Displaying items by tag: JSW Cement

The Indian corporate rumour mill ramped up this week with speculation that UltraTech Cement and Adani Group might possibly be interested in buying Heidelberg Materials' assets in India. This follows the story broken by the Economist newspaper last week that JSW Cement had made an unsolicited offer to buy them. However, when HeidelbergCement India was asked by the Bombay Stock Exchange what exactly was going on, it replied that it was unaware of any such development and that it did not comment on market speculation.

A week later though and now another related story has popped up. In this case it is unclear exactly what the Hindu newspaper actually knew. The country’s two largest cement producers are locked in a battle for capacity expansion and any opportunity is likely to be of interest to them both. Yet the newspaper did quote a source who said that any divestment by HeidelbergCement India (HCI) would involve a “full-fledged bidding process,” implying that something may be going on.

Germany-based Heidelberg Materials operates four main subsidiaries in India: Gulbarga Cement; HC Trading (India); HCI; and Zuari Cement. HCI and Zuari Cement are the main two in terms of cement production. Heidelberg Materials entered the market in 2006 via a number of purchases and a joint-venture. It then acquired Zuari Cement via its takeover of Italcementi in 2016. Between them the two subsidiaries operate four integrated plants, three grinding plants and one terminal in Central and Southern India. Altogether the company says it has a total cement production capacity of 14Mt/yr. Gulbarga Cement, meanwhile, is a long running project via Zuari Cement to build a new integrated plant at Gulbarga in Karnataka. As of mid-2021 at least the company was still finalising planning and permitting requirements.

HCI’s income fell by 3% year-on-year to US$275m in the financial year to the end of March 2023 from US$282m in the same period that ended in 2022. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 39% to US$35.4m from US$58.2m, its lowest figure since at least its 2017 financial year. The company blamed this on higher fuel prices, although it has been trying to offset this by optimising its fuel and power mix. Unfortunately, it was not able to pass these costs on to its customers through price rises due to competition and new cement plants being commissioned in its market areas. Its revenue and profits improved somewhat in the quarter to July 2023. Recent financial data on Zuari Cement appears to be unavailable, possibly in part due to the company changing the dates of its financial year in 2020. However, it reported revenue of US$249m in its 2021 financial year, a broadly comparable figure to HCI’s. When asked during the company’s earnings call in July 2023, HCI’s managing director Joydeep Mukherjee did confirm that the company was looking at a potential merger with Zuari Cement. However, the company was waiting for the right time before it would consider actually doing it.

The Indian cement market has been consolidating in recent years. Companies have been increasing their production capacity, competition has been intensifying and the spike in fuel prices in 2022 battered profits. Adani Group’s acquisition of Holcim’s businesses in 2022 has probably been the most visible example of this trend towards mergers and acquisitions. It follows UltraTech Cement’s acquisition of Jaiprakash Associates in 2017. Heidelberg Materials has been steadily selling off bits and pieces of its cement business since the mid 2010s but at a slower pace than Holcim. Selected sales have occurred in Italy, Spain, Georgia, Ukraine and various countries in Africa, but the biggest was the sale of its US West region to Martin Marietta Materials for US$2.3bn in 2021. It reinforced this process with its ‘Beyond 2020’ strategy with the stated aim to simplify its country portfolio and prioritise its strongest market positions. A large-scale divestment of its operations in India would certainly fit with this plan. Whether the current reporting is accurate or not, Heidelberg Materials’ intentions for its Indian operations are certainly worth keeping an eye on.

India: The Hindu newspaper has reported that Adani Cement and UltraTech Cement may submit offers for Heidelberg Materials’ Indian business. This follows the news that parent company Heidelberg Materials has reportedly entered into talks with JSW Cement over the possible sale of the business. It consists of cement plants in Andhra Pradesh, Madhya Pradesh, Karnataka and Telangana, in addition to a cement terminal and four grinding plants across India.

Global Cement reported on 4 October 2023 that Heidelberg Materials’ Indian subsidiary HeidelbergCement India had said it was ‘unaware’ of any discussions between its parent company and JSW Cement.

India: HeidelbergCement India has clarified that it is ‘unaware’ of reported discussions between its parent company Heidelberg Materials and JSW Cement over the possible transfer of the former’s Indian assets, Reuters has reported.

Heidelberg Materials owns 13.4Mt/yr-worth of cement capacity in India, of which HeidelbergCement India comprises 6.3Mt (47%).

India: Heidelberg Materials has entered preliminary discussions over the possible acquisition of its Indian business by JSW Cement. The business commands 13.4Mt/yr in cement production capacity, 7.1Mt/yr (53%) of it via Zuari Cement and 6.3Mt (47%) via HeidelbergCement India.

ET Now News has reported that JSW Cement made an unsolicited offer for the assets. The company aims to raise its capacity by 46% to 60Mt/yr by the end of 2028, in order to be among the top five cement producers in India.

India: JSW Cement is conducting a pilot project in the use of electric vehicles for cement transportation. The producer has introduced five Murugappa electric cement trucks into its fleet in Andhra Pradesh and Karnataka. It expects these to eliminate 150t/yr of CO₂ emissions from its logistics operations.

Daijiworld News has reported that CEO Nilesh Narwekar said “The pilot project is an important milestone in making our future much greener and more purposeful.” He added “Based on the success of these pilot trials, we will scale-up the integration of these trucks across our cement operations in India.”

India: JSW Cement may be planning to launch an initial public offering (IPO) to raise up to US$484m, according to Reuters.

JSW Cement managing director Parth Jindal reportedly said “In 2024, we are planning to take this company public, for which we will be filing the draft red herring prospectus in the next six months. We will be timing the market listing after the national elections.” Parliamentary and state legislative assembly elections are due to take place in September, November and December 2023.

India: The Cement Manufacturers' Association has elected Neeraj Akhoury. He is the managing director of Shree Cement. In a statement the association said “Akhoury brings with him more than 30 years of experience in steel and cement industries. He has worked in various leadership roles in India and other emerging markets.” The association also elected Parth Jindal as its vice-president. Jindal is the managing director of JSW Cement.

India: JSW Cement has signed a US$50m sustainability-linked loan agreement with BNP Paribas Singapore. The Hindu BusinessLine newspaper has reported that the producer plans to use the funds for capital expenditure projects aimed to more than double its production capacity to 50Mt/yr from 17Mt/yr. Current plans include US$388m in investments in the construction of a 2.5Mt/yr integrated cement plant in Madhya Pradesh and a 2.5Mt/yr grinding plant in Uttar Pradesh.

The latest loan from BNP Paribas is the second of its kind taken by the group, following a US$48.5m sustainability-linked loan from Japan-based MUFG Bank in October 2022.

India: Shiva Cement has commissioned its new US$185m Sundergarh cement plant in Odisha. Pragativadi News has reported that the new plant has an integrated capacity of 1.05Mt/yr and an additional grinding capacity of 0.27Mt/yr.

In October 2022, parent company JSW Cement announced plans to increase its total installed capacity by 47% to 25Mt/yr.

India: JSW Cement was among 20 companies from various industries in attendance at a roundtable discussion on the subject of leveraging clean energy to journey towards net zero on 13 April 2023. The discussion covered a broad range of ways to end the use of fossil fuels, including energy storage and the use of electric vehicles. Press Trust of India News has reported that advanced batteries developer Log9 Materials hosted the event in partnership with networking platform Blue Circle – not to be confused with the former cement producer of the same name. Executive director and chief risk officer Arvind Bodhankar represented Dalmia Bharat, while chief sustainability and innovation officer Manoj Rustagi represented JSW Cement.