Displaying items by tag: India

India: Sagar Cements is in advanced talks to buy Jaypee Group's Andhra Cements. JSW Cement is another potential contender. The enterprise value of the deal is expected to be around US$162 – 169m, a steep discount of about 30% in comparison with recent cement deals.

Andhra Cements has two plants in Andhra Pradesh with a combined capacity of 2.6Mt/yr. It also has a 25MW captive power plant under construction. It had a debt of US$118m at the end of its 2015 fiscal year. If the deal transpires at US$162m, it will translate into an enterprise value of US$64/t of cement capacity. This is lower than the average valuations of US$100/t of the recent deals in the sector.

"We would like to clarify that, though the company does hold discussions internally now and then in an informal way on expanding its operations through organic and inorganic routes, no particular entity has yet been identified for a possible acquisition," said an Andhra Cements spokesperson.

For Sagar Cements, the deal presents several long-term synergies. The acquisition will enhance its current capacity of 3.8Mt/yr by 2.6Mt/yr. Secondly, Sagar Cements will add the capacity at a time when the creation of two new states, Telangana and Andhra Pradesh, is expected to generate an incremental cement demand of 30Mt in the region in the next five years.

Last week we promised reasons to be cheerful for the cement industry. We only have one to offer this week but it's a good one. At present three Indian cement companies are on sale: Lafarge India, Reliance Cements and Jaiprakash Associates. If these sales complete then it represents an opportunity for the Indian cement industry to reorganise itself and stride forward when growth recovers.

Lafarge India upped its sales proposal to the Competition Commission of India (CCI) on 6 January 2016 to sell its entire 11Mt/yr portfolio. Originally as part of the LafargeHolcim merger agreements the CCI asked Lafarge to sell 5.2Mt/yr of production capacity in Chhattisgarh and Jharkhand in eastern India. However the deal was reliant on the original buyer, Birla Corporation, securing limestone mining rights. Birla failed to do so. Now Lafarge India has decided to sell everything instead. Naturally, following its Euro8bn spending spree in 2015 CRH has been linked to the sale by Indian media.

Then following press speculation Reliance Infrastructure confirmed to the Bombay Stock Exchange on 11 January 2016 that it was at an 'advanced stage of discussions with potential buyers for divesting the cement business of the company.' Reliance's cement arm, Reliance Cement, holds three cement plants in Maihar in Madhya Pradesh, Kundanganj in Uttar Pradesh and Butibori in Maharashtra with a total production capacity of 5.8Mt/yr. In addition to this, the company is also developing a 5Mt/yr cement plant at Wani in Maharashtra. The Reliance sale has been reported upon since early 2015. The difference this time is that Reliance responded to local press reports that it was about to sell to Birla Corporation or a couple of other private equity firms.

Finally, the third sale concerns Jaiprakash Associates' on-going attempts to sell its remaining cement assets to service its debts. Jaiprakash Associates cement subsidiary, Jaypee Cement, holds eight plants in India with a cement production capacity of 11Mt/yr. In addition it holds six cement grinding plants with a capacity of 10.7Mt/yr. Despite reported attempts to sell the entire division in one Jaypee has actually ended up selling its cement assets in a piecemeal fashion one or two at a time. The most recent sale being announced this week is to sell its Bhilai Jaypee Cement to Shree Cement. This follows other sales to HeidelbergCement and UltraTech in 2015.

None of these sales are new exactly but the combined production capacity of these plants comes to just under 28Mt/yr. This represents 9% of India's total national cement production capacity of 310Mt/yr. Any player somehow able to weasel their way into striking a deal for all of these plants would immediately become one of the country's biggest producers.

It would definitely be a case of buyer beware though. Credit agency ICRA recently reported that it expects that cement demand growth will be a 'modest' 4% in the 2015 - 2016 financial year before picking up in the following year. This follows poor growth in cement demand in the first half of 2015 and even declines in March and April 2015. ICRA also expected the country capacity utilisation to drop to 70% in the 2016 financial year, down from 77% in the 2012 financial year. That 7% drop in the utilisation is awfully close to the 9% of Indian national production capacity that the cement assets currently on sale from Lafarge India, Reliance Cement and Jaypee Cement. Unsurprisingly, the buyers of Indian cement assets have been picking and choosing their plants one-by-one so far.

India: Kakatiya Cement Sugar & Industries' Chairman and Managing Director, Shri. P Venkateswarlu, passed away on 11 January 2016.

India/Ireland: CRH has decided to bid on the 11Mt/yr of cement assets up for sale by Lafarge India, according to local media. This follows CRH's acquisition of US$7bn of assets from Lafarge and Holcim in 2015 that were available as a result of their merger.

CRH is already present in India via its 50% stake in My Home Industries (MHI), which has 4.8Mt/yr of cement production capacity. In 2013, MHI acquired Sree Jayajothi Cements, which has 3.2Mt/yr of production capacity in the south of India.

India: Emami Cement Ltd has made three recent orders for mills from Gebr. Pfeiffer. The first Gebr. Pfieffer mill is for its greenfield cement plant in Chhattisgarh, which is currently under construction. The second is destined for a standalone grinding unit in West Bengal. This order is currently being processed.

