Displaying items by tag: India
Dalmia challenges the Lafarge India sale
20 April 2016Dalmia Cement (Bharat) threw a spanner in the works of the sale of Lafarge India this week. The cement producer, part of Dalmia Group, appealed against the Competition Commission of India’s (CCI) revised approval of the sale in February 2016. Dalmia challenged the CCI’s approval on procedural grounds querying both the revised and original order for the sale. Subsequently the sale has been delayed until a hearing in May 2016.
Dalmia’s objections concern how the CCI’s original approval in March 2015 interacts with the revised approval given in February 2016. Lafarge India was originally asked by the CCI in February 2015 to sell off 5.2Mt/yr of cement production capacity in Chhattisgarh and Jharkhand in eastern India. The request was a condition to allow the merger of Lafarge and Holcim in the country. Lafarge lined up Birla Corporation to buy the two cement plants but an ambiguous amendment to the Mines and Minerals (Development and Regulation) (MMDR) Act killed the deal. Then Lafarge India, a subsidiary of LafargeHolcim, announced that is was selling all of its assets in India. This includes three cement plants and two grinding stations with a total capacity of around 11Mt/yr.
Dalmia’s appeal may be planned to slow down the sale of a rival in the Indian cement business. Dalmia Group is the fifth largest cement producer in India with a capacity of 14.5Mt/yr. Lafarge India is, to an extent, a lame duck rival whilst the legal wranglings drag on.
However, the appeal may have a more serious side. A statement from the lawyers representing Dalmia also mentioned a challenge against the purchase requirements from the original CCI approval in March 2015. Specifically that any purchaser, “shall not have (directly or indirectly) operational capacity exceeding 5% of the total installed capacity in the relevant geographic market.” The confusion here is where that ‘relevant’ area refers to.
Originally the CCI designated this as Chhattisgarh, Odisha, Jharkhand, Bihar and West Bengal. And unsurprisingly, Dalmia holds more than 5% of production capacity in that region. If the CCI expands the relevant geographic area to more regions of the country then Dalmia’s market share is likely to fall. Local media reported that a bid for the Lafarge India assets by private equity firm KKR, which holds equity in a Dalmia subsidiary, was denied by the CCI. Cue the legal challenge.
It seems unlikely that the appeal by Dalmia will slow the sale down too much. If it is accepted then the CCI will have to reissue its approval for a second time and the sale will be delayed by a few months. If it is denied then the sale will proceed after a delay of one month. Either way the affair demonstrates how prized the Lafarge India assets have become. Indian local media reported that at least nine bids were made. It will be fascinating to see the price the winning bid makes when it is released.
India: UltraTech Cement has commissioned a cement grinding plant in Pataliputra, Bihar. The 1.6Mt/yr plant is the company’s 15th grinding plant. It is intended to produce cement for markets in eastern India.
The new grinding plant increases the company’s production capacity to 69.3Mt/yr including overseas operations. The Indian cement producer has added 6.1Mt/yr in production capacity in the year that ended in March 2016.
Beumer supplies world's highest bucket elevator to ACC
20 April 2016India: Beumer Group has supplied a HGBW-HC 1250 x 175.3m belt bucket elevator to the ACC cement plant in Wadi. Beumer says it is the highest such bucket elevator in the world with a distance of 175.3m between the centres. The size of this system enables a flow rate of around 600t/hour to be achieved, supported by high-strength steel wire belts. Previously Beumer has supplied bucket elevators with a height of 174m and 171m to ACC.
India: The state government of Jammu and Kashmir has required that all of its departments in Jammu Valley should buy cement from Jammu and Kashmir Cements as a first preference. Government order 89-IND of 2016 enforces the order according to the Early Times. Under the directive all relevant departments are only able to purchase cement from the open market where Jammu and Kashmir Cements is unable to supply the order and a non-availability certificate is obtained.
India: The Competition Appellate Tribunal has delayed the sale of Lafarge India following an appeal by Dalmia Cement Bharat. The sale has been halted until a hearing on 9 May 2016.
