Displaying items by tag: India

India: UltraTech Cement has appointed K K Maheshwari as Managing Director and Additional Director for a period of four years with effect from 1 April 2016. Maheshwari is a chartered accountant with over 38 years of experience.

The post was previously held by O P Puranmalka, who will cease to be the company's Managing Director on 31 March 2016, but will continue as a Non-executive Director from 1 April 2016.

India: Prism Cement Limited has appointed Joydeep Mukherjee as its Chief Executive Officer - HRJ (designate) and Key Managerial Personnel with effect from 16 December 2015. HRJ or H R Jhonson is a division of Prism Cement.

Here are the major stories from the cement industry in 2015 as the year draws to a close. 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..

Will the year of the mega-mergers pay off?
2015 showed a global cement industry that was consolidating. Amongst the multinational producers Lafarge and Holcim finished their merger and HeidelbergCement announced that it was buying Italcementi. Yet alongside this international trend the large Chinese cement producers, who represent over a quarter of the world's production capacity, have continued their own-government-favoured consolidation. The on-going boardroom scuffles at Shanshui have been a lively example of this.

Where this will leave the cement industry as a whole in 2016 is uncertain but mergers and consolidation are no 'magic bullet' for difficult market conditions. After the fanfare subsided from the launch of LafargeHolcim the first quarterly report emerged in late November 2015 reporting falling net sales, net volumes and profit markers.

BRICing it – growth stalls in Brazil, Russia, India and China
The economies of the BRIC nations – Brazil, Russia, India and China – have all suffered in 2015. Brazil and Russia are enduring recessions. Growth in China and India is slowing down. All of this has a knock on in their respective construction sectors.

Over in China, we report today that production capacity utilisation is estimated to be 65% and that cement companies lost US$2.63bn in the first nine months of 2015. The same source says that at least 500Mt/yr of production capacity needs to be eliminated. That represents nearly a third of Chinese total production capacity or about an eighth of global cement production capacity.

Multinationals African plans accelerate
One consequence of all these international mergers is the transformation of the situation in Africa. Suddenly LafargeHolcim has become the biggest cement producer on the continent, followed by HeidelbergCement, Dangote and PPC. Africa becomes the big hope for the multinationals as established markets continues to flounder and growth in Asian and South American markets slackens. Perversely though, should African development growth slow it may cast a poor light on the mega-mergers of 2015 in the coming years.

Dangote Cement is growing fast and it may overtake HeidlebergCement soon as the second largest cement producer in Africa. Yet it may not be plain sailing for the Nigerian company. As we report today, sources in Gambia say that Dangote's plans to open a cement plant are on hold in part to protect its domestic suppliers.

The Gambian government has denied a licence to Dangote to open a cement plant. Dangote has built its empire in recent years by forcing out cement importers from Nigeria. As it expands in other countries in Africa it may now be facing a backlash to playing the nationalist card at home as other countries too desire 'self-sufficiency' in cement production.

Iran shakes off the sanctions
In July 2015 Iran and the P5+1 countries agreed to lift trade sanctions from Iran. The implications for the local cement industry are immense given that the country was the joint-fourth largest producer in 2014, based on United States Geological Survey data. Remove the sanctions and, in theory, the local economy should boom leading to plenty of construction activity. Notably, at the launch of LafargeHolcim the new CEO Eric Olsen was asked for the new group's position on Iran. It didn't have one but this will change.

China expands along the Silk Road
China's cement industry may be suffering at home but it has been steadily expanding in Central Asia. Notably Huaxin Cement has plants in Kazakhstan and Tajikistan and it has new projects in the pipeline. Business may be down at home but steady advancement abroad may offer the Chinese cement industry the lifeline it needs.

Cop out at COP21?
And finally... The 2015 Paris Climate Conference announced a diplomatic coup d'etat in December 2015. However, it apparently forgot to include any binding targets. The Cement Sustainability Initiative (CSI) pre-empted the decision by announced its aim to reduce CO₂ emissions by clinker producers by 20 - 25% by 2030... Provided the entire cement industry follows its lead. Cement plants burning vast swathes of dirty fossil fuels may not have to worry quite yet.

For more a more detailed look at trends in the cement industry check out the Global Cement Top 100 Report in the December 2015 issue of Global Cement Magazine.

Global Cement Weekly will return on 6 January 2016. Enjoy the holidays if you have them.

The past week has seen several quarterly financial results from producers in the world's second-largest cement industry: India. So far, they do not make for a great read from an economic perspective, although some players, including Birla Group and Sanghi Cement are yet to show their hands.

