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Displaying items by tag: Dalmia Bharat
Mahendra Singhi to work with Carbon Pricing Leadership Coalition on Asia-Pacific strategy
09 June 2021India/US: Mahendra Singhi, the head of India-based Dalmia Cement (Bharat), has been invited to represent the Carbon Pricing Leadership Coalition (CPLC) as Carbon Pricing Champion. He will work with Feike Sijbesma, Honorary Chair of Board of Royal DSM to devise carbon pricing strategies for the Asia-Pacific region
The CPLC is a global coalition promoted by the World Bank Group. It is represented by 34 national and sub-national governments, 172 private sector organizations 100 strategic partners non government organisations, business organisations, and universities. The voluntary initiative aims to accelerate climate change mitigation by securing the place of carbon pricing on the global agenda.
India: Dalmia Bharat subsidiary Dalmia Cement (Bharat) has marked World Environment Day with the ceremonial planting of a tree at the Bokaro cement plant in Jharkhand. In Assam, the company planted 6000 Neem, Royal Poinciana and Yellow Poinciana saplings and 4km of bamboo fence around its Alsthom Industries cement plant in Jagiroad.
Dalmia Cement (Bharat) executive director Indrajit Chatterji said, “We at Dalmia Cement have been firm believers in creating a clean and green ecosystem, especially in this pandemic situation across the world. With this tree plantation drive, we would humbly like to make a contribution towards the nature. I would urge all, to come forward and join hands to do our bit towards enabling a greener environment not only for us, but for the future generations to come. We, as a responsible corporate citizen, will always come forward to do whatever we can for the society at large.”
Fuels in India
02 June 2021Another week and it’s another commodity story related to the effects of coronavirus. This time the Indian press and financial analysts have started to notice a shift in the fuel mix of some of the major producers from petcoke to coal. UltraTech Cement moved to 30% petcoke and 60% imported coal in the fourth quarter of its 2021 financial year that ended on 31 March 2021. This compares to a reported mix of 77% and 10% in the previous year according to Mint. Dalmia Bharat reduced its share of petcoke to 52% in the fourth quarter from 70% in the third quarter, while its coal mix was 35 - 40% in the fourth quarter.
Price is the driver here. UltraTech Cement’s chief financial officer Atul Daga summed the situation up in an earnings call in late January 2021. Essentially, he said that fuel represented about 13% of total costs for cement producers in India and that both the cost of coal and petcoke nearly doubled from June 2020 to January 2021. However, coal is seen as the cheaper option, hence the move towards it in the fuels mix ratio. The petcoke market meanwhile has suffered due to reduced oil refinery output due to, you guessed it, the effect of coronavirus on global markets in 2020. Scarcity in the US market has particularly affected the decisions on buyers for Indian cement companies since this is the key source of their imports. Demand for petcoke from Latin America and the Mediterranean hasn’t helped either. Both petcoke and coal markets are expected to stabilise in the second half of 2021. Diesel prices have also risen recently causing UltraTech Cement’s power and fuel costs to increase by 28% year-on-year to US$356m and logistics costs, including freight expenses, to rise by 25% to US$449m in the fourth quarter of its 2021 financial year.
With this in mind it’s interesting then, that for some analysts at least, fuel prices have been seen as more worrying for cement producer profits than the latest round of coronavirus-related lockdowns from India’s second wave of infection. Fitch Ratings for example, warned that the impact of mounting fuel costs would continue to be seen in the quarter to June 2021 but that it would subside due to the switch in fuel mix and price rises passed to end consumers. On the lockdowns, it forecast that localised restrictions, with cement plants being allowed to continue operating in most states, would cause a far less pronounced drop in cement demand than during the first national lockdown.
Graph 1: Monthly cement production in India, January 2019 – April 2021. Source: Office of the Economic Adviser.
