Displaying items by tag: India

India: Indian Railways has raised a freight tariff of 15% on all commodities, including cement, from 1 October 2013. Designated a busy season charge in a railway notification, the tariff is due to run until June 2014. The charge precedes a review of the fuel adjustment component (FAC), applicable after every six months to adjust fuel prices, that was also due on 1 October 2013.

India: The Indian Realtors' body CREDAI has said that cement prices across India had gone up by US$0.95-1.12/bag in the week to 23 September 2013 and that it was considering an approach to the fair trade regulator Competition Commission of India (CCI) alleging a cartel between the cement producers.

CREDAI chairman Lalit Kumar Jain said that cement prices in Pune had risen by 31% in just a week. "Considering that buyer sentiment is currently low, the cement price rise defies logic," he said. "We feel that there is a cartel. We are currently taking legal advice."

India: The Indian high court in Gujarat has ordered that a US$600m deal to sell the Kutch cement plant from Jaypee Cement to UltraTech Cement will be subject of outcome of a public interest litigation (PIL) filed by local villagers.

According to the Times of India, the Kharai panchayat has filed a PIL complaining that the cement company has encroached upon grazing land, water bodies and public roads. The PIL demands that the encroachment should be removed and that the high court should intervene to make the area free from pollution caused by mining and the dumping of dust.

Counsel Mehul Sharad Shah contended that over 5000 hectares of land was given at a cheap rate to Gujarat Anjan Cement to create a cement plant for a lease period of 1997 to 2008 on the condition that the company would put up construction within two years. After not following the condition, it transferred the lease for US$120m to Jayprakash Associates, which merged with the J P Corporation. The PIL alleges that the company encroached on gauchar land, water bodies, public roads and began polluting by dumping alkali dust. Cuts in jobs for local labourers has also added to tension in the area.

The high court has said that the transfer of lease will be subject to final outcome of the PIL.

India: Mangalam Cement has started a trial run of a new 1.25Mt/yr grinding plant. In addition the Indian cement producer announced to the Bombay Stock Exchange that the kiln at its plant in Morak in Rajasthan had commenced operation after a break for renovation since May 2013. The cement plant's clinker production capacity has now risen to 2.21Mt/yr from 1.71Mt/yr.

India: Jaypee Cement plans to sell a 51% stake in its 5Mt/yr cement plant in Gujarat to Ultratech. The value of the deal has been placed at around US$633m. A Jaypee official described the deal as 'finalised' to the Press Trust of India.

Jaypee and Ultratech have been in negotiations over the deal for a year. Ultratech reported to the Bombay Stock Exchange in December 2012 that it had not issued any press releases on the rumoured sale in a bid to calm market speculation.

In 2008 the owner of Jaypee Cement, Jaiprakash Associates, purchased purchased Bina Power Supply (BPSL) from the owner of Ultratech, Aditya Birla Group.

India: The Central Bureau of Investigation (CBI) has filed separate chargesheets against Penna Cement, Raghuram Cements and India Cements for favours they allegedly received from the Andhra Pradesh state government in 2008 and 2009. According to newspaper The Hindu, YS Jaganmohan Reddy has been accused of influencing his father, deceased chief minister of Andhra Pradesh YS Rajasekhara Reddy, to grant government benefits to firms that invested in his own companies.

The CBI allege that Penna Group had invested US$7m in Jagati Publications and US$3.5m in Carmel Asia, both belonging to YSJ Reddy. In return, Penna Cements was allocated mining leases in Anantapur and Kurnool districts and the transfer of limestone mines originally allotted to Walchand Cements. Similar deals with Raghuram Cements (now Bharati Cements) and India Cements are noted in the CBI's charges.

India: ACC will set up a 1.5Mt/yr cement grinding plant in Kharagpur in West Midnapore district, its Chief Executive (East) Vivek Chawla has announced. Building of the US$88.4m project is planned to start by January 2014.

"The company will invest US$88.4m for setting up the 1.5Mt/yr factory at Kharagpur," said Chawla.