So let's kick off. For the quarter that ended on 30 September 2015, LafargeHolcim subsidiary Ambuja Cements saw its net profit slide by 36% year-on-year to US$23.6m compared to the same period of 2014. Its income fell by 4% to US$324m as it battled a one-off charge. ACC, LafargeHolcim's other Indian subsidiary, saw a profit of US$17.5m for the quarter, a year-on-year fall of 40% compared to 2014. Not great for the global number one player.

Other players to announce so far have included JK Cements, which reported a 58% fall in consolidated net profit to US$2.1m. Meanwhile, Century Textiles, which owns Century Cement, fared even worse. It actually posted a loss compared to a marginal profit in 2014, despite an increase in total income.

It has not been all doom and gloom however. UltraTech Cement, while it reported a drop in profit, was not as badly affected as the firms listed above. It recorded a 3.9% fall to a net profit of US$59.7m for the quarter, down from US$62.3m in the same period of 2014. This was reported as being better than expected according to a senior research analyst at Angel Broking, perhaps hinting at shaky ground under even these results.

So far, the exception to the lower profits and losses has been India Cements Ltd (ICL), which posted an almost five-fold growth in its net profit. It profit grew from US$1.14m to US$6.26m, which it said stemmed mainly from improved operating parameters and substantial reductions in its variable costs. Its operating profit grew to US$35.4m from US$27.9m. It expects performance to improve as it increases its capacity utilisation rate up, currently languishing at just 60%.

Does the company provide a model for other producers to follow? Perhaps. The company's managing director and vice-chairman of ICL, N Srinivasan, said that the company was poised for improved conditions in its markets. In the company's results he said, "Going forward, we see better times ahead. We had a tough time for two years and have achieved a turnaround by cutting costs and maintaining a healthy cement price." The fact that ICL has managed to 'maintain a healthy cement price' in times of low requires scrutiny in a separate column.

However, a possible take-away from the results released so far is that the larger producers seem to have greater immunity to the problems surrounding over-supply in India. Economies-of-scale and the ability to spread risk around different Indian markets tends to favour larger players like UltraTech. Conversely, a smaller player that finds itself 'stuck' in one of the weaker regional markets, must just sit tight and weather the storm. Either that or it can make itself into a strategic acquisition target for one of the larger groups.

We are still awaiting results from other players in the Indian market, but with low demand, it would be foolish to expect them to be significantly different from the above. Given this, two key factors will help determine whether the decline in profits continues or not. Firstly, India's Modi government is promising large-scale infrastructure projects, which would help boost demand for cement. The industry has heard such promises in the past, however, and may chose to be skeptical. Secondly, it is important to remember that lower profits are being seen at the moment, even despite lower coal costs. Any upward change in these costs and the pace may become too fast for some of the country's smaller producers.

India: HeidelbergCement India has reported that Daniel R Fritz has tendered his resignation from the position of Director of the company with effect from close of business on 29 September 2015.

India: UltraTech Cement Ltd has reported that the tenure of S Rajgopal, Independent Director of the company, ended upon the conclusion of the annual general meeting of the company held on 28 August 2015.

India: Prism Cement Limited has appointed Vivek Krishan Agnihotri as a director following the resignation of the previous director. The Board has also appointed Agnihotri as the executive director of cement, effective from 17 August 2015.

India: Mangalam Cement Limited has announced that Anil Kumar Mandot has resigned from the post of CFO. The board of directors has appointed Yaswant Mishra as CFO with effect from 7 August 2015. This is in addition to his present designation of president (corporate).

Ireland's CRH this week submitted a binding bid for various Indian assets of LafargeHolcim that will be sold by the newly-formed group as a condition of its formation. CRH will compete for the assets with HeidelbergCement and Barings Private Equity, which sold its stake in the same assets to Lafarge India prior to the merger. According to the Irish Examiner, the scale of the bids is in the region of US$600 - 800m. On the back-burner is another deal that could see CRH snap up a 74% stake in Tongyang Cement and Energy in South Korea.

These moves are consistent with CRH's new-found commitment to rapid expansion into new markets and an apparent desire to become a far bigger player in the global cement industry. It is in line with the sentiment expressed by its CEO Albert Manifold back in February 2015, when he stated in a letter to shareholders that CRH had given 'hell or high water commitments to Lafarge and Holcim' regarding its earlier Euro6.5bn purchase of assets as part of the LafargeHolcim merger. At that point CRH appeared almost 'over committed' to the huge deal, with some analysts asking whether or not CRH had paid too much.

