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Penalty on cement players credit neutral – India ratings

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The Competition Commission of India’s penalty of over Rs 6,700 crore on 11 cement companies amounts to 20-75 per cent of the players’ 2015-16 operating profits, however, the move is credit neutral due to their low leverage levels, said India Ratings and Research.
"Most of the companies (eight out of 11) maintain a low leverage and thus will be in a position to absorb the burden, in the event the penalty has to be paid. The penalty, however, will put pressure on the credit metrics for companies with relatively high levels of leverage," the ratings agency said in a statement.
Fair trade regulator CCI in its order dated August 31, 2016 imposed a penalty of Rs 6,700 crore on 11 cement companies for alleged cartelisation.
"Maintaining high prices in the face of declining capacity utilisation has over the past few years allowed cement companies to contain decline in profits," it said.
India Ratings said it maintains a stable outlook for cement manufacturers for 2016-17 and expects the cement industry to grow in the range of 4 per cent-6 per cent during 2016-17.
"A favourable monsoon after two consecutive bad years, can give a leg-up to rural demand, and government initiatives (such as ‘Housing for All’ and the thrust on infrastructure activities) are expected to improve overall cement demand with a lag and show signs after FY17," the rating agency said

Concrete

CCU testbeds in Tamil Nadu

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Tamil Nadu is set to host one of India’s five national carbon capture and utilisation (CCU) testbeds, aimed at reducing CO2 emissions in the cement industry as part of the country’s 2070 net-zero goal, as per a news report. The facility will be based at UltraTech Cement’s Reddipalayam plant in Ariyalur, supported by IIT Madras and BITS Pilani. Backed by the Department of Science and Technology (DST), the project will pilot an oxygen-enriched kiln capable of capturing up to two tonnes of CO2 per day for conversion into concrete products. Additional testbeds are planned in Rajasthan, Odisha, and Andhra Pradesh, involving companies like JK Cement and Dalmia Cement. Union Minister Jitendra Singh confirmed that funding approvals are underway, with full implementation expected in 2025.

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Concrete

JSW Cement gears up for IPO

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JSW Cement has set the price range for its upcoming initial public offering(IPO) at US$1.58 to US$1.67 per share, aiming to raise approximately US$409 million. As reported in the news, around US$91 million from the proceeds will be directed towards partially financing a new integrated cement plant in Nagaur, Rajasthan. Additionally, the company plans to utilise US$59.2 million to repay or prepay existing debts. The remaining capital will be allocated for general corporate purposes.

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Concrete

Cement industry to gain from new infrastructure spending

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As per a news report, Karan Adani, ACC Chair, has said that he expects the cement industry to benefit from the an anticipated US$2.2tn in new public infrastructure spending between 2025 and 2030. In a statement he said that ACC has crossed the 100Mt/yr cement capacity milestone in April 2025, propelling the company to get closer to its ambitious 140Mt/yr target by the 2028 financial year. The company’s capacity corresponds to 15 per cent of an all-India installed capacity of 686Mt/yr.

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