Displaying items by tag: Uttar Pradesh

India: Germany-based HeidelbergCement has announced the successful expansion of two grinding plants. Accord Fintech News has reported that the company took advantage of the suspension of cement production since 24 March 2020 to complete debottlenecking work at the Jhansi, Uttar Pradesh, and Imlai, Madhya Pradesh, grinding plants, bringing their cement production capacities to 3.3Mt/yr and 2.5Mt/yr respectively.

HeidelbergCement India has an integrated capacity of 3.7Mt/yr and a grinding capacity of 6.3Mt/yr (total capacity: 10Mt/yr).

The National Council for Cement and Building Materials (NCB) International Seminar is running this week in New Delhi and this gives us a good opportunity to take a snapshot at the world’s second largest cement industry.

Data from the Ministry of Commerce & Industry shows comfortable cement production growth of 4.4% year-on-year to 255Mt in the first nine months of 2019. As graph 1 shows there was higher production growth in 2018 but this followed a decline in 2017, due to partly to the government’s demonetisation policy. October 2019 confirms a trend of falling year-on-year growth from August 2019 onwards following a peak growth rate in mid-2017.

Graph 1: Indian cement production in the first nine months of the year, 2015 – 2019. Source: Indian Ministry of Commerce & Industry.

Graph 2: Year-on-year change in monthly Indian cement production, 2017 – October 2019. Source: Indian Ministry of Commerce & Industry.

Analysts like ICRA have blamed the growth slowdown on the general election in mid-2019 and then the monsoon rains. By region in the six months from April to September 2019 it noted a slowdown in demand due to slowing government projects in northern, eastern and central areas. Labour concerns were reported in the north, centre and Gujarat in the west. Raw material shortages were picked up on such as water in Maharashtra and sand in the east and Andhra Pradesh. Positive growth was reported in Kerala, driven by post-flood reconstruction and low-cost housing schemes, and in Karnataka due to general construction activity. Broadly, UltraTech Cement, the country’s largest cement producer, in its November 2019 investor’s presentation, agreed with this assessment. It noted growth in the northern region and declines elsewhere. Like ICRA it too picked up on low cost housing declaring it to be a ‘key cement consumption driver.’

Away from the figures the main news stories have been continued consolidation such as the auction for Emami Cement and UltraTech Cement’s acquisition of Century Textiles and Industries. The sale of the former for plants in east and central regions has been linked to all the major local producers, including those owned by LafargeHolcim and HeidelbergCement. A report in the Hindu newspaper last week quoted a source placing UltraTech Cement and Nirma Group as the frontrunners with a valuation of around US$700m and an announcement at some point in December 2019. Despite UltraTech Cement’s market dominance nationally, its 17% production share in the east is low compared to its presence elsewhere. Nirma Group’s subsidiary Nuvoco Vistas is one of the smaller producers but, notably, it picked up Lafarge India’s assets in 2016.

Investment in new production capacity has continued with announcements from both JSW Cement and HeidelbergCement in recent weeks about expansion plans well into the mid-2020s. This follows planned projects from Dalmia Bharat Cement and Ramco Cement as well as orders from the JK Cement and Shree Cement. This ties into the capacity growth forecasts of around 120Mt over a similar timescale that the analysts were predicting in the middle of 2019. JM Financial, for example, pinned most of this growth on the south followed by the east and north. However, The India Cements said in November 2019 that it was delaying its expansion projects in Uttar Pradesh due to slowing government spending.

As is usual for a country with a low per capita cement consumption, on the national scale, one of the tensions in the Indian cement industry has been the balance between the capacity utilisation rate and the commissioning of new capacity. Its utilisation rate was below 60% in 2018 and a number of producers started reporting the negative effects of higher input and raw materials costs on their financial results. Knowing when to stop and start capacity growth is critical in this kind of environment. Specifically in India’s case curveballs such as government action on pollution and the country’s growing need for imports of coal as well as a burgeoning waste fuels sector are factors to keep an eye on. Finally, general trends such as UltraTech Cement’s focus on the Indian market, despite buying assets outside the country, are also compelling to watch as it chooses to concentrate on just one country. There are parallels here with other similarly-sized multinational that have also been focusing on core markets elsewhere in the globe.

India: India Cements is planning to spend up to US$200m on a new integrated plant in Madhya Pradesh and a grinding unit near Allahabad in Uttar Pradesh. The move will increase its production capacity to 20Mt/yr by 2023 from 16Mt/yr at present, according to the Hindu newspaper. N Srinivasan, Vice-Chairman and managing director of India Cements said that the company was in the process of buying land in Madhya Pradesh and that it hoped to complete this by late 2019. The company holds mining lease for more than 100Mt of limestone following its acquisition of Springway Mining in Madhya Pradesh in 2018.

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: JK Cement has invested nearly US$65m towards building two new grinding plants at Balasinor in Gujarat and Aligarh in Uttar Pradesh. The Balasinor plant will have a production capacity of 0.7Mt/yr, according to the United News of India. It will cost US$35m to build. The Aligarh plant will have an investment of US$30m.

India: Birla Corporation has entered the construction chemicals and additives business by launching three new products. It is promoting Perfect Plus IWP, Perfect Plus SBR Latex and Perfect Plus Wall Putty, according to the Business Standard newspaper. The products will have been released in Uttar Pradesh and further rollout will follow. The initiative is intended to create a new revenue stream for the cement producer.

India: The board of ACC has approved plans to build a new cement plant at Ametha, District Katnl in Madhya Pradesh. The unit will have a clinker production capacity of 3Mt/yr and a cement production capacity of 1Mt/yr. The subsidiary of Switzerland’s LafargeHolcim plans to expand a 1.6Mt/yr grinding plant at Tikaria, Uttar Pradesh and a 2.2Mt/yr grinding plant also in Uttar Pradesh. The board also agreed to build a 1.1Mt/yr grinding plant at an existing unit at Sindri in Jharkhand. The projects are expected to cost around US$417m.

India: RCCPL, a subsidiary of Birla Corporation, has approved an expansion to its cement grinding plant at Kundanganj in Uttar Pradesh. A new 1.2Mt/yr third line at the unit will increase the plant’s total production capacity to 3.2Mt/yr, according to the Press Trust of India. The upgrade is expected to cost around US$34m and be completed by the end of the 2020 – 2021 financial year. The cement producer is building the new production line to meet demand in central India.

India: HeidelbergCement India’s half-year results have benefitted from improved markets in building materials in central India including Uttar Pradesh. Its sales volumes of cement rose by 10.5% year-on-year to 2.39Mt in the six months to the end of September 2018 from 2.17Mt in the same period in 2017. Its revenue rose by 19.4% to US$138m from US$116m. Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 47% to US$32.1m from US$21.9m.

The subsidiary of Germany’s HeidelbergCement said that although fuel prices rose in the latest quarter this was offset by a waste heat recovery system. The company operates two integrated plants and one grinding plant with a cement production capacity of 5.4Mt/yr.

India: The state government of Uttar Pradesh has identified land on which Jaiprakash Associates will have to plant a plantation as a penalty for conducting mining in a forest. The decision follows a National Green Tribunal order in 2016, according to the Times of India newspaper. UltraTech Cement purchased the Dalla plant from Jaiprakash Associates in 2017 but it has been unable to use the site fully due to legal issues. It will be able to use the site fully once the conditions of the government proposal have been completed. Other conditions of the government deal will force Jaiprakash Associates to pay four times the actual cost of land for its acquisition and to maintain the plantation for 10 years.