The latest mill order is for a grinding plant in Odisha. The order covers a MVR 6000 C-6 mill with an installed drive power of 6700kW. This mill will be capable of producing 335t/hr of ordinary Portland cement (OPC). The grinding plant will be designed in a way to allow fly ash cement and granulated blast-furnace slag to be ground to a fineness of 3800cm²/g and 4000cm²/g acc. to Blaine, respectively.

The MVR 6000 C-6 mill with is its six rollers has an actively redundant system. In case of an unplanned outage of one grinding roller, it allows the mill to continue in operation with four rollers while the roller swung out of the mill is being worked on outside of the mill. When it comes to cement grinding, where regular and planned maintenance works are scheduled for the regeneration of the grinding elements, this concept offers the customer the option to carry out maintenance works on two rollers outside the mill while at the same time cement can continue to be produced, albeit at a somewhat lower capacity.

Thanks to the modular design of the MVR mills, the essential components, such as bearings, seals of the grinding rollers and the tension system, as well as the gear units of the mill main drive, will be designed so as to be identical to the parts of the MVR mills that have been supplied to Emami Cement previously, i.e. an MVR 6000 R-6 and an MVR 6000 C-6. This will enable Emami Cement to manage with a small pool of strategic spare parts, which can be used with all the MVR mills.

Gebr. Pfeiffer SE will supply the core components of the mills and the gear units from Europe. Its Indian subsidiary, Gebr. Pfeiffer (India) Pvt. Ltd., will provide components such as the housing of the mill and classifier, the steel foundation parts as well as all static and dynamic interior parts of the classifier and, in addition, supply some of the equipment required to complete the grinding plant. Moreover, the Indian subsidiary will do the plant layout and advise Emami Cement on the equipment it must procure itself.

India: JSW Group plans to invest US$1.49bn over the next 5 - 7 years at Salboni in West Bengal. The investment would involve setting up a 1320MW coal-based power plant, a 4.8Mt/yr cement plant and a paints factory.

The projects are due to come up in phases on 4300 acres of land acquired by the company for a proposed 10Mt/yr steel project way back in 2007. The steel project is in cold storage since JSW failed to secure iron ore linkage. Sajjan Jindal Chairman and Managing Director of JSW Steel said that JSW Cement will start construction of a 2.4Mt/yr cement plant at Salboni shortly.

"Bengal is likely to emerge as a bastion of JSW Group. We are drawing up plans to double the capacity of the Salboni plant. This is part of JSW Cement's larger plans to add another 10Mt/yr of capacity in next two years for US$300m. We entered the cement business in 2009 and now have 6Mt/yr of capacity at present, having managed to turnaround some of the units," said JSW Group's Parth Jindal said. While the Salboni cement unit will cost US$120m in the first phase, the expansion project to double its capacity will require anther US$105m of investment.

Sajjan Jindal said that the group plans to enter into a power purchase agreement with the government for two 660MW power plants at Salboni with an investment of US$1.19bn. He added that the group is also exploring the option of entering the paints business and is considering setting up a modern paints factory at the site. The group is keeping its options open on whether to acquire an existing paints business or launch its own business from scratch. The group is also looking at the possibility of setting up downstream steel processing units at the site at a later stage.

India: In an attempt to service its US$5.99bn debt, Jaiprakash Associates has signed an agreement with Shree Cement to divest its stake in the 2.1Mt/yr Bhilai Jaypee Cement plant for an enterprise value of US$314 – 329m. Jaiprakash Associates is finding it difficult to service its debt due to various reasons, including a slowdown in the economy and some of its projects falling on the revenue front.

India: UltraTech Cement has appointed K K Maheshwari as Managing Director and Additional Director for a period of four years with effect from 1 April 2016. Maheshwari is a chartered accountant with over 38 years of experience.

The post was previously held by O P Puranmalka, who will cease to be the company's Managing Director on 31 March 2016, but will continue as a Non-executive Director from 1 April 2016.

India: Prism Cement Limited has appointed Joydeep Mukherjee as its Chief Executive Officer - HRJ (designate) and Key Managerial Personnel with effect from 16 December 2015. HRJ or H R Jhonson is a division of Prism Cement.

India: Lafarge India has submitted a revised proposal to the Competition Commission of India (CCI) to sell its entire 11Mt/yr assets in India.

The decision comes after the company's plan to sell its 5.15Mt/yr cement capacity in Chhattisgarh and Jharkhand to Birla Corporation for US$749m ran into trouble. Investment bankers said that Birla Corporation was facing challenges in securing limestone mining rights for the two units.

In order to approve the LafargeHolcim merger in India, the CCI had asked Lafarge India to sell its 5.15Mt/yr of capacity in eastern India by 31 December 2015. In August 2015, Birla Corporation agreed to buy the proposed assets along with brands Concreto and PSC and mineral rights over adequate reserves of limestone. The deal was conditional on Birla Corp being able to secure mining rights that Lafarge had.

"Lafarge India has sought an extension of its deadline from the CCI to complete its divestment," said an unnamed investment banker. "Lafarge India has now put the entire company on the block, as the sale of the entire company will include transfer of mining rights."