Displaying items by tag: UltraTech Cement

India: Dalmia Bharat Cement and UltraTech Cement have each submitted bids of around US$930m for Binani Cement. The amount also includes upfront cash payments, as well as an offer of close to 20% stake in Binani to lenders, according to sources quoted by the Hindustan Times. A winning bid is expected to be chosen by the end of February 2018.

Both bidders have been asked for additional details related to their bid to allow the creditors to make their final decision. UltraTech Cement, for example, has been asked to provide information on a Competition Commission of India (CCI) penalty imposed upon it in 2016.

India: The Environment Ministry has approved a US$9.4m opencast limestone mine project by UltraTech Cement in Bhavnagar district, Gujarat. The cement producer has proposed to lease a 632 hectare site with a production capacity of 2.07Mt/yr, according to the Press Trust of India. The mine has total mineral reserves of 63.6Mt with a lifespan of 32 years. Conditions of the approval include relocating 147 families and a group of local farmers.

Limestone from the mine will be used to support a proposed cement plant in Bhavnagar district. It will also be sent to UltraTech’s other plants in the state.

India: Jaiprakash Associates has narrowed its loss to US$23m in the third quarter of its financial year from US$171m in the same period in 2016. Despite this its income fell by 30% year-on-year to US$178m from US$258m, according to the Press Trust of India. The company has sold its assets, including a large number cement plants to UltraTech Cement, to reduce debt.

India: UltraTech Cement’s profit after tax has dropped in the third quarter of its financial year that ends on 31 March 2018 due to rising costs of petcoke and coal. It also blamed a ban on petcoke usage in some states. Overall, its consolidated profit after tax for the first nine months of its financial year rose by 10% year-on-year to US$3.58bn from US$3.25bn in the same period in 2016. Its profit after tax fell by 10.5% to US$278m from US$311m.

The cement producer said that it had successfully launched the ‘UltraTech Brand’ in all the markets served by the plants it acquired from Jaiprakash Associates in 2017. It reported that production capacity utilisation is at 60% from a low of 18% at the time of the purchase. It is currently appointing new dealers and retailers in its new territories.

India: Binani Cement has received six bids in its sale process. Offers were received from UltraTech Cement, JSW Cement, Ramco Cement, HeidelbergCement India, Dalmia Cements and a pair of Indian investors, according to the Daily News & Analysis newspaper. The bids ranged from around US$630m to US$940m. However, each bid came with various clauses that made the committee of creditors refer them to a consultancy for evaluation.

India: The Maharashtra Pollution Control Board has complained about a terminal operated by UltraTech Cement at Peth Naygaon near Pune. Local residents petitioned the pollution board with claims that the trucks to the unit have been carrying raw and packaged cement without any cover, according to the Pune Mirrow newspaper. Following a study the pollution board then made an official complaint under the Air (Prevention and Control of Pollution) Act 1981 and the Environment (Protection) Act 1986. Local police are investigating the matter.

To mark the end of the calendar year we’re going to round up some of the major news stories from the cement industry in 2017. Like last year this piece also complements the corresponding article ‘The global cement industry in 2017’ in the December 2017 issue of Global Cement Magazine. Remember, this is just one view of the year's events. If you think we've missed anything important let us know via LinkedIn, Twitter or This email address is being protected from spambots. You need JavaScript enabled to view it..

Recovery in Europe
2017 was the year that the European cement industry finally had something to shout about after a lost decade since the financial crash of 2007. The good news was led by a revival in cement consumption in 2016 that looks set to have continued in 2017. Prospects in Germany and Spain feel similar and a series of mergers and acquisitions have taken place in Italy suggesting that investors believe that the market is about to recover there too. Sure, Brexit is looming but as contacts have told Global Cement staff throughout the year, if the British want to damage their economy, that’s their business.

