Displaying items by tag: Uttar Pradesh

India: The government of Uttar Pradesh has awarded JK Cement US$4.15m as a concession for its construction of the 1.5Mt/yr Aligarh grinding plant. The Times of India newspaper has reported that the concession covers some of the producers' investments over a period between 1 April 2019 and 31 March 2022.

JK Cement has invested a total sum of US$145m in projects in Uttar Pradesh, including US$60.6m of it in the on-going construction of its 2.5Mt/yr Prayagraj grinding plant.

India: Dalmia Bharat says its has executed definitive agreements with Jaiprakash Associates to buy cement, clinker and power plants. The latest part of the acquisition process has cleared Dalmia Bharat to buy the JP Super Cement plant in Uttar Pradesh for US$183m, subject to various clearances and approvals. In addition, Dalmia Bharat has also agreed to buy a 74% share of Bhilai Jaypee Cement for an enterprise value of US$81m and is in the process of signing a seven-year lease agreement with Jaiprakash Power Ventures for its 2Mt/yr Nigrie Cement grinding plant in Madhya Pradesh. Dalmia Bharat will have the option to purchase the Nigrie unit anytime within the lease period for an enterprise value of around US$30m.

Dalmia Bharat agreed to buy selected assets from Jaiprakash Associates for US$684m in December 2022. Cement and grinding plants under the deal are situated in Chhattisgarh, Madhya Pradesh and Uttar Pradesh. The Competition Commission of India (CCI) approved the deal in February 2023.

India: JK Cement has announced a planned investment of US$60.6m in construction of a new 2.5Mt/yr grinding plant at Prayagraj, Uttar Pradesh. Asian News International has reported that the producer hopes to strengthen its presence in Eastern India. The project increases JK Cement's total investments in Uttar Pradesh to US$145m. It previously inaugurated its 2Mt/yr Hamirpur grinding plant in the state in October 2022. It also operates a 1.5Mt/yr grinding plant at Aligarh.

JK Cement's deputy managing director and CEO Madhavkrishna Singhania said "We are proud to be a part of this dynamic state that not only offers us a geographic advantage but also gives a plethora of opportunities for investment and expansion. With its favourable business environment, abundant resources, and highly skilled workforce, Uttar Pradesh is undoubtedly an ideal location for our expansion plans."

India: Three cement producers plan to establish new plants in Shankragarh, south of the River Yamuna in Uttar Pradesh’s Prayagraj District. The Uttar Pradesh State Industrial Development Authority said that JK Cement has signed a memorandum of understanding for the construction of a 2.5Mt/yr grinding plant, according to the Hindustan Times newspaper. Eco Cement plans to build a 4Mt/yr grinding plant, and KJS Cement a 2Mt/yr cement plant. All three companies have applied for no-objection certificates from the Uttar Pradesh Pollution Control Board.

Further consolidation of the Indian cement sector looked closer this week with the news that Dalmia Bharat’s cement subsidiary has agreed to buy the remaining cement plants from Jaiprakash Associates. The US$685m deal covers cement and power plants in Madhya Pradesh, Uttar Pradesh and Chhattisgarh. It includes clinker production capacity of 6.7Mt/yr, cement capacity of 9.4Mt/yr and 280MW of captive power capacity.

Chart 1: Map of Dalmia Bharat’s cement plants in November 2022 with region of proposed new plants highlighted in orange. Source: Adapted from Dalmia Bharat investor presentation.

The acquisition gives Dalmia Bharat the opportunity to draw level with Shree Cement in terms of cement production capacity. If the deal completes, then both cement companies will hold a capacity of around 46Mt/yr. This puts them behind UltraTech Cement and Adani Group nationally. In terms of the cost, the proposed acquisition works out at around US$73/t of cement capacity, although this doesn’t take into account the additional captive power generation capacity. This compares to US$119/t for UltraTech Cement’s purchase of Jaiprakash Associates plants in 2017 and US$97/t for Adani Group’s purchase of Holcim’s Indian-based business in September 2022.

Dalmia Bharat’s rationale for its move this week was that it wants to grow in the Central Region of the country and work towards a capacity target of 75Mt/yr by the 2027 financial year and at least 110Mt/yr by the 2031 one. It backed this up in an investors’ presentation by saying that cement consumption was around 170kg/capita locally and that the region represented about 15% of national demand at 54Mt/yr. This roughly checks out with regional integrated/clinker production capacity distribution analysis that Global Cement Weekly carried out in June 2022. Only the East region was lower, but this didn’t take into account grinding plants or new projects.

