Displaying items by tag: India

India: Associated Cement Companies Ltd (ACC) is reportedly planning to boost its capacity by 16% to 35Mt/yr from existing 30Mt/yr at present. The expansion will entail an investment of around US$650m, which would be funded entirely from internal accruals.

To achieve this, ACC plans to set up a 4Mt/yr cement unit and a 2.79Mt/yr clinker unit at Jamul in Chattisgarh. The company will also stop its existing production line at Jamul. Grinding units are also planned at Sindri in Jharkhand and Kharagpur in West Bengal. The company also proposes to develop four coal blocks in Madhya Pradesh and one in West Bengal for its raw material requirements.

It's official: the big boys are heading to India this week.

First Lafarge head Bruno Lafont announced broad expansion plans in the subcontinent. Then a Holcim presentation emerged from earlier in 2012 projecting that the company expects India's overall construction market to take the global third position after China and the US by 2020.

With the Indian construction share set to rise from US$360bn in 2010 to US$840bn in 2020 that's one massive market share up for grabs. Throw in some interpretation from India's 2011 census and the signs are that its population could overtake China's by 2030. Sounds like an absolutely perfect opportunity for your average embattled European cement corporation!

Except that there's no such thing as a sure bet. As we covered previously, Indian cement consumption fell for the first time in 20 years in August 2011. The cause was put down to political problems holding up infrastructure in key states. In March 2012 we've had two stories that have impacted upon the local industry. First the Railway Board of India hiked the freight rates by 24%. Then the Union Budget for 2012-13 increased the excise and service tax. Clearly everybody wants a piece of the 'inevitable' bonanza. If anything impedes India's growth in the next decade there may be bargains going for cement on the export market.

Elsewhere this week we have stories on the potential cost of a proposed air pollution ruling upon two plants in the US state of Montana, more information on a revival in the Gulf Cooperation Council region and more capacity growth in Indonesia.

India: Holcim expects the Indian construction market to more than double by 2020. According to one of the company's presentations made earlier in 2012, the Indian construction market will replace Japan as the third largest, after China and the US, by 2020, by which time, emerging markets will outweigh mature markets.

At US$360bn, India accounted for 5% of the US$7.2tn global construction market in 2010. However, by 2020, India is likely to capture a 7% market share, at US$840bn, of the US$12tn global market.

Holcim, which entered India post-2000, has its presence in the country through two established brands: ACC and Ambuja Cements. Collectively, these companies have the largest market share in India. The company currently has an Indian capacity of close to 57Mt/yr and is ahead of domestic giant Aditya Birla Group's UltraTech Cement, at 52Mt/yr.

Both have plans to augment capacities. UltraTech has plans to take its overall capacity to 75Mt by 2015. Holcim's Ambuja Cements will pump in around US$365m by 2013 to add more capacity.

According to India's 12th five year Plan (2012-17) document, the two segments most important to construction activity are infrastructure and housing. Since infrastructure spending is expected to go up to 9% of gross domestic product (GDP) or US$1tn for the Plan period (2012-17), this should translate into double-digit growth for the demand segment.

The Indian cement sector is the world's second largest, after China. During the current Plan (2007-12), cement players invested around US$10bn to add fresh capacities of 150Mt. According to the 12th Plan documents on the industry, the sector would need to increase capacity to 470Mt by 2017.

India: Lafarge is focused on expanding its own operations in India and isn't considering any acquisitions at present, according to its chairman Bruno Lafont.

"We will continue to grow, mostly through internal growth and by expanding our existing cement plants and growing through several green-field plants," Lafont told reporters on the sidelines of an event.

He said the company will continue with its program to increase production capacity in India by 2Mt/yr, but he didn't say when the expansion will be completed. Lafarge has increased its capacity in India from 6.5Mt/yr in 2010 to 8Mt/yr in 2012. Lafont said the company will continue investing in its concrete and construction aggregates businesses in India.

The company recently expanded its capacity through new production lines at Jojobera in Jharkhand and at Mejia in West Bengal. Its four greenfield projects in Rajasthan, Karnataka, Meghalaya and Himachal Pradesh are in different stages of progress. Lafarge entered the Indian market in 1999 with the acquisition of Tata Steel's cement business. This was followed by the purchase of the Raymond Cement facility in 2001. Lafarge currently has four cement plant across the country - in Sonadih and Arasmeta in Chhattisgarh, Jojobera and Mejia.

India: The Union Budget for 2012-13 has divided the cement industry on the likely impact of its new measures. An increase in excise and service tax is expected to increase the price for consumers, whilst an expected demand increase for cement will be driven by housing and infrastructure development.

Finance Minister Pranab Mukherjee proposed to exempt imported non-coking coal from the current basic duty of 5%. It is anticipated that this will have a positive impact of 1-1.5% on the industry's operating profit. The cement industry is the third largest consumer of coal after power and metallurgy, requiring about 15-20Mt/yr. At present, the industry meets close to one-fourth of its total coal requirement through imported coal.