Graph 1 above shows that the crisis the Indian cement sector faced during the first lockdown, when production crumbled by 85% year-on-year to 4.3Mt in April 2020. The following recovery saw production reach its second highest ever figure at 32.9Mt in March 2021. It’s too soon to tell what’s happening from the national figure but that dip in April 2021 is not looking good so far.
One benefit from unstable fuel prices is that it builds the economic case for cement producers to raise their alternative fuels substitution rates. UltraTech Cement, for example, reported that its ‘green’ energy rate grew to 13% in its 2021 financial year from 11% in 2020. With a target of 34% by its 2024 financial year, this is an ideal opportunity for a change for both UltraTech Cement and other producers.
Indian cement producers’ petcoke use fell amid rising fuel prices in fourth quarter of 2021 financial year
01 June 2021India: Cement producers reduced the proportion of coal in their fuel mixes during the fourth quarter of the local 2021 financial year. Ramco Cements’ petcoke use was 41% in the 2021 financial year compared to 48% in the 2020 financial year, according to Mint News. Dalmia Bharat subsidiary Dalmia Cement used 52% petcoke in its cement fuel in the fourth quarter of the 2021 financial year, which ended on 31 March 2021, compared to 70% in the year’s third quarter. In the same comparison periods, Aditya Birla subsidiary UltraTech Cement reduced its petcoke share to 30% from 77%. It replaced the fuel with 60% coal, compared to 10% in the third quarter of the 2021 financial year.
Petcoke prices more than doubled year-on-year to US$130/t in the fourth quarter of the 2021 financial year, leading cement producers to switch fuels. Coal prices have resultantly risen by 82% to US$100/t. Producers rely on imports for both commodities.
India: Dalmia Bharat’s consolidated revenue rose by 9% year-on-year to US$1.43bn in its 2021 financial year from US$1.31bn in the same period in 2020. During the period, which ended on 31 March 2021, its sales volumes of cement grew by 7% to 20.7Mt from 19.3Mt. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 32% to US$377m from US$285m.
Puneet Dalmia, the managing director of Dalmia Bharat said, “I am delighted with our company’s performance this year. The performance is backed by broad-based revenue growth of 9.0% across each region of our operation and EBITDA margin expansion. Through a much disciplined execution, we have successfully increased our capacity by 16% while simultaneously pre-paying our gross debt.”
Dalmia Cement among Indian companies tightening safety measures amid second coronavirus spike
08 April 2021India: Dalmia Bharat subsidiary Dalmia Cement and other companies are introducing a raft of new safety measures to counteract an increase in coronavirus cases, according to the Economic Times newspaper. The companies’ efforts include creating bio-bubbles for workers, reintroducing working from home where possible, changing shift patterns, conducting rapid testing and, not allowing outsiders into facilities without a negative coronavirus test and organising vaccination stations.
India: The Supreme Court has ruled that depository and clearing agent IL&FS Securities Services (ISSL) release US$52.4m to Dalmia Cement owner Dalmia Bharat. The money was alleged stolen by Allied Financial Services in 2019, according to the Economic Times newspaper. The trial concerning the alleged theft of mutual fund units continues.
2020 roundup for the cement multinationals
03 March 2021LafargeHolcim’s financial results for 2020 arrived this week, giving us data on many of the larger multinational cement producers. The Chinese ones are yet to release their results and some of the larger other ones such as CRH, Votorantim and InterCement are pending too. Yet, what we have so far gives a selective view on an unusual year. Revenue was down for most producers year-on-year in 2020 due to the effects of the coronavirus pandemic upon construction activity and demand for building materials. There were large regional differences between how countries implemented different lockdowns, how markets responded and how they bounced back afterwards. Generally, the financial effects of this were felt in the first half of 2020 with recovery in the second.
Graph 1: Sales revenue from selected cement producers in 2019 and 2020. Source: Company reports. Note: Figures calculated for Indian producers.
Graph 2: Cement sales volumes from selected cement producers in 2019 and 2020. Source: Company reports. Note: Figures calculated for Indian producers.