Renewal and recrimination at LafargeHolcim
Lafarge’s conduct in Syria during the civil war has cost its successor company LafargeHolcim dear, with the loss of its chief executive officer (CEO) Eric Olsen and potential reputational damage if the on-going investigation in Paris finds fault. At the time of writing Olsen, former Lafarge CEO Bruno Lafont and the former deputy managing director for operations Christian Herraul are all being questioned by the inquiry into the affair as it attempts to determine who knew what and when. LafargeHolcim has drawn a line under the debacle by appointing outsider Jan Jenisch as its new CEO in mid-2017. He has made changes to the group’s management structure that were announced this week but has he done enough? If anything truly ‘explosive’ emerges from the investigation, the question for anyone across the world buying LafargeHolcim’s products may be whether or not they want to finance extremism through their purchase.

US doesn’t build wall but does okay anyway
The US Portland Cement Association (PCA) may keep downgrading its forecasts of cement consumption growth but the local industry is doing fairly well anyway. All sorts of cement producers with a presence in the US have benefited from the market, despite extreme weather events like Hurricane Irma. President Donald Trump may not have delivered on his infrastructure development promises or built his fabled wall yet but his recently-approved tax reforms are likely to benefit the profits of cement producers. The decision by Ireland’s CRH to buy Ash Grove Cement in September 2017 may remove the largest domestically-owned producer from US hands but it shows confidence in the market and heralds the continued creeping growth of the building materials company into an international empire.

South America shows promise… just don’t mention Brazil
Countries like Brazil, Colombia and Venezuela may not be performing to expectations but other countries south of the Darian Gap, have been growing their respective cement industries. The leader here is Argentina that is riding a full-scale construction boom with capital investment chasing it from the producers. Bolivia is following a decade of growth although this may be starting to slow somewhat. Chile appears to be realigning itself to take in more exports. And finally, Brazil may also be starting to return to growth too. Although cement sales were continuing to fall year-on-year in the first nine months of 2017 the rate has been slowing. Local producer Votorantim also reported improved market conditions at home.

India stares into the demand gap
UltraTech Cement finally managed to buy six cement plants and five grinding plants from Jaiprakash Associates for US$2.5bn in 2017. The acquisition marked the end of the long-running deal between the companies and what may be a new phase in further integration in the Indian industry. In September 2017 the Cement Manufacturers Association (CMA) complained that the sector had 100Mt/yr of excess production capacity out of a total 425Mt/yr. The government’s demonetisation policy sank cement production growth in late 2016 and production has struggled to improve since then. Some estimates expect growth to return in around 2020 as the demand gap shrivels. Further merger and acquisition activity can only help until then, although the current government flip-flopping over a petcoke ban and import duties may get in the way.

China restructures with an eye on overseas market
As discussed last week the mind-bogglingly massive merger between China National Building Material (CNBM) and China National Materials (Sinoma) is proceeding with the press equivalent of radio silence. If one trusts the company figures then the largest cement producer in the world will get even bigger following completion. Once the big Chinese producers start building lots of overseas plants then the implications of combining a major producer with a major plant builder may become clear outside of China. Alongside this the buzzword on the Chinese cement company balance sheets this year have been a major rollout of co-processing at plants and a policy of ‘peak shifting’ or simply shutting off production at selected plants in the winter months. Somehow despite all of this the official figures suggest that cement production is still growing in China.

The African mega deal that wasn’t
The prospective bidding war for South Africa’s PPC has turned out to be a bust. A low offer was made in September 2017 by a Canadian investment firm with the aim of merging PPC with local rival AfriSam. Vague expressions of interest from the usual suspects followed over the following months before everything fizzled out. What the dickens was going on? A difference of opinion between the board and shareholders? A poor market in South Africa giving everyone the jitters? If any readers know, please get in touch. PPC’s poor showing at home mirrors Dangote Cement’s travails. Both companies have suffered domestically whilst going full tilt elsewhere in Sub-Saharan Africa.

Indonesia about to pick up?
And finally, a report from Fitch Ratings this week suggests that growth in Indonesia is set to pick up once again. The market dragged down HeidelbergCement’s mid-year financial results as cement consumption dropped in the same period. Like India, Indonesia faces a consumption-capacity mismatch. However, with annual consumption poised to grow at over 6%, the time to close that gap will narrow. Some good news to end the year with.

Global Cement Weekly will return on 3 January 2018. In the meantime Merry Christmas and a have Happy New Year!