Cutting the duty on imported non-coking coal has been offset by an increased excise and service tax of 2%. This hike in excise duty is expected to increase the cost of cement for consumers as manufacturers pass on the impact. One positive feature is the 30% abatement on the retail sale price, a long pending demand of the industry.

Meanwhile on the demand side the measures set to encourage housing and infrastructure development are expected to boost sales.

Overall opinions on the Union Budget have remained neutral for the cement industry, as the increase in excise duty combined with the recent increase in the cost of rail freight will result in a considerable increase in the cost of delivered cement. This will then impact upon the cost of construction. Although welcome the 30% abatement of the retail sale price will also pose some practical difficulties as the sales price changes with different markets.

India: The Cement Manufacturers Association of India (CMA) has asked the Railway Board of India to reduce the cost of freight haulage. The CMA raised the issue in the wake of the board's decision to raise freight rates by 24%, which came into effect on 6 March 2012.

The CMA highlighted the disparity in the transportation costs of cement by rail compared to road. Other key concerns included the need to reduce the total cost by suitably lowering the classification for cement and clinker and by curtailing penalties, wharfage/demurrage charges and terminal charges.

The CMA now expects that cement prices will rise. "With this steep hike, the rail transportation cost of cement, which is already very high, will go up further including the transportation cost of input materials like coal, slag, gypsum assuming an average rail lead of 600km for the cement industry," said the CMA's President MMAR Muthiah.

According to Muthiah, transportation contributes about 20% to the operating cost of the cement industry. In addition, the industry has been highly taxed at over 60%. In the last couple of years railways have revised the classification of cement and clinker consistently from class 130 to 150 resulting in indirect freight hikes. In addition, a further burden on cement industry has been imposed by levy of various surcharges like a busy season terminal surcharge and development surcharge in the last few years.

India: ACC Limited has announced plans to set up a new clinker production facility at Jamul in Chhattisgarh, replacing its existing line at the plant. Currently the plant can produce 1.6Mt/yr of cement. The expansion will see this figure rise to 5Mt/yr by mid-2015. The existing line will be phased out as the new one is commissioned.

Along with the announcement, ACC also said that it is planning to set up decentralised grinding stations, which will use clinker produced at Jamul. These will be implemented in a phased manner and are scheduled for completion by March 2015.

At the same time, ACC will also increase its existing grinding capacity at its Sindri plant in Jharkhand. Another new grinding plant is currently being built at Kharagpur in West Bengal. Both installations will source clinker from the new Jamul plant.

The overall capacity of ACC will increase to 35Mt/yr when all these projects are completed, helping the company to meet the demand for cement in the east of India.

India: In a clear move away from its traditional engineering, procurement and construction (EPC) business, Shriram EPC, part of the financial services major Shriram Group, is ready to pick up a majority stake in Sree Jayajothi Cement. The company's board approved picking up a significant equity share capital of Sree Jayajothi by partially converting the dues owned by Sree Jaya Jothi into equity.

Shriram EPC, which provided EPC services to the latter's cement plant at Yanakandala village in Andhra Pradesh, has invested its own money for the project. Shriram EPC hopes to complete the deal by mid-April 2012, according to its managing director and CEO, T Shivaraman.

"For us it is a strategic move," explained Shivaraman. "For the group it is a diversification to get into the cement business. This move will have long term benefits for us. Since Sree Jayajothi could not return the money that we invested over the years, we thought it fit to convert the dues into equity. We are converting part of the dues into equity and it will be for majority stake."

Sree Jayajothi has been struggling to find a suitable investment partner for its cement business, with repayment so far taking longer than expected. Over recent years Shriram EPC has invested over US$100m in the plant.

Mr M A M R Muthiah, the current managing director of the Chettinad Cement Corporation has taken over as president of the Cement Manufacturers' Association (CMA). Muthiah said that the association acts as a bridge between the industry and the Government with an objective to promote the cement sector's growth, protect consumer interests and collaborate with international counterparts outside of India.

Mr O P Puranmalka, a whole-time Director of Ultratech Cement, has taken over as the CMA's new vice-president.

India: After UltraTech Cement announced a 93% improvement in its net profit for the quarter ending 31 December 2011, Hyderabad Industries has also reported an improvement. The company posted a near 60% surge in its net profit to US$2.03m for the same quarter. Its total income has increased by 15% year-on-year from US$33.8m to US$38.7m in the quarter under review.

Shree Cement has also reported results for the quarter, which show a massive 115% surge in its net profit to US$11.8m compared to US$5.5m for the same quarter of 2010. Shree's total income increased by 61% year-on-year from US$156m to US$252m in the quarter under review.

Meanwhile, data from the Indian Cement Manufacturers' Association (CMA) has shown that cement sales grew by 5.3% percent to 159.7Mt during the period 1 April 2011 to 31 December 2011, up from 151.6Mt in the same period of 2010. The same CMA data showed that in December 2011, cement sales grew by 14% to 19.8Mt from 17.4Mt in December 2010.