LafargeHolcim’s figure in Graph 1 above is a little misleading given that it has divested assets. Its like-for-like reduction in net sales was more like 6%, a similar figure to HeidelbergCement’s. Both experienced mixed results in North America and Europe but not terribly so. LafargeHolcim did relatively well in Latin America. HeidelbergCement found growth in its Africa-Eastern Mediterranean Basin region. It’s also worth noting the comparative leverage of each company: 1.4x for LafargeHolcim and 1.86x for HeidelbergCement. Both are slimming down but the latter’s ongoing divestment plan (see GCW 494) can be seen in the context of its debt to earnings ratio and the cash crisis that coronavirus threw up in 2020.
The contrast between these companies and Cemex and Buzzi Unicem is striking. Both of these benefitted from operations in the North America and parts of Europe. In Cemex’s case sales in Mexico and the US, made the difference despite falling sales elsewhere. Buzzi Unicem’s sales also held up in the US especially in the second half of the year. Europe was more mixed for both producers with growth reported in Germany but losses elsewhere.
The Indian producers tell a different story but one no less notable. Despite a near complete shutdown of production for around a month from late March 2020, the regional market largely recovered. As UltraTech Cement told it in January 2021, “Recovery from the Covid-19 led disruption of the economy has been rapid. This has been fuelled by quicker demand stabilisation, supply side restoration and greater cost efficiencies.” It added that rural residential housing had driven growth and that government-infrastructure projects had helped too. It expects pent-up urban demand to improve with the gradual return of the migrant workforce.
Unfortunately, Semen Indonesia, the leading Indonesian producer, suffered as the country’s production overcapacity was further hit by scaling back of government-based infrastructure projects as it tackled the health situation instead. Its solution has been to focus on export markets instead with new countries including Myanmar, Brunei Darussalam and Taiwan added in 2020 joining existing ones such as China, Australia and Bangladesh. The company’s total sales volumes may have fallen by 8% year-on-year to 40Mt in 2020 but sales outside of Indonesia, including exports, grew by 23% to 6.3Mt.
On a final note it’s sobering to see that the third largest seller of cement in this line-up was UltraTech Cement, a mainly regional producer. Regional in this sense though refers to India, the world’s second largest cement market. By installed production capacity it’s the fifth largest company in the world after CNBM, Anhui Conch, LafargeHolcim and HeidelbergCement. This move towards regionalisation among the large cement producers can also be seen in the large western-based multinationals as they are heading towards fewer but more selective locations. More on the world’s largest producer, China, when the producers start to releases their financial results towards the end of March 2021. Whatever 2021 brings, let’s hope it’s better than 2020.
Dalmia Cement completes new school building in Barunia
12 February 2021India: Dalmia Bharat subsidiary Dalmia Cement has inaugurated a new school building that it has built in Barunia, Odisha. The Orissa Diary newspaper has reported that the work was part of a US$7690 project which also included the refurbishment of two existing classrooms.
Projects executive directorRamawatar Sharma said, "The access to quality education is a basic human right. As a company, we have always believed in providing opportunities to the best of our capacity and helped in laying the foundation for a better life for everyone. We are optimistic that with the renovation of the school infrastructure, the students will feel motivated to attend classes and continue working towards building a better future for them."
Dalmia Cement (Bharat) to hire more locals
27 January 2021India: Dalmia Bharat subsidiary Dalmia Cement (Bharat) has shifted its recruitment procedures towards hiring more local people in Maharashtra, Bengal, Orissa due to labour shortages throughout the Covid-19 outbreak. The Economic Times newspaper has reported that local labour now makes up a majority of the workforce at multiple cement plants belonging to the company.
Dalmia Bharat group head of human resources Ajit Menon said, "In our Bengal plant, we have 90 - 95% local workers now versus 20 - 25% earlier, while in Orissa it is almost 100% local labour. Covid-19 has accelerated the intake of local workforce.” He added, “This has also given us the opportunity to give employment to people in the locations neighbouring our factories - many of whom are tribal people and are from underprivileged communities."