India: The government has raised the import duty on petcoke to 10% from 2.5%. This follows the abolition of a ban on petcoke and furnace oil to the cement and power industries in Delhi, Haryana, Rajasthan and Uttar Pradesh by the Supreme Court, according to Reuters. The increase in import duty is expected to create a rise in coal imports as companies change their energy mix. Shree Cement, JK Cement, J K Lakshmi Cement, UltraTech Cement and Mangalam Cement are all expected to be particularly affected by the tariff change. India is the world’s biggest consumer of petcoke, with much of it imported from refineries in the US.

India: UltraTech Cement plans to build a US$287m plant at Pali in Rajasthan. The 3.5Mt/yr unit is expected to commence operation by June 2020. The cement producer said that the plant is being set up in one of the fastest growing markets in the country and highest cement consuming states in the North Zone of the country. It added that the plant will serve markets in western Rajasthan where the company does not have a ‘significant’ presence.

The third quarter financial results for HeidelbergCement are out today. They aren’t perfect but the company is hanging in there following its acquisition of Italcementi in late 2016. As one would expect both cement sales volumes and sales revenue are up on a double-digit basis. After all, HeidelbergCement has absorbed a major competitor, including assets, staff, cement plants and all. Its volumes and revenue have improved, more importantly though, on a like-for-like basis, even if it is modest. With the US and Europe driving sales the cement producer has time to make its promised synergies following the Italian acquisition and hopefully wait out recovery in places like Indonesia and Egypt.

Graph 1: Cement sales volumes for selected multinational cement producers during the first nine months of 2017. Source: Company financial reports.

That growth on a like-for-like basis is crucial compared to HeidelbergCement’s big rival, the world’s biggest cement producer, LafargeHolcim. As Graph 1 shows sales volumes data for the major multinational cement producers shows quite a varied picture. LafargeHolcim’s sales volumes have fallen by 12% year-on-year to 156Mt but the company has also been reducing its production capacity. Despite this, a rough calculation of its production utilisation rate suggests that it is selling less cement proportionally, although the company’s like-for-like figures disagree, positing a rise of 1.8%. Cemex’s sales volumes declined slightly to 51.3Mt. The larger regional companies show interesting trends. UltraTech Cement has managed to increase its sales volumes by 5% to 40.4Mt overcoming a poor third quarter in 2016. What to watch here will be whether this will be enough to overcome the effects of demonetisation that rocked India’s economy in late 2016.

Graph 2: Sales revenue for selected multinational cement producers during the first nine months of 2017. Source: Company financial reports.

The stronger regional positions of those last two companies really hits home when sales revenue is examined. As can be seen in Graph 2 both UltraTech Cement and Dangote Cement are growing their sales revenue, the latter despite dropping sales volumes. UltraTech Cement is suffering from falling profits due to rising fuel costs and it may yet suffer from ‘corporate indigestion’ as it digests its acquisition of 21.2Mt/yr cement production capacity from Jaiprakash Associates that took place in June 2017. Dangote Cement seems to have increased its earnings and profits despite problems at home in Nigeria by improving its fuel mix. Yet, flirtations with South Africa’s PPC aside, its expansion plans remain in a holding position. Dangote Cement presents another fascinating situation. Its overall sales volumes have fallen but this reflects a failing market at home in Nigeria and doesn’t show the company’s booming sales in the rest of Sub-Saharan Africa.

Results from CRH and the Brazilian companies Votorantim and InterCement will further flesh out the situation when they are released. Yet, the difference between worldwide producers and regional producers seems to be clear. The likes of LafargeHolcim and Cemex with a global presence are generally battling stagnation in the cement markets overall with a couple of key markets holding them back. Meanwhile, larger regional producers in the right locations are growing. However, the absence of the Brazilian producers is critical here as their experience of the floundering market in Brazil is very different to that of, say, UltraTech Cement’s in India. Looking ahead, the next quarter will be particularly interesting to see how demonetisation skewed UltraTech Cement’s performance, to start to see the first results from HeidelbergCement a year after its purchase of Italcementi and how well LafargeHolcim’s new chief is doing.