Displaying items by tag: India
Real estate body to boycott Shree Cement
12 July 2016India: The National Capital Region (NCR) division of the Confederation of Real Estate Developers’ Associations of India (CREDAI) has decided to boycott Shree Cement due to complaints of alleged inconsistent price increases and shortages of cement. The property body also intends to file a complaint with the Competition Commission of India, according to the Economic Times newspaper.
“Shree Cement is arbitrarily increasing prices and stopping supply in between, demanding a price revision, despite taking an advance,” said a CREDAI NCR spokesperson. “Through excuses such as plant not functioning properly and issues with transportation these companies are not meeting the delivery deadlines, thereby affecting the builders’ construction timelines.”
The NCR CREDAI previously stopped using cement from UltraTech and Lafarge, on alleged grounds of cartelisation and malpractices. However it reversed this decision when the cement producers reduced their prices. Shree Cement has not commented on the matter.
LafargeHolcim will sell Indian assets to Nirma Ltd
11 July 2016India/Switzerland: LafargeHolcim has announced that it has entered into a letter agreement with Nirma Limited subject to approval by the Competition Commission of India (CCI) for the divestment of its interest in Lafarge India for an enterprise value of approximately US$1.4bn. Lafarge India operates three cement plants and two grinding stations with a total capacity of around 11Mt/yr. The company also markets aggregates and is one of India’s leading ready-mix concrete manufacturers. The proceeds from the divestment will be used to reduce LafargeHolcim’s debt.
Eric Olsen, CEO of LafargeHolcim, said, “This agreement is an important step in our US$3.6bn divestment programme. With this deal, two thirds of the programme has been secured and it is well on track. We are confident that we will meet our target by the end of this year. With the proposed buyer we have found the right partner who will be able to develop the business further in the interest of all of our stakeholders.”
LafargeHolcim will continue to operate in India through its subsidiaries ACC Ltd. and Ambuja Cements Ltd., which have a combined cement capacity of more than 60Mt/yr and a distribution network that extends across the entire country.
Lafarge India sale moves to final stage
07 July 2016India/Switzerland/UK: The five bidders that gave their final bids for Lafarge India’s 11Mt/yr cement business have been called to London, UK for the final leg of discussions, which started on 7 July 2016. Multinational bidders, including Mexico’s Cemex and China’s Anhui Conch, are believed to have bid aggressively. Domestic bidders Ajay Piramal Group, Nirma and Sajjan Jindal-led JSW Cement also submitted bids earlier in the week.
The bids are in the range of Euro1.19-1.33bn, which implies an enterprise value of US$108-121/t, comparable to UltraTech’s recent acquisition of JP Group’s cement assets for US$116/t.
“This discussion in London could take three to four days to finalise,” said a banker familiar with the development. “The winner will be decided not just on the price quoted for assets but also other conditions for the bid,” he said. Once the winning bid is decided, an exclusivity agreement will be signed with the bidder and it will take around three months to complete the deal.
Doing a cement deal the Indian way
06 July 2016Boy, is the UltraTech Cement and Jaiprakash Associates deal dragging on. The agreement by UltraTech to buy cement plants from Jaiprakash Associates reached its latest revision this week when UltraTech upped its offer to US$2.40bn from the US$2.36bn offered at the end of March 2016. The deal also includes an additional US$70m for a cement grinding plant under construction in Uttar Pradesh.
This time round the haggling took place to the background music of Jaiprakash Associates’ mounting debts. It owes US$4.45bn to a group of lenders led by ICICI Bank. A repayment window was due to close on 30 June 2016. Defaulting this deadline could have switched the account to non-performing asset status. So, according to reports in the Indian media, the lenders forced a strategic debt restructuring scheme on Jaiprakash Associates. Or in other words they took control of the company. Alongside all of this UltraTech was allegedly trying to renegotiate the terms of the deal agreed in March 2016 following amendments to the Mines and Minerals (Development and Regulation) (MMDR) Amendment Act, 2015.