Let's stop a minute to look at where CRH finds itself. Europe, its main cement market, is still under siege from a general lack of investment, both private and public. The UK is likely to perform well, although an ongoing Competition Enquiry at Irish Cement is an unwelcome distraction. CRH's new eastern European ventures are all in fairly small markets. Poland, in which CRH operates Grupa Ozarow, appears to act as the model for these acquisitions, but they remain at risk from the prolonged Eurozone crisis.

In Brazil, another new market, CRH is 'up against it,' with massive competition from Votorantim and InterCement, smaller local players and LafargeHolcim. A decline in cement demand here so far in 2015 year-on-year is not a good omen. Neither is Votorantim's decision this week to turn one of its plants into a distribution centre due to continued low demand.

In Canada CRH will gain 3.1Mt/yr of former Holcim capacity, around 20% of that market's capacity. This, along with its 2.7Mt/yr acquisition in the Philippines, probably represents CRH's best opportunities out of its newly-acquired assets.

However, with the confirmation that it intends to invest in 5Mt/yr of former Lafarge assets in India, a market not exactly enjoying buoyant conditions at present, CRH appears to be further exposing itself to another 'sub-optimal' market. We recently reported on the 100Mt/yr of capacity that is sitting idle in India at present , hardly a situation to instil confidence in a new entrant.

Whether CRH will be forced to leave some of these markets, buy into others or otherwise shuffle its cement assets to better suit the world economy remains to be seen.

Meanwhile, on the other side of the aforementioned mega-deal, LafargeHolcim gave the first indications of how it will go about re-branding in various markets this week. While a new brand will be introduced in markets with 'a balanced overlap' of former Lafarge and Holcim assets, countries without overlap will see existing Lafarge or Holcim 'brands' become 'endorsed' by LafargeHolcim. In countries with unbalanced overlap, either Lafarge or Holcim will be the endorsed brand.

Of course, in every market that it has bought a LafargeHolcim asset, CRH will also have to re-brand. So far it has announced that its operations in France will be branded as 'Orsima' from 1 August 2015. No elaboration on how this name was derived has been provided, but let's hope that there are not too many other new names to remember!

Tamil Nadu's subsidised cement scheme attracted negative attention this week when a prominent Indian politician called for it to be investigated. PMK party founder S Ramadoss alleged in a statement covered by Indian press that cement from the scheme is either being not being procured at the levels the state government are declaring or it is being sold on the black market.

Without investigating Ramadoss' comments too deeply in this article the Amma scheme does deserve looking at along with the pressures that have created it in the Indian cement market. The scheme takes its name from the nickname, Amma or mother, of the current Chief Minister of Tamil Nadu J Jayalalithaa. It follows previous populist subsidy schemes such as Amma Vegetables, Amma Water and Amma Theatres. As such it is exactly the kind of initiative you might expect a rival politician might criticise.

The scheme was created in mid-2014 to cope with fluctuating cement prices in the state. At that time Tamil Nadu consumed 1.7 – 1.8Mt/month of cement and around 400,000 – 450,000t was supplied by Andhra Pradesh. Subsequently prices rose in the neighbouring state, the purchases from Andhra Pradesh fell to 150,000 – 300,000t/month and the price went up in Tamil Nadu. The Amma Cement Scheme was created in response. It was intended to purchase 200,000t/month from private manufacturers. This would then be sold in eligibility bands with limits on the number of cement bags that could be bought dependent on size and type of project.

When the scheme launched in January 2015 the Times of India saw it as a politically canny move that would benefit middle-income rural citizens who could afford to build their own homes. Urban residents are less likely to build their own homes and so they wouldn't use the scheme as much. For example, at the start of the scheme sales in one rural district massively overtook sales in the city of Chennai.

Looking nationally, in July 2015 the Cement Manufacturers' Association (CMA) cried out that 100Mt/yr of India's production capacity was not being used due to supply and demand mismatching. It placed the value of this 'dead investment' at US$8.66bn. At present, the CMA places installed capacity at 380Mt/yr and utilisation at 275Mt/yr (70%). Previously utilisation was 94% in 2007 – 2008. Locally, Global Cement Magazine placed cement production capacity in Tamil Nadu at 33.9Mt/yr at the start of 2015. Demand was recorded at 20Mt in 2014, giving the state a capacity utilisation of 60%.

Cement demand was reported down in the southern states of India in 2014. Producers subsequently cut production to hold prices and stem their losses. With the CMA hoping for national infrastructure and housing projects to whip up demand generally, it seems possible that producers have little incentive to provide cement for the Amma scheme. One economist the Times of India quoted wondered whether the private producers would continue to sell cement to the state government at the necessary volumes. Sure enough, one of Ramadoss' criticisms of the scheme is that it may not be procuring the targeted volumes. If this is the case then the state government will have to pay more for their cement to hit the volumes they want.