India: Kesoram Industries, a BK Birla Group company, has committed US$38.7m towards setting up a grinding unit at Sholapur, Maharashtra.

The first phase of the new 1.5Mt/yr grinding unit would be completed in the next 20 months, according to Kesoram's CEO Arvind Kumar Singh. When completed, the plant will be its first standalone grinding unit outside its main production bases in Karnataka and Andhra Pradesh.

India: The Andhra Pradesh Pollution Control Board (APPCB) has ordered closure of India Cements Limited (ICL) factory at Yerraguntla and initiated action against four more cement plants in the state's Kadapa district, for non-compliance of its directions and standards and causing severe air pollution in surrounding areas.

The APPCB said that it issued closure orders in the interest of protecting public health and the environment, in accordance with a decision taken at a hearing conducted by the APPCB on 5 August 2013. The electricity authorities were directed to disconnect the ICL factory from the grid.

The ICL factory closure was ordered due to: non-compliance with regard to upgrade requirements to its electrostatic precipitators (ESP); failing to meet emissions standards; storing limestone in an open area, leading to excessive dust in nearby public roads and villages; not disposing solid waste correctly; inadequate water sprinkling systems.

Along with the ICL plant, Kadapa district officials investigated the district's four other cement plants. These are an ICL plant at Chilamakul, Zuari Cements at Yerraguntla, Bharti Cements at Kamalapuram and Dalmia Cements at Mylavaram. Bharti Cements must provide an automatic water sprinkling system along its roads to minimise dust emissions by 23 September 2013. The APPCB issued warnings to Zuari and Dalmia to conform to regulatory standards.

'Below expectations' was the headline message from Holcim's half-year results this week. Canada, Mexico and Morocco were all singled out as problem areas for Holcim but surely India represents the biggest headache for the debt-reducing multinational.

How badly its bottom line was hit by India in particular, Holcim declined to say. Overall its entire Asia Pacific region saw sales volumes of cement fall by 3.7% to 37.8Mt to 36.4Mt for the first six months of 2013. In 2012, India represented over half of the group's Asia Pacific installed cement production capacity. This suggests that the actual drop in sales in India was probably at least 6%, more if the other countries in the territory did better than in 2012. Overall profits for the Asia Pacific region fell by 14% to US$650m. What we do know is that Holcim announced major restructuring to its businesses in India in late July 2013 to cut costs.

The other major cement producers in India have fared similarly badly. UltraTech's first quarter profit, for the period ending on 30 June 2013, fell by 13.5% to US$111m. Its revenue fell by 2% to US$820m. Jaiprakash Associates also reported a 2% dip in its cement sector revenue to US$247m in the quarter ending on 30 June 2013. Profits fell by 24% to US$27m. India Cements' sales revenue rose by 3% to US$196m. Yet its operating profit fell too, by 41% to US$19.8m.

Both Holcim and India Cements blamed falling cement prices in the south of India. India Cements directly mentioned overcapacity. The only explanation UltraTech offered for its poor performance was rising input and logistics costs.

Problems in India are not unexpected. Overcapacity has loomed over the Indian cement industry for some time as the race for growth far overtook the increase in demand. In the wider economy, India hit its lowest gross domestic product increase in a decade, 'just 5%', for the financial year ending on 31 March 2013. Meanwhile the Indian Rupee fell to a record low of 61 against the US Dollar in late June 2013. Not good news at all for any cement producers looking to offset energy or raw materials costs from abroad.

As predicted in our overview of the Indian cement industry back in February 2013, the smaller cement producers are now likely to get picked off by the larger firms as capacity utilisation falls and fuel costs rise. It is interesting to compare this free-market led cement industry consolidation to the state-directed one happening in China.

The Indian media are certainly wise to this with reports and speculation on endless takeover rumours. One example of this is the Irish building materials conglomerate Cement Roadstone Holdings's (CRH) decision to purchase Sree Jayajothi Cements that was announced in early August 2013. However with CRH itself having just reported that it made a loss in the first half of 2013 it may be regretting that it finally has a presence in the south of India.