Displaying items by tag: UltraTech Cement

India: UltaTech Cement’s net profit has risen by 20% year-on-year to US$292m for the first nine months of its financial year to the 31 March 2017 from US$244m in the same period in the pervious year. Its total income from operations rose slightly to US$3.04bn. However, net sales fell slightly in the third quarter.

The cement producer reported that its board of directors had approved the setting up of a 3.5Mt/yr cement plant at Dhar, Madhya Pradesh for a cost of around US$382m. Commercial production at the plant is anticipated to start in early 2019. The plant is intended to grow the company’s markets in southwest Madhya Pradesh.

UltaTech Cement added that it had deposited a penalty of US$17.3m, 10% of a fine imposed by the Competition Commission of India (CCI) in August 2016. It is also facing a separate fine for U$10m from the CCI in relation to alleged misconduct in Haryana. The company intends to appeal both fines.

India: The Competition Commission of India (CCI) has found seven cement companies guilty of bid rigging and cartelisation and imposed a total fine of nearly US$30m on them. The accused companies are Shree Cement, UltraTech Cement, Jaiprakash Associates, JK Cement, Ambuja Cements, ACC and JK Lakshmi Cement, according to the Times of India. The fines are based on 0.3% of each company’s average turnover for three financial years. Each company has also been ordered to cease and desist such behaviour.

The ruling relates to a tender floated by a Haryana state procurement agency in 2012 that the CCI started investigating in 2014. Evidence cited in the CCI’s order includes text messages and phone calls made between officials of the companies.

UltraTech Cement and Shree Cement have issued statements saying that they will appeal against the fine.

India: The shareholders of Jaiprakash Associates approved the sale of the group’s cement business to UltraTech Cement. According to the deal, arranged earlier in 2016, UltraTech Cement will buy Jaiprakash Associates' cement plants in Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, which have a total production capacity of 21.1Mt/yr, at an enterprise value of US$2.4bn. In addition, it will acquire a 4Mt/yr grinding plant being built in Uttar Pradesh.

Approval has been obtained from the Competition Commission of India, according to the Press Trust of India. The next step involves seeking approval from the concerned High Court and the final approval from capital markets regulator.

India: UltraTech’s net profit has risen by 27% year-on-year to US$209m for the first half of its 2017 financial year from US$164m in the same period of the previous year. Its sales revenue grew slightly by 1% to US$2.08bn from US$2.06bn. However, its sales revenue fell by 13% year-on-year to US$967m for the quarter that ended on 30 September 2016 from US$1.11bn.

In a results presentation the cement producer said that the industry had been hit by low cement demand, low capacity utilisation rates and rising operating costs, including petcoke prices in the latest quarter. It added that its capacity utilisation had fallen by 6% to 70% in the first half of its financial year from 76% a year earlier as its production capacity grew to 66.25Mt/yr from 63.05Mt/yr. Its sales volumes grew by 4% to 24.4Mt from 23.5Mt, with a particular boost in exports.

India: The Competition Commission of India has approved the proposed acquisition by UltraTech Cement of selected cement assets from Jaiprakash Associates and its associated company Jaypee Cement. The deal concerns 21.2Mt/yr of cement production capacity at a cost of US$2.47bn. The transaction is expected to complete in early to mid 2017.

India: Bokaro district officials in the state of Jharkhand will support the construction of a 1.5Mt/yr cement plant by UltraTech Cement in the Bokaro Industrial Area Development Authority (BIADA). UltraTech will be the second cement producer to build a plant in the BIADA region following Dalmia Cement. Local officials have met UltraTech staff to discuss infrastructure connections, the availability of slag and other raw materials and environmental clearance, according to the Times of India.

India: UltraTtech’s net sales have risen by 4% year-on-year to US$937m for the quarter that ended on 30 June 2016 from US$935m from the same period in 2015. Its net profit rose by 29% to US$116m from US$90m in the same period. During the quarter the cement producer has commissioned grinding plants at Nagpur in Maharashtra and Patliputra in Bihar. The company also confirmed that its acquisition of cement plants from Jaiprakash Associates is continuing.

Boy, is the UltraTech Cement and Jaiprakash Associates deal dragging on. The agreement by UltraTech to buy cement plants from Jaiprakash Associates reached its latest revision this week when UltraTech upped its offer to US$2.40bn from the US$2.36bn offered at the end of March 2016. The deal also includes an additional US$70m for a cement grinding plant under construction in Uttar Pradesh.

This time round the haggling took place to the background music of Jaiprakash Associates’ mounting debts. It owes US$4.45bn to a group of lenders led by ICICI Bank. A repayment window was due to close on 30 June 2016. Defaulting this deadline could have switched the account to non-performing asset status. So, according to reports in the Indian media, the lenders forced a strategic debt restructuring scheme on Jaiprakash Associates. Or in other words they took control of the company. Alongside all of this UltraTech was allegedly trying to renegotiate the terms of the deal agreed in March 2016 following amendments to the Mines and Minerals (Development and Regulation) (MMDR) Amendment Act, 2015.

How paying more for the same assets benefits UltraTech remains to be seen. In addition US$1.78bn worth of Jaiprakash Associates’ debts will be transferred to UltraTech, according to Rahul Kumar, Director & CFO of Jaiprakash Associates. At US$118/t for new-ish production capacity it still seems like a good deal. Doubtless the devil lies in the (unseen) detail. Reports in the Indian media speculate that the lenders may have threatened UltraTech with rival bids.

To add to the confusion, the deal covers cement plants with a production capacity of 21.2Mt/yr but this total includes both integrated cement plants (clinker producing) and standalone cement grinding plants. Given the difference in cost to build a clinker production line compared to a grinding mill this makes assessing the value of the deal difficult.

UltraTech have described the purchase as a ‘geographic market expansion,’ which will allow its entry into markets of India including the Satna cluster in
Uttar Pradesh and Madhya Pradesh, Himachal Pradesh, Uttarakhand and coastal Andhra Pradesh. It has also stated that its cement production capacity (clinker and grinding) will rise to 91.1Mt/yr following the deal. As ever, the latest revised agreement is dependent on shareholder, creditor, high court and regulatory approval. UltraTech plan to complete the transaction by July 2017. What can possibly go wrong!?

India: UltraTech Cement and Jaiprakash Associates have revised their deal for UltraTech to buy 21.2Mt/yr of cement production capacity from Jaiprakash Associates. The revised value of the deal is now US$2.47bn, up from US$2.40 agreed previously. UltraTech will have to pay an additional US$70m upon completion of a grinding unit under construction. The new agreement is an amendment to the 31 March 2016 scheme of arrangement., according to the Hindu newspaper.

The approval follows an agreement of Jaiprakash Associates’ lenders who invoked Strategic Debt Restructuring (SDR) scheme on 28 June 2016. This allowed the lenders may take control of the company and sell its assets to recover dues.

“Jaypee Group is determined to reduce its overall debt through its proactive divestment initiatives to help the group tide these current turbulent times caused by the economic slowdown,” said Manoj Gaur, Executive Chairman, Jaypee Group. The company has put together a committee of directors to explore its options to tackle its debt management.

India: Jaiprakash Associates has had problems meeting its financial commitments towards the purchase of some of its cement plants by UltraTech Cement. Sources quoted by the Mint newspaper said that the cement producer had met issues clearing statutory dues and providing necessary working capital for the plants under review. They added that UltraTech Cement had also sought additional funding ahead of the completion of the US$2.4bn deal. Both cement producers have claimed that the deal is still on track.