
Displaying items by tag: UltraTech Cement
Heidelberg leads interest in join venture with RINL
07 November 2011India: Heidelberg and major Indian cement companies including UltraTech and Reliance Cements have shown interest as joint venture partners in state-run Rashtriya Ispat Nigam's (RINL) proposed USD204m cement plant at Vizag, in Andhra Pradesh.
"We are looking for a partner to set up a 3Mt/yr plant at Vizag. Heidelberg, Ultratech and Reliance Cements have shown interests to be our joint venture partner," RINL Chairman and Managing Director A P Choudhary said. Zuari Cements, Bhavya Cements, JP Cements and Binani Cements have also shown interests in the joint venture.
"The finalisation of the partner will not take more than 2-3 months from now. We will be able to establish the joint venture before the end of the current fiscal year," Choudhary said.
Asked how much of a stake the steel-maker would offer to its partner, Choudhary said that no decision has been taken yet. However RINL is willing to give up to 74% to the partner since cement making is not its core business. The proposed venture will use fly ash and slag generated from RINL's Vizag plant, where the capacity will shortly be increased from 3Mt/yr to 6.4Mt/yr.
Around USD204m in investment will be required to set up the cement plant, Choudhary said, adding that the cost would be borne by the two firms according to the shareholding pattern. Production at the plant is likely to commence two years from the start of construction.
UltraTech reports strong Q2
20 October 2011India: UltraTech Cement has reported strong results for its second quarter that ended on 30 September 2011. Net profit after tax for the quarter surged upwards by 140%, reaching USD57m compared to USD24m for the same quarter in 2010.
Total income for the company has increased by 22%, to USD810m for the quarter under review from USD670m for the similar quarter in 2010. Net sales have risen by 22% over the same period USD800m. However both net profit and sales were lower than USD140m and USD890m respectively, as reported in the previous quarter that ended on 30 June 2011.
UltraTech has an installed capacity of about 52Mt/yr and it hopes to increase that by over 9Mt/yr by mid-2014. The company warned that a surplus scenario in the Indian cement industry would likely continue for 2-3 years.
"Variable cost rose by 14% (during the quarter) because of the increase in input and energy costs. The 30% increase in the price of domestic coal, continuous rise in prices of imported coal together with escalation of freight costs... have constrained the company's performance," the firm said in a statement. It continued, "Growing input costs will result in a squeeze in margins."
Cement demand in India, the world's second-largest producer after China, has declined in recent months on a slump in the construction and real estate industries due to high interest rates and growth moderation in Asia's third-largest economy.
Indian production challenged by local coal shortage
17 October 2011India: Indian cement companies are facing a shortage of coal from Coal India Ltd, the country's largest producer. However they are unlikely to be affected by this due to the high levels of imports, a cement trade official has said.
"Most cement companies import up to 70%-75% of the coal needed to run their captive power plants. As of now, I don't expect cement supply to be affected by the coal shortage," said Sanjay Ladiwala, president of the Cement Stockists and Dealers Association of Bombay.
A brokerage report by Emkay Securities has stated that large cement companies such as ACC, Ambuja Cements and Ultratech Cement source around 20% of their thermal coal needs from Coal India's monthly electronic auctions. The report also said that Coal India has diverted the 4Mt for auction in October 2011 to power generation companies. This could lead to some cost escalation for cement producers as they have to rely on higher-priced imported coal.
Separately, Ladiwala said that cement prices rose across most of the country in October 2011, except in southern regions, as demand from the construction sector revived after the summer monsoon rains ended.
Indian sales revive but manufacturers face margin-pressure
10 October 2011India: Cement sales in September 2011 showed signs of a revival with monsoon weather subsiding in most parts of the country. However the ongoing unrest over the creation of a new state in Telangana have affected the despatches of ACC. In addition UltraTech Cement, one of the biggest producers in the country, has not yet announced its figures for the month.
Cement demand from the real estate sector has improved with many builders putting their projects on fast track to keep up their promise of timely delivery during the festival season. But there are no substantial developments in the infrastructure sector even as some government projects have been announced.
Analysts warn that it's too early to predict a recovery in cement demand because there is no marked improvement in the economic health of the country along with continuing unstable global developments from the US and Eurozone. With concern over rising input costs and increases in lending rates still lingering, cement companies have kept their production in check in order to align with the demand.
Besides transportation interruptions, the Telangana disruption has paralysed power supplies. Big cement factories have captive power plants but smaller cement units have been badly affected. The supply of coal from Andhra Pradesh was also hit, pushing up the cost of power production for captive plants that had to rely to a large extent on imported coal shipments.
V Srinivasan, a research analyst at Angel Broking, said that cement companies are expected to face margin pressures due to higher fuel costs because of increased domestic and international coal prices. The demand revival has helped cement companies to raise prices across the country, yet despite the rise, cement producers' profitability may be under pressure due to increasing costs.