Displaying items by tag: Rajasthan

Nirma Group won the auction for Emami Cement this week with an US$770m offer. The deal is subject to approval by the Competition Commission of India but it signals further consolidation for the Indian cement industry. It sets Nirma Group and its subsidiary Nuvoco Vistas in a strong position in Central, North and East regions of the country, if authorities agree to it.

Sometimes the press releases connected to corporate acquisitions can be accused of hyperbole but Nuvoco’s chairman Hiren Patel may be proved closer to reality than some when he said, “This acquisition is a momentous and transformational step in Nuvoco’s journey to becoming a major building materials company in India.” This is because Emami Cement operates one integrated cement plant in Risdah, Chhattisgarh and grinding units in Bihar, West Bengal and Odisha with a total installed capacity of 8.3Mt/yr. It also holds mining leases in Chhattisgarh, Rajasthan and Andhra Pradesh. Nuvoco Vistas runs four integrated plants in Chhattisgarh and Rajasthan and three grinding plants in West Bengal, Jharkhand and Haryana with a total installed capacity of around 15.2Mt/yr.

Put all of this together and Nuvoco Vistas has a capacity of 23.5Mt/yr. This may not make it a leader nationally, where it faces the likes of UltraTech Cement’s capacity of just under 110Mt/yr. Yet it does make the producer a serious player regionally in Chhattisgarh and Rajasthan. Backing this up are five grinding plants in East India. Hence, Hiren Patel might not be exaggerating all that much.

It’s difficult to ascertain the valuation of this deal given the mixture of integrated and grinding capacity that was on sale. Altogether, for its total of US$770m, Nirma Group has agreed to pay around US$93/t. Like any deal there must have been some haggling going on given that the projected price for Emami Cement drifted downwards as the auction went on. Emami Cement’s owners reportedly valued the company at around US$1.2bn before the auction and were subsequently said to be looking for US$1bn. Later, local media said that UltraTech Cement was likely to submit an offer around US$0.94bn.

In the wider context of the Indian cement industry, the picture looks similar to when this column looked at the country as a whole in December 2019. Since then the November 2019 production figures have been released showing that cement production grew in the first 11 months of 2019, to 308Mt, but at a far slower rate than in 2018. A growth in production in November 2019 also broke a downward trend since August 2019. Adding to this growing sense of optimism, analysts ICRA were forecasting increasing profitability for cement producers in the 2020 financial year due to ‘benign’ input costs. If correct then Nirma Group will have picked a good time to expand.

India: LafargeHolcim and HeidelbergCement have joined a bidding war for Emami Cement. LafargeHolcim is reported to have submitted an expression of interest via its subsidiary Ambuja Cement, according to the Hindu newspaper. HeidelbergCement has submitted its bids through HeidelbergCement India. Emami Cement has an expected value of around US$845m. Nuvoco Vistas Corporation, Shree Cement and Dalmia Bharat have also been linked to the sale.

Emami Cement operates a 2.5Mt/yr integrated plant at Risda in Chhattisgarh and a 2.5Mt/yr grinding plant at Panagarh in West Bengal. It acquired a 0.6Mt/yr grinding plant at Bhabua, Bihar in September 2018. In addition, the firm has mining assets in Guntur in Andhra Pradesh and near Jaipur in Rajasthan. Its main markets are in West Bengal, Chhattisgarh, Odisha, Jharkhand, Bihar, Maharashtra and Madhya Pradesh. It markets its products under the Double Bull brand.

India: CARE Ratings has identified Telangana, Andhra Pradesh, Odisha, Rajasthan, West Bengal and Uttar Pradesh as the key states expected to lead cement production capacity additions over the next decade to 2030. In a sector report the credits agency forecast growth of 120Mt in this period. It noted that Rajasthan, Karnataka, Madhya Pradesh, Tamil Nadu, Andhra Pradesh and Telangana were among the top states in installed capacity at present. It said that the southern region led with highest installed capacity of 33% followed by the North, East, West and Central regions. Rajasthan, Karnataka, Telangana, Madhya Pradesh and Maharashtra are among the states with highest limestone resources.

India is the world’s second largest second producer but its per capita consumption is low, at 210kg. This is well below the global average of around 575kg/capita.

India: Wonder Cement has launched the third production line at its Nimbahera plant at Chittorgarh in Rajasthan. The new 2Mt/yr integrated line had an investment of US$159m, according to the Hindu newspaper. The unit at Nimbahera now has a total production capacity of 9Mt/yr and the company also operates a 2Mt/yr cement grinding plant at Dhule in Maharashtra.

Sanjay Joshi, the executive director of Wonder Cement, said that he expected domestic cement demand to grow by 8% year-on-year in the 2019 – 2020 financial year. He added that, although the market was crowed, he thought that a new company could stand out if it delivered quality products.

