Displaying items by tag: India
India: The Ministry of Coal has cancelled Jaypee Cement’s coal block at Mandla in Madhya Pradesh citing breach of agreement. In a letter the ministry said that the cement producer was ‘not serious about the development of the coal mine,’ according to the Business Standard newspaper. The ministry has accused Jaypee Cement of switching the plant using coal from the mine without permission and of exceeding the agreed output.
The Mandla coal mine was allocated to Jaypee Cement in March 2015 after a bidding process. At first it supplied Jaypee’s Balaji cement plant in Andhra Pradesh. However, production from the mine switched to the Shahabad cement plant in June 2017 following the acquisition of the Balaji plant by UltraTech Cement.
India: Nuvoco Vistas plans to increase its specialist cement product range by 5 – 10% over the next two years. The cement producer is undergoing cost cutting initiatives and brand transition exercises, according to the Telegraph of India newspaper. Sales volumes of microfibre-based cement are expected to double to 10% of the company’s product mix. On the production side, the company is considering reducing costs by installing captive power plants and waste heat recovery units.
Nirma Group purchased three cement plants and two grinding plants from Lafarge India with a total production capacity of 11Mt/yr in 2016. Its cement business, Nuvoco Vistas, operates six plants in Chhattisgarh, Rajasthan, Jharkhand and Bengal and Haryana.
UltraTech Cement fights rejected bid for Binani Cement
07 March 2018India: UltraTech Cement is querying the National Company Law Tribunal (NCLT) why its bid for Binani Cement had been rejected. The auction for the bankrupt Binani Cement was won by a consortium consisting of Dalmia Bharat and Bain Capital’s India Resurgent Fund and Piramal Enterprises, according to the Business Standard newspaper. UltraTech Cement is questioning how the bid selection process was conducted.
Although JSW Cement won the first round of bidding, the NCLT decided to ask for more bids. Bidders were then informed that their bids would be assessed using a weighted system that would consider each company’s background, experience and upfront cash to be paid to the secured lenders.
Ramco Cements to buy grinding plant in West Bengal
06 March 2018India: Ramco Cements has entered into an agreement with Ramco Industries, a fellow subsidiary of Ramco Group, to buy a 216,000t/yr grinding plant at Kharagpur in West Bengal. The deal covers the land and equipment at the site. The cement producer will pay US$2.6m as part of the agreement.
Cement and taxes
28 February 2018The old saying goes that nothing is certain except for death and taxes. But maybe that should be cement and taxes. Paying your taxes is something most people and companies just get on with, perhaps with some grumbling or perhaps not, but certainly with little press. So two news stories popping up in the same week about cement plants with tax issues is out of the ordinary.
The first concerned Lucky Cement’s battle in Pakistan to keep one of its plants open following accusations of underpaying its taxes. The local tax office tried to shut the Pezu plant down for not paying its property tax. The cement producer hit back with a restraining order from the provincial high court. The second detailed efforts by the Ethiopian authorities efforts to claw back US$10m from a local cement producer accused of deliberately understating its profits. In both cases it’s hard to tell if there is an obvious right or wrong party. Yet if these kinds of stories are hitting the local press headlines then either something has gone wrong or both parties are digging in for a fight.
Looking over a longer time frame two major stories about tax have been doing the rounds over the last year in the industry news. India’s Goods and Services Tax (GST) is a classic example of how cement producers sometimes have to deal with changes to existing regulations. It received another outing this week in the form of the credit agency ICRA’s latest forecast. It explained how the introduction of the new tax, a consolidation of other existing indirect taxes, had slowed production in the second quarter of the Indian financial year in 2017 - 2018.
The other example from a large cement producing country was US President Donald Trump’s cut to federal corporate tax in December 2017. The tax cut was expected to particularly benefit companies that produce materials, like building materials manufacturers. It prompted HeidelbergCement to say in early January 2018 that it expected to see a boost to its profits in 2019. Warren Buffet, the chairman of Berkshire Hathaway and owner of insulation producer Johns Manville amongst other companies, put it bluntly when he said in his 2017 annual report that nearly half the gain of his company’s net worth came from the changes to the US tax system.