Completion of the agreement is planned by December 2023 and is subject to the usual regulatory approvals. However, readers may recall the difficulties UltraTech Cement had in the mid-2010s when it attempted to buy two plants from the subsidiary of Jaypee Group. Problems stemming from an amendment to the Mines and Minerals (Development and Regulation) (MMDR) Act caused the original proposal to be rejected by the Bombay High Court in early 2016. UltraTech Cement bounced back though with a deal to buy far more plants instead. This deal completed successfully in mid-2017.

Jaypee Group’s debts have also caused problems along the way. Indeed, this is the reason why it has finally decided to leave the cement business altogether. In early December 2022 it reported its latest default on interest payments towards some of its loans. Overall its outstanding debt was US$3.39bn. Due in part to this, there have been plenty of stories in the local press over the last decade on whoever was reputedly buying the Jaypee Group’s cements assets. In October 2022, for example, Adani Group was reportedly in advanced talks to buy Jaypee Group’s remaining cement business until it denied it publicly. One deal that did reach fruition was Dalmia Bharat’s purchase of Bokaro Jaypee Cement back in 2014 from a joint-venture majority controlled by Jaypee Group. That agreement gave it full control of the 2.1Mt/yr Bokaro grinding plant in Jharkhand. Looking at the current proposed acquisition, one commentator from HDFC Securities in the local business press noted that detail on the transaction is lacking, such as what will happen to existing limestone reserves. Another pointed out that the deal was probably 30 – 40% below the replacement cost because the plants were old, lack of interest from potential buyers and due to the “likely need for additional CAPEX to run operations.”

If the Dalmia Bharat - Jaiprakash Associates deal completes then it marks the end of an era for the Indian cement industry as one of the big players bows out of the sector. It shows once more that, despite the mounting fuel and raw material costs in 2022, companies are still seeing big opportunities. In its December 2022 report, the ratings agency ICRA found that cement sales volumes grew by 11% year-on-year to 187Mt in the first half of the 2023 financial year. The acquisition might also, hopefully, put an end to the endless speculation about who Jaypee Group might be selling its cement plants to! Although, of course, the question then becomes who else might be considering divesting cement assets.

India: Dalmia Cement (Bharat) has concluded a contract for the acquisition of cement and other assets from Jaypee Group for US$684m. Mint News has reported that the deal will bring Dalmia Cement (Bharat) into control of an additional 9.4Mt/yr of cement production capacity, including 6.7Mt/yr of clinker production capacity, as well as 280MW-worth of fossil fuel-fired power capacity. All cement and grinding plants included under the deal belonged to Jaypee Group subsidiaries Jaiprakash Associates and Jaiprakash Power Ventures and are situated in Chhattisgarh, Madhya Pradesh and Uttar Pradesh.

India: JK Cement has commissioned its latest new grinding plant in Uttar Pradesh. Reuters News has reported that the facility has a cement production capacity of 2Mt/yr.

JK Cement is on track to increase its total installed capacity to 23Mt/yr by the end of 2023.

Nepal: Udayapur Cement has urged the Nepalese government's Ministry of Finance to process its application for a loan of US$3.82m. The Kathmandu Post newspaper has reported that the producer plans to invest in an upgrade to its 800t/day-capacity Gaighat cement plant in Province No.1. The plant is reportedly unable to meet its capacity due to frequent issues with its 33-year-old equipment. The producer hopes that an upgrade will increase the plant's production capacity by 41% to 2.5m bags/yr. It also expects its expenditure on coal to fall by 25% as a result.

Director general Gopi Neupane noted the Gaighat cement plant's access to high quality limestone not available elsewhere in the country. He said "We will turn the factory into a profit-making enterprise if the additional investment is provided. We have huge scope for exporting cement to Uttar Pradesh and Bihar (in India)."

India: Prism Cement, part of Prism Johnson, has signed supply agreements with three cement producers in Bihar and Uttar Pradesh. Mayflex Cement Industries, RLJ Infracement and Rockhill Hi-Tech Cement will supply the cement producer and distributor with cement from their respective grinding plants, which have a total capacity of 820,000t/yr. Prism Cement said that the agreements will help it to improve local availability in the strategic markets of Bihar and Uttar Pradesh. Bihar contributed 19% of Prism Johnson's cement sales by volume in the 2022 financial year, and Uttar Pradesh 55%.

Mayflex Cement Industries reportedly commissioned its new 300,000t/yr Faizabad grinding plant in Uttar Pradesh earlier in 2022.

India: JSW Cement has announced a planned US$389m investment in the construction of a new integrated cement plant in Madhya Pradesh and a grinding plant in Uttar Pradesh. Together, the plants will have a cement capacity of 5Mt/yr.

The Economic Times newspaper has reported that JSW Cement's acquisition of Springway Mining has given it access to 106Mt of new limestone reserves, with a mining lease until 2065.