India: JSW Cement plans to invest over US$275m towards meeting its target production capacity of 20Mt/yr by 2020. Following this achievement it intends to launch an initial public officer (IPO), according to the Economic Times newspaper. The company aims to reach its capacity target through expansions and upgrades at its existing plants.

At present the cement producer has a capacity of 12.6Mt/yr. It will add 1.8Mt/yr at Dolvi, 1.8Mt/yr at Vijayanagar, 1.2Mt/yr at Jajpur in Odisha and 1.2Mt/yr in Salboni. Following the IPO it will build new capacity in Rajasthan and Chhattisgarh.

India: Birla Corporation’s earnings before interest, taxation, depreciation and amortisation (EBITDA) rose due to increased sales of blended cement in the last quarter of 2018. Blended cements represented 89% of its total sales volumes compared to 85% in the same period in 2017.

The company’s net sales grew by 14.6% to US$653m in the nine months to the end of 2018 from US$569m in the same period in 2017. Its EBITDA rose by 17.1% to US$96.8m from US$82.7m. Its cement production increased by 10.5% to 9.86Mt from 8.92Mt and its cement sales increased by 9.9% to 9.79Mt from 8.92Mt. It said that better sales in key markets had offset raw material price rises such as petcoke, coal and diesel. It noted that the price of diesel had risen by over 20% in the reporting period although it had started to soften in the most recent quarter.

The cement producer held a ground breaking ceremony in late January 2019 for a new plant being built by its RCCPL subsidiary at Yavatmai district in Maharashtra. The 3.9Mt/yr unit has an investment of US$342m and it includes a 40MW captive power plant and a 10.6MW waste heat recovery (WHR) system. Commissioning is scheduled for the 2021 – 2022 financial year. The company is also planning to upgrade RCCPL’s plant at Kundanganj with 1.2Mt/yr of additional production capacity. Other new projects include a 12.25MW WHR system at Maihar that is expected to be commissioned in mid-2019. It is building solar power plants at Maihar, Chanderia and Satna with 11MW, 3.6MW and 1.2MW capacity respectively. Birla Corporation also said that restrictions on using explosives placed on limestone mining at Chanderia in Rajasthan had increased its costs.

India: UltraTech Cement has renamed its Binani Cement subsidiary UltraTech Nathdwara Cement. The leading Indian cement producer finally acquired Binani Cement in late November 2018 when the Supreme Court supported the National Company Law Appellate Tribunal’s (NCLAT) approval of its bid for Binani Cement following a legal fight with a consortium led by Dalmia Bharat group.

Binani Cement’s production assets include a 4.85Mt/yr integrated plant at Nathdwara and a 1.4Mt/yr grinding plant at Neem ka Thana, both in Rajasthan. The company also operates plants in China and the UAE. UltraTech Cement’s acquisition will increase its production capacity in the north of the country to around 24Mt/yr, increase its access to limestone reserves and offer it synergies in logistics and procurement.

India: JSW Cement is planning to target the north and north-east of the country after a proposed initial public offering (IPO) in 2020. The company is looking for acquisitions in the region to meet its production capacity target of 20Mt/yr by 2020, according to a company executive quoted by the Economic Times newspaper. The cement producer has purchased two limestone mines via auction at Nagaur in Rajasthan and one in Gujarat. It is also considering building new cement plants near the mines. The company has a production capacity is 12.8Mt/yr at present.

India: The board of Ambuja Cements has approved an extension to its Marwar Mundwa integrated plant project in Rajasthan. The clinker production capacity of the plant has been increased to 3.1Mt/yr and an additional 1.8Mt/yr cement grinding capacity has been added. The total investment of the project has been increased to around US$326m. A waste heat recovery (WHR) unit has also been added to the project. Once completed the plant will increase the subsidiary of LafargeHolcim’s production capacity of 31.5Mt/yr.

India: Dalmia Bharat is reported to be planning a 4Mt/yr greenfield cement plant in Rajasthan to cover the north Indian market. It was earlier reported to have secured limestone mining rights in the area surrounding Chittogarh and it has recently missed out on the purchase of northern cement maker Binani Cement to its rival Ultratech Cement.

Speaking to Business Standard, a Dalmia Bharat spokesperson said, “If we aren’t able to foray into North India via acquisition, we’ll do it via a greenfield project.” He added that the plant will start with a single 2Mt/yr line, with a second to be added later.

This new proposal gives Dalmia Bharat exposure to Rajasthan and neighbouring Gujarat, opening the wider nothern region up to the company. “The region is expected to register good growth in the next 10 years, which makes this market lucrative for us. It has always been our endeavour to be present across the country,” concluded the spokesperson.