Multinational companies, including some cement producers, face issues when dealing with different rules and regulations between the various countries that they operate in. However, sometimes unfairly, sometimes not, large companies also hold a reputation for trying to avoid paying tax.
In this context it’s interesting to look at how LafargeHolcim says it approaches the issue. The company published its tax principles in 2016 where it talks about being responsible and that it, “…accepts tax as a necessary and required contribution to society.” It then talks about the necessity of transparency and good relationships with tax authorities. The same year it declared a total tax bill of Euro726m versus total sales revenue of Euro23bn. By contrast Cemex UK in its tax strategy talks about how it follows the US Sarbanes Oxley Act 2002, which applies a more stringent international accounting and auditing standard. It feels far more honest when it says that it aims to minimise the tax burden upon its shareholders by using methods outlined by the UK government. Taxes may be a certainty but nobody wants to pay a penny more in taxes than they have to.
Housing and infrastructure spending to speed up Indian cement demand in 2018 - 2019
28 February 2018India: The credit agency ICRA forecasts that cement demand will grow by 4.5% in the 2018 – 2019 financial year due to growth in the housing sector and higher infrastructure spending. Improved rural incomes, higher rural credit and increased allocation for rural, agriculture and allied sectors are also likely to increase the demand for rural housing, according to the Press Trust of India.
Indian cement production rose by 2.7% to 217Mt in the nine months from April to December 2017 from 211Mt in the previous year. However, the first three months of this period, from April to June 2017, saw production drop due to local issues across the country such as a sand shortage, the implementation of Real Estate Regulatory Authority (RERA) Act and a drought. The following quarter then saw a fall in production due to the introduction of the Goods and Services Tax (GST), continued sand shortages and inclement weather. ICRA predicts that cement demand will grow by 3% for the remainder of the 2017 – 2018 financial year due to a boost in production in December 2017.
Gujarat Sidhee Cement commissions waste heat recovery plant
27 February 2018India: Gujarat Sidhee Cement has commissioned a 5.5MW waste heat recovery plant at its Sidheegram plant in Gujarat. The project has a budget of US$10m. Power generated from the unit is expected save the plant US$2.6m/yr .
Asian Cement Group launches Duraton Cement grinding plant in Punjab
27 February 2018India: Asian Cement Group has launched a new 1.5Mt/yr grinding plant at Rajpura in Punjab. The project had an investment of US$62m. The site will operate under the Duraton Cement brand.
The plant consists of a grinding mill with a roller press and a separator. The unit also uses a robotic laboratory from Demark’s FLSmidth to automate cement sampling, sample transportation, preparation and analysis.
The cement producer will launch its Prime WR variant product in March 2018. This product will be sold in vacuum-packed waterproof packaging. The first consignments from the plant have been sent to religious sites in Rajpura and Chandigarh. Subsequent rollout will target Punjab, Haryana, Chandigarh and Himachal Pradesh.
ACC and Ambuja Cements put merger plans on hold
27 February 2018India: ACC and Ambuja Cements, the two Indian subsidiaries of LafargeHolcim, have put their merger plans on hold. ACC said that its board was of the opinion that there were ‘certain constraints’ blocking its merger plans, according to the Press Trust of India. However, it added that a merger was its ‘ultimate’ objective. Ambuja Cements made a similar statement. Both companies joined Holcim in 2005, before becoming part of LafargeHolcim in 2015.
Birla Corporation to launch Perfect product across India
26 February 2018India: Birla Corporation plans to launch its Perfect cement product across most of the country, except in the south. The brand was purchased by the cement producer in August 2016 when it acquired Reliance Cement, according to the Business Standard newspaper. The product launch is Birla’s first national rollout. Perfect brand cement is produced at the former Reliance Maihar plant in Madhya Pradesh. The cement producer is also planning to introduce a new variant of its Unique brand of premium cement, which will be sold in the northern region. This brand of slag cement is limited to its eastern market and is currently manufactured from the Durgapur plant in West Bengal.