"Operation of order dated 2 February 2016 passed by the Competition Commission of India (CCI)... shall remain stayed," the COMPAT order passed by its chairman GS Singhvi said. LafargeHolcim has been asked to reply to Dalmia's appeal before the hearing in May 2016.
Lafarge India is selling all of its assets in India including a cement production capacity of 11Mt/yr. It received approval from the CCI in February 2016.
India: Dilip Gaur has replaced K K Maheshwari as the managing director of Grasim Industries, with effect from 1 April 2016. Maheshwari will remain on the board as a non-executive director.
Gaur was previously the deputy-managing director of Ultratech Cement. Before that he worked for Birla Copper, Alexandria Carbon Black and Pan Century Edible Oils. He also worked for over 20 years with Hindustan Unilever. Gaur holds a bachelor of engineering degree in chemicals and took the Advanced Management Program at Harvard, US.
Nine companies bid for Lafarge India assets
13 April 2016India: LafargeHolcim has received nine non-binding offers for its subsidiary Lafarge India. The bidders include multinational cement producers CRH, HeidelbergCement and China Resources. Local companies which have made bids include JSW Infrastructure, Piramal Enterprises and Ramky Infrastructure, which have deals with private equity firms CVC Capital, Goldman Sachs Private Equity and Carlyle respectively. Blackstone, Baring Asia and CPPIB have also submitted a bid as part of a consortium. Bain Capital and Advent International have also submitted their bids individually, according to Business Standard.
Following a shortlisting and due diligence process a final bid will be selected. A final bidder is expected to be announced by the end of June 2016.
India: Two cement plants in Himachal Pradesh have been accused of evading goods tax worth US$9m, the Comptroller and Auditor General of India (CAG) has said. The Ambuja integrated cement plant at Darlaghat and the JP Cement Himachal grinding plant at Bagha allegedly avoided the tax.
The companies transported 1.7Mt of limestone and 0.21Mt of shale from their quarries between April 2012 and March 2014. Ambuja Cement and JP Cement were liable to pay US$5.1m and US$3.9m respectively. The CAG only became aware of the shortfall in December 2015.
Ratings agency says LafargeHolcim to benefit from Indian infrastructure spending growth
12 April 2016India: Government plans to increase spending on infrastructure projects will benefit LafargeHolcim according to Moody's Investor Service. The second largest cement producer in India will gain from uneven regional demand, with a much larger scale and more prominent operations in northern India, where it sells almost 42% of its local cement volume.
LafargeHolcim and other European cement manufacturers with a presence in India are likely to benefit if the Indian government's plans to ramp up infrastructure spending happen in the next 12 to 18 months. The 2016 Union Budget contained plans to hike public infrastructure spending, especially on roads, which could revive stagnant cement demand in the country.
According to the government's 12th Five Year Plan (2012 - 17) investment in infrastructure should increase from 7.6% of gross domestic product (GDP) in 2014 to 9% in 2017. However, cement demand for government-funded projects has been weak in the last four years with many construction schemes delayed or put on hold. As a result, while infrastructure investment will be a key growth driver, the timing of such investment remains uncertain.
However, Moody’s also noted that European multinational cement producers based in the south of the country with limited geographical spread would be more exposed to local overcapacity in this region. This included HeidelbergCement, Italcementi and CRH.
India: Jaiprakash Associates has revised a US$2.4bn deal to sell cement plants to and UltraTech Cement. The new deal excludes a 1.2Mt/yr cement plant in Karnataka. UltraTech will also spend US$71m to complete a cement grinding plant that is currently being built. UltraTech will now acquire Jaiprakash Associates cement plants in five states with total capacity of 21.2Mt/yr. Jaiprakash Associates will retain a cement capacity of 10.6Mt/yr.
A Memorandum of Understanding signed in February 2016 agreed the terms of the sale. However, currency fluctuations between the Indian Rupee and US Dollar have kept the US Dollar value of the revised deal at a similar amount despite a drop in the Indian Rupee amount. The sale is expected to take around 12 to 14 months to complete subject to statutory and regulatory approvals.