffered the most. Coal, crude oil, natural gas, petroleum refinery products, fertilisers and electricity generation all fell by far less.

Graph 1: Change in Indian cement production year-on-year (%). Source: Office of the Economic Adviser.

By comparison in China monthly cement output only fell around 30% at the peak of its outbreak. The difference is that China implemented a graduated lockdown nationally, with the toughest measures applied in Wuhan, the place the outbreak was first identified. As we reported in April 2020 demand for cement in Wuhan had fallen by around 80% at the time its lockdown ended. Production and demand are different, but India’s experience feels similar except that it’s on a national scale. The last time the country had a dip in cement production recently was in late 2016 when the government introduced its demonetisation measures and dented cement production growth rate (and national productivity) in the process.

UltraTech Cement, Orient Cement, Ambuja Cement, India Cement, Dalmia Bharat, JK Lakshmi Cement, Shree Cement and others all suspended operations to varying degrees in the first phase of the lockdown in late March 2020. Operations of industrial plants in rural areas was then cleared to restart in mid-April 2020, although subject to local permissions and social distancing rules, as the country’s lockdown zones took shape. All of this started to show in company results towards the end of March 2020 as sales started to be hit. The worst is yet to filter through to balance sheets.

March 2020 was a particularly bad time for the government to shut down cement plants because it is normally the month when annual construction work peaks. Cement production usually hits a high around the same time. The monsoon season then follows, reducing demand, giving producers a poor time to restart business. Credit ratings agency Care Ratings has forecast that capacity utilisation will drop to 45% in the 2020 – 2021 financial year. This follows a rate of 65 – 70% over the last six years with the exception of 2019- 2020, which was dragged down to 61% due to lockdown effects. On top of this labour issues are also expected to be a major issue to the sector returning to normality. The mass movement of workers back to their homes made world-wide news as India started its lockdown. Now they have to move back and Care Ratings thinks this is unlikely to complete until after the monsoon season, by September 2020. Hence, it doesn’t expect a partial recovery until the autumn, nor a full recovery until January 2021 at the earliest.

Not everybody is quite as gloomy though. HM Bangur, the managing director at Shree Cement recently told the Business Standard newspaper that he was expecting a rebound following the resumption of production in May 2020. He also reported a capacity utilisation rate of 60% at his company, higher than Care Rating’s prediction above, and he noted a difference between demand in rural areas and smaller cities (higher) compared to bigger cities (lower).

India is now pushing forward with plans to further unlock its containment measures to focus on the economy. However, daily reported news cases of coronavirus surpassed 8000 for the first time on Sunday 31 May 2020. How well its more relaxed lockdown rules will work won’t be seen for a few weeks. While this plays out we’ll end with quote from HM Bangur that will resonate with cement producers everywhere: “sales are imperative.”