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Adani 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.

China: Yin Zhisong has been elected as the chair of Sinoma International Engineering. He succeeds Liu Yan, who has resigned. Zhisong has held of number of management positions with subsidiaries of China National Building Material (CNBM) and Sinoma. Notably he has worked as the general manager of Suzhou Sinoma Construction, the general manager of Sinoma International Engineering and a vice president at Sinoma International Engineering.

Germany: Schmersal Group has appointed Jörg Kraus as its Sales Manager for Germany. He will be responsible for areas including continued development and implementation of the group’s sales strategy and sales process optimisation. He will lead a sales team and will be responsible for sales representatives and external service providers.

Kraus holds experience in the sale of technical components and capital goods in complex industries, such as mechanical and plant engineering, metals, technical gases and surface technology. He has also established and managed local sales and service organisations in Germany, Switzerland and Poland, as well as the development of new business areas. He has worked for subsidiaries of Alberts Surface since 2019. Prior to this he was employed by Linde Group for over 20 years.

India: Shree Cement’s sales amounted to US$609m during the first quarter of the 2024 financial year, up by 19% year-on-year from US$512m during the first quarter of the 2023 financial year. Its net profit rose by 84% to US$70.8m from US$38.5m.

The producer also approved plans to spend around US$850m on four new cement plants. These include two 3.65Mt/yr clinker plants, with waste heat recovery (WHR) systems, at Pali in Rajasthan and Kodla in Karnataka. Two additional grinding plants will also be built at Etah in Uttar Pradesh and Bangalore in Karnataka. All four units will have a cement production capacity of 6Mt/yr. It intends to support its expansion plans by raising US$122m from issuing non-convertible debentures (NCDs).

Neeraj Akhoury, the managing director of Shree Cement, said, “We have started the trial commissioning of our new unit at Purulia, West Bengal and are confident to commence operations of new plants at Nawalgarh in Rajasthan and Guntur in Andhra Pradesh within scheduled timelines. We are also happy to announce our next phase of capacity expansion projects of 12Mt that will take the group’s cement capacity to 72.4Mt.”

Mexico: GCC’s sales rose by 15% year-on-year to US$608m during the first half of 2023. The company’s cement volumes rose by 6.9% in Mexico, but fell by 11% in the US. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 27% to US$196m.

GCC’s chief executive officer Enrique Escalante said “Despite persistent weather-related challenges during the quarter, GCC achieved year-on-year growth in both top and bottom-line, attributable to the successful execution of our pricing and cost strategies, along with our focus on operational excellence.” He added “We remain vigilant in monitoring demand and economic dynamics in the US, planning to ensure we’re positioned to capture opportunities, while we take advantage of the momentum we’re seeing in the Mexican market.”

UK: Breedon Group recorded sales of US$958m during the first half of 2023, up by 11% year-on-year from US$866m during the first half of 2022. The producer’s cement sales rose by 18% in value, despite an 8.3% drop in sales volumes to 1.1Mt from 1.2Mt. Its earnings before interest and taxation (EBIT) fell by 5% to US$80.2m.

Canada: Holcim subsidiary Lafarge Canada has successfully transitioned its Richmond cement plant to exclusively producing ECOPlanet reduced-CO2 cement. The company says that cement produced at the plant in British Columbia will offer at least 30% reduced CO2 emissions compared with ordinary Portland cement (OPC).

Lafarge Canada West president and chief executive officer Brad Kohl said “This is a proud moment for our organisation. This conversion in Lafarge’s Western Canada division highlights our strong commitment to accelerating green growth."

Nepal: Cement and clinker exports to India totalled 1.04Mt throughout the 2023 financial year, which ended on 15 July 2023. The República newspaper has reported that three separate cement companies exported their products during the year. Palpa Cement Industry began exports in July 2022, followed by Arghakhachi Cement in October 2022 and Balaji Cement in June 2023.

Total Nepalese export volumes to India were 607,000t of cement, worth US$2.74m, and 397,000t of clinker, worth US$3.21m.

India: Police are investigating an incident in which a construction worker died and two others were injured at My Home Industries’ Huzurnagar cement plant in the Suryapet District of Telangana. Workers were laying concrete for a new medium-rise building on the site on 25 July 2023, when a pipe conveying concrete became congested. Three workers succeeded in clearing the blockage, however this caused a powerful burst of concrete, knocking them into a lift, which fell to the ground floor. The Indian Express newspaper has reported that 32 year-old Arvind Singh died, while his colleague Raja Singh is receiving treatment for a head injury in Hyderabad. The third worker, Hassan Jamal, has since been discharged from hospital.

Police have reportedly filed charges of negligence against the contractor responsible for the site.

Germany: The Ministry for Economic Affairs and Climate Action has approved funding for Holcim Deutschland's Höver cement plant carbon capture project. The test phase of the project is scheduled to commence in early 2024. Holcim Deutschland, together with project partners Cool Planet Technologies and Helmholtz-Zentrum Hereon, carried out preliminary testing in 2022. They reported 'positive' results in May 2022.

Plant manager Stephan Hinrichs said "The funding commitment from the federal government is great news for Holcim and our partners. We are doing real pioneering work for the entire cement industry, and look forward to the next step on our way to becoming a climate-neutral company."