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India: Strong sales from India's two largest cement makers, Aditya Birla Group's UltraTech and Swiss major Holcim's Ambuja Cements, in May 2012 are likely to return the industry to growth figures above 10% after a gap of two months.

Following India's 'disappointing' GDP growth of 5.3% for the first quarter of 2012, strong dispatches just before the start of the monsoon season has given hope to cement industry experts for better growth in 2012-13.

Ambuja Cements sold 1.93Mt in May 2012 against 1.73Mt in May 2011, a rise of 11.9%. UltraTech Cement, registered sales growth of 10.6%. However, Ambuja's sister concern, ACC, could not match up with the other key producers and reported a growth of 3%. It sold 2.05Mt compared to 1.99Mt in May 2011.

"With 10-12% growth from country's two top cement makers, it seems the industry will hit growth of 11-13% in May 2012," said the research head of a Mumbai-based brokerage firm.

The Indian Cement Manufacturers' Association (CMA) will be releasing the sector's overall statistics in June 2012. UltraTech Cement, ACC and Amubja Cements collectively control close to one-third of the country's cement market, which has an overall capacity of 330Mt/yr.

Two trends have put the squeeze on the Indian cement industry this week. Firstly it emerged that producers were slashing prices ahead of the coming monsoon season. Then the Centre for Monitoring Indian Economy (CMIE) proclaimed that it expected cement prices to rise by 5.9% in the 2013 financial year.

Producers cutting prices in May, before the monsoon, is important because it suggests that overall cement demand is already down. Once the rains come demand will go down even more. A slowdown in construction, particularly in infrastructure projects, a labour shortage and a sand shortage have all been blamed. Looking ahead however, as the CMIE has done, suggests that prices have to go up due to the increase in railway freight charges announced in March 2012 and the excise duty hike announced in the Union Budget 2012-13. All that remains in the middle are the profit margins that the cement industry has become accustomed to.

Back in January 2012 Fitch Ratings predicted a 'negative outlook' for the Indian cement industry in 2012, based on overcapacity and higher interest rates. Now it seems that total capacity utilisation is down in 2012 compared to 2011, from 76.2% to 71.3%. Throw in the railway and duty increases and one might be tempted to feel that Fitch went easy on the subcontinent.

Yet, the cement producers have already found one silver lining in the monsoon season. Industry sources were soon reported as using price increases in the country's south zone and price decreases in the north zone as evidence that cartel-like behaviour couldn't possibly be happening. In a country as large as India perhaps they should have added the words 'nationally coordinated.' Despite the price drops, prices in the cities have been reported at an all-time high due to supply shortages - a situation that may be familiar to some consumers in Saudi Arabia.

India: Indian cement companies have slashed their prices in May 2012 due to poor demand, event before the monsoon season has started.

Prices declined in all regions, except the south and central regions of the country, where prices have been stable. Demand has slowed, compared with April 2012 levels. Most dealers in India expect prices to decline after mid-June 2012, said Jaspreet Singh Arora an analyst at Anand Rathi.

Vinita Singhania, managing director JK Lakshmi Cement, said that demand in April 2012 has gone 'absolutely haywire' due to a slowdown in construction activities and certain infrastructure projects not being implemented. A senior official of the Indian Cement Manufacturers' Association said that in 2012 cement prices have declined even before the arrival of monsoon due to oversupply. "The price correction has come a little earlier than expected because demand didn't pick up in line with our expectations," the official said.

India: Martin Kriegner has been appointed CEO of Lafarge India as part of the current group-wide reorganisation drive. He will hold responsibility for all of Lafarge's cement, aggregates and concrete activities in the country.

"I am happy to return to India as Country CEO, at a time when the construction sector is evolving quickly in the country. By combining all of our activities together we will be able to support this evolution by offering integrated and innovative solutions at an earlier stage of construction in close proximity with our customers, allowing the full benefits of our innovative products and services to be realised," said Kriegner.

Martin Kriegner, an Austrian citizen, joined Lafarge in 1990 and became the CEO of Lafarge Perlmooser AG, Austria in 1998 before he moved to India as head of the cement activity in 2002. Prior to this assignment he served as regional president, based in Kuala Lumpur, Malaysia. Lafarge has four cement plants in India: two plants in the state of Chattisgarh and a grinding plant each in Jharkhand and West Bengal.

India: Shree Cement has reported a rise of 74% in its net profit to US$21.2m for the fourth quarter of the financial year 2011-12, which ended on 31 March 2012, compared to US$12.2m for the same period of 2010-11.

Shree's net sales rose by 43% to US$289m for the quarter, compared to US$203m in 2011. For the full financial year the company reported a rise of 27.3% in its standalone un-audited net profit to US$50m, compared to US$39m in the previous financial year. Net sales for the company also increased by over 31% to US$884m in 2012 compared to US$676m in 2011.

HM Bangur, managing director of Shree Cement, attributed the jump in profits to better capacity utilisation, increased sales and increases in other income streams thanks to legal action ruling in the company's favour. "Our capacity utilisation has been much better. In the fourth quarter of 2012 compared to the same period in 2011, cement sales increased by 30% in volumetric terms and instead of 25.7Mt, we have sold 33.5Mt," he explained.

Bangur expects growth to slow down in the financial year 2012-13 and he is optimistic about the surge in the sale of power. "The pace will definitely slowdown because the 30% growth rate is not easy to maintain. I expect the cement market to grow by 9% and the company to grow by 12% in volume terms." In the 2012-13 period Shree Cements forecasts that it will increase its capacity by 12.5-13Mt.

Bangur added that claims of cartelisation in the cement sector were unfounded and that the forthcoming judgement by the Competition Commission of India (CCI) on its investigation into the sector are eagerly expected.