How paying more for the same assets benefits UltraTech remains to be seen. In addition US$1.78bn worth of Jaiprakash Associates’ debts will be transferred to UltraTech, according to Rahul Kumar, Director & CFO of Jaiprakash Associates. At US$118/t for new-ish production capacity it still seems like a good deal. Doubtless the devil lies in the (unseen) detail. Reports in the Indian media speculate that the lenders may have threatened UltraTech with rival bids.
To add to the confusion, the deal covers cement plants with a production capacity of 21.2Mt/yr but this total includes both integrated cement plants (clinker producing) and standalone cement grinding plants. Given the difference in cost to build a clinker production line compared to a grinding mill this makes assessing the value of the deal difficult.
UltraTech have described the purchase as a ‘geographic market expansion,’ which will allow its entry into markets of India including the Satna cluster in
Uttar Pradesh and Madhya Pradesh, Himachal Pradesh, Uttarakhand and coastal Andhra Pradesh. It has also stated that its cement production capacity (clinker and grinding) will rise to 91.1Mt/yr following the deal. As ever, the latest revised agreement is dependent on shareholder, creditor, high court and regulatory approval. UltraTech plan to complete the transaction by July 2017. What can possibly go wrong!?
India: UltraTech Cement and Jaiprakash Associates have revised their deal for UltraTech to buy 21.2Mt/yr of cement production capacity from Jaiprakash Associates. The revised value of the deal is now US$2.47bn, up from US$2.40 agreed previously. UltraTech will have to pay an additional US$70m upon completion of a grinding unit under construction. The new agreement is an amendment to the 31 March 2016 scheme of arrangement., according to the Hindu newspaper.
The approval follows an agreement of Jaiprakash Associates’ lenders who invoked Strategic Debt Restructuring (SDR) scheme on 28 June 2016. This allowed the lenders may take control of the company and sell its assets to recover dues.
“Jaypee Group is determined to reduce its overall debt through its proactive divestment initiatives to help the group tide these current turbulent times caused by the economic slowdown,” said Manoj Gaur, Executive Chairman, Jaypee Group. The company has put together a committee of directors to explore its options to tackle its debt management.
India: Ramco Cements has received environmental clearance to upgrade the captive power plant at its Alathiyur cement plant in Tamil Nadu. The expansion will cost US$3.18m. The cement producer intends to add 6MW turbines based on air-cooled condensers, taking the total power generation to 42MW, according to Accord Fintech. The company will use imported coal from Indonesia for the power plant. The coal supply agreement was made in July 2014 with Devendral Coal International.
UltraTech faces block to Jaiprakash Associates deal
01 July 2016India: Jaiprakash Associates has had problems meeting its financial commitments towards the purchase of some of its cement plants by UltraTech Cement. Sources quoted by the Mint newspaper said that the cement producer had met issues clearing statutory dues and providing necessary working capital for the plants under review. They added that UltraTech Cement had also sought additional funding ahead of the completion of the US$2.4bn deal. Both cement producers have claimed that the deal is still on track.
India: Sagar Cements has received approval to buy a cement grinding plant in Bayyavaram, Andhra Pradesh owned by Toshali Cements for US$8.9m. The sale is expected to be completed by 30 September 2016 subject to obtaining due diligence and other approvals.
Following the acquisition, Sagar Cements intends to increase the grinding plant’s production capacity to 3Mt/yr with an investment of up to US$0.89m. The new unit will enable Sagar Cements to reduce its logistical costs and introduce slag cement to markets in Visakhapatnam, Vizianagaram, Srikakulam and parts of Orissa.
India: Malabar Cements will restart operations at its Cherthala cement grinding plant following approval from the Kerala High Court. The cement producer says its has been granted permission to produce Portland Pozzolana Cement (PPC) using clinker, gypsum and fly ash at the plant. Previously the Bureau of Indian Standards objected to the cement producer manufacturing PPC.
Prism Cement secures coal contract from Coal India
01 July 2016India: Prism Cement has purchased 120,000t/yr of coal from South Eastern Coalfields, a subsidiary of Coal India. The cement producer successfully bid for the fuel in a recently held auction of coal linkages for the cement industry. The company said that it has secured part of its fuel requirement for the next five years and the allocation by Coal India has been made at the floor price.