India: Madras Cements has promoted its executive director for finance, A V Dharmakrishnan, to chief executive officer.

"A V Dharmakrishnan has been designated as chief executive officer of the company with effect from 1 April 2012," the Chennai-based cement maker said in a BSE filing.

Dharmakrishnan is a chartered accountant who began his career with Madras Cements in 1982. He has been an additional director at Rajapalayam Mills and Ramco Systems since 2008 and serves as a director On-Time Transport Company Limited. In addition he is a member of Institute of Chartered Accountants of India.

Madras Cements is the flagship company of the diversified Ramco Group and it produces 13Mt/yr at its five manufacturing plants across Tamil Nadu, Karnataka and Andhra Pradesh. Apart from cement, Ramco Group has presence in real estate, paper production, hardware and stainless steel.

India: Ultratech Cement Ltd, part of the Aditya Birla group, has said that its net profit for quarter ending 31 March 2012 rose by 19% compared to the same quarter of 2011. It attributed the increase to higher sales volume and an increase in product prices.

The profit at India's largest cement company by sales climbed to US$165m for the January-March 2012 period, from US$138m in the same period in 2011.

Sales also increased by 19%, to US$1.01bn from US$582m.

Indian cement companies were helped in the last quarter by revived construction activity which boosted both sales volume and product prices. However, improvement in the profit margin was limited by a rise in costs of coal and diesel. Ultratech sold 11.54Mt of cement during the quarter compared with 10.70Mt in the same period in 2011.

Ultratech didn't say how much prices rose in the January-March 2012 quarter but brokerage firm Emkay Global Financial Services Ltd said that prices grew by 10% compared to the same period in 2011. Ultratech said its variable costs also rose by 10% as a result of higher energy prices. It also added that the surplus capacity in the Indian cement industry is likely to continue until 2015. Together with the rising cost of raw materials this is expected to put pressure to profit margins.

India: ACC has posted a total income of US$579m for the first quarter of 2012, an increase of 19% compared to the US$488m that it made in the same quarter in 2011.

Operating earnings before interest, taxes, depreciation and amortisation increased by 10%, growing from US$112m in 2011 to US$124m in 2012. Net profit after tax for the quarter fell from US$67.2m in 2011 to US$29.1m in 2012, a decrease of over 55%!

In its consolidated financial results ACC explained that the marked decrease in profit was due to its decision to change its method of providing depreciation on captive power plants from 'Straight Line' to 'Written Down Value' methods at the rates prescribed in Schedule XIV to the Companies Act, 1956. Accordingly, ACC has recognised an additional depreciation charge of US$65.5m. Using the previous method of depreciation profit after tax would have been US$73.6m, a slight increase on the 2011 figure. This change would have had no impact on EBITDA and cash profit for the quarter ended March 2012.

While the company's results benefited from better volumes during the quarter, manufacturing costs and realisations were affected by steep escalations in the cost of inputs such as coal, fly ash and gypsum. The cost of transportation also rose significantly as a result of the hike in rail freight and increase in diesel prices.

India: Growth in the Indian cement industry for March 2012 was 12%, the lowest figure since November 2011, causing some analysts to fear that there may be a slowdown ahead.

Despatches for the four main Indian companies, namely ACC, Ambuja, UltraTech and JP Associates, peaked at 21% in November 2011. Subsequent growth has averaged out at 13% for the December 2011 to February 2012 period. The high growth since November 2011 has been attributed to an increase in demand during the Uttar Pradesh legislative assembly elections and an addition of new capacity. Subsequently, industry growth estimates for 2013 were increased from 7-8% to 10%. However, with March 2012 witnessing the lowest growth in five months, a few analysts are cautious about this. The industry growth is now expected to be around 6.5%.

Pinakin Parekh and Neha Manpuria, JP Morgan analysts, commented, "The big four companies have seen a year-on-year growth come to an average 12%, among the lowest over the last five months." They added that growth slowdown in March 2012 could be due to decline in despatches by JP Associates.

An analyst from a domestic brokerage said, "A good amount of capacity was added by these players in 2011. The rise in demand growth rates in November 2011 and its slowing down in March 2012 could be due to this. Some of these months are being compared with months a year ago when these capacities were still being commissioned." The analyst expects demand growth for the rest of 2012 to average 6-7% with a high possibility of an upside.

However, a few have turned bullish on the sector. Anand Agarwal and Rahul Kumar, analysts with international brokerage Jefferies, said, "Strong despatches by major cement companies in March confirm our belief of a revival of cement demand and we expect overall industry despatches to clock a double-digit growth for a fifth consecutive month in March 2012. We expect the strong demand momentum to sustain throughout 2012." Mihir Jhaveri, Prateek Kumar and Suhas Harinarayan from Religare Research see a 9-10% despatch growth for the 2013 fiscal year.

India: Keralan cement dealers have condemned attacks on cement shops and cement vehicles allegedly carried out by workers attached to the railway goods sheds in the towns of West Hill and Kallai. They have warned they will retaliate if the attacks continue. The Kerala Vyapari Vyavasayi Ekopana Samithi (KVVES) has declared support to the dealers, organised under the banner of the Kerala Cement Dealers Association.

T Naziruddin, KVVES president, inaugurating the general body meeting of the Kerala Cement Dealers Association's Kozhikode unit, demanded the intervention of the authorities to settle the issue. District president of the association MV Sakeer Hussain, who presided over the meeting, called for an immediate end to the attacks, which he said were being carried out to press for higher unloading charges for cement at railway goods sheds.

The association has alleged that the workers were insisting that cement should be brought to the city only by trains and that vehicles bringing cement by road were being attacked to create an artificial scarcity of cement. He said that this in turn would cause hardships to those who depended on the construction sector for livelihood.