Concrete

Who’s gonna bag it?

Published

3 years ago

May 11, 2022

admin

That’s a million-dollar question… or should we say a 10 billion-dollar one, as that is the estimated size of the deal in the ACC and Ambuja bidding war that the Indian cement industry is witnessing.

The cement sector has been in the news since the beginning of the year for cost inflation and the corrections there of. But the impending exit of the Switzerland-based building materials conglomerate Holderind Investments Ltd (Holcim) and the upcoming stake sale in Ambuja Cements and ACC has captured the headlines and imagination of the media. Speculations are rife as contenders are heating up the bidding game in what is turning out to be a game changing manoeuvre.

Holcim Group’s global cement capacity as of the current financial year is 293 mtpa with around 24 per cent of its total capacities housed in India. Ambuja’s
current reported grinding capacity is 31.4 mtpa with plans to expand capacity to 39.9 mtpa by 2024, while ACC’s has been calculated at 34.9 mtpa to be increased
to 39.7 mtpa by the first half of the next year. The company that bags the deal will have a combined pan-India capacity of 66 mtpa, changing the global order.
Sweden, where Holcim is based, has the highest carbon tax rate worldwide at $137 per metric tonne of CO2 equivalent. Earlier this year, Holcim sold several of
its assets in Indonesia, Malaysia and Brazil. The company’s disinvestment in India is in tune with its sustainability strategy to reduce its cement business to around
35 per cent of revenue in 2025, in a bid to lower its carbon footprint. It has even joined the Science-Based Targets initiative detailing its net-zero pathway to 2050.
Holcim would be a torchbearer in ESG within the building material industry. Players like Adani and JSW are leading the race to buy Holcim’s Indian prized assets
including others such as Shree Cement and RS Damani of D Mart making some efforts to explore the deal.

There are two strong plot lines that are emerging from this scenario. One: How will the bidders raise the capital for the buyout and what what is government likely to do, are questions that will lead economic reform discussions in time to come.

Up Next

Dalmia Bharat, FLSmidth join hands to develop more sustainability solutions

Don't Miss

Optimisation is about doing more with less

Concrete

Construction Costs Rise 11% in 2024, Driven by Labour Expenses

Cement Prices Decline 15%, But Labour Costs Surge by 25%

Published

2 days ago

November 19, 2024

admin

The cost of construction in India increased by 11% over the past year, primarily driven by a 25% rise in labour expenses, according to Colliers India. While prices of key materials like cement dropped by 15% and steel saw a marginal 1% decrease, the surge in labour costs stretched construction budgets across sectors.

“Labour, which constitutes over a quarter of construction costs, has seen significant inflation due to the demand for skilled workers and associated training and compliance costs,” said Badal Yagnik, CEO of Colliers India.

The residential segment experienced the sharpest cost escalation due to a growing focus on quality construction and demand for gated communities. Meanwhile, commercial and industrial real estate remained resilient, with 37 million square feet of office space and 22 million square feet of warehousing space completed in the first nine months of 2024.

“Despite rising costs, investments in automation and training are helping developers address manpower challenges and streamline project timelines,” said Vimal Nadar, senior director at Colliers India.

With labour costs continuing to influence overall construction expenses, developers are exploring strategies to optimize operations and mitigate rising costs.

Concrete

Swiss Steel to Cut 800 Jobs

Job cuts due to weak demand

Published

3 days ago

November 18, 2024

admin

Swiss Steel has announced plans to cut 800 jobs as part of a restructuring effort, triggered by weak demand in the global steel market. The company, a major player in the European steel industry, cited an ongoing slowdown in demand as the primary reason behind the workforce reduction. These job cuts are expected to impact various departments across its operations, including production and administrative functions.

The steel industry has been facing significant challenges due to reduced demand from key sectors such as construction and automotive manufacturing. Additionally, the broader economic slowdown in Europe, coupled with rising energy costs, has further strained the profitability of steel producers like Swiss Steel. In response to these conditions, the company has decided to streamline its operations to ensure long-term sustainability.

Swiss Steel’s decision to cut jobs is part of a broader trend in the steel industry, where companies are adjusting to volatile market conditions. The move is aimed at reducing operational costs and improving efficiency, but it highlights the continuing pressures faced by the manufacturing sector amid uncertain global economic conditions.

The layoffs are expected to occur across Swiss Steel’s production facilities and corporate offices, as the company focuses on consolidating its workforce. Despite these cuts, Swiss Steel plans to continue its efforts to innovate and adapt to market demands, with an emphasis on high-value, specialty steel products.

Concrete

UltraTech Cement to raise Rs 3,000 crore via NCDs to boost financial flexibility

UltraTech reported a 36% year-on-year (YoY) decline in net profit, dropping to Rs 825 crore

Published

3 days ago

November 18, 2024

admin

UltraTech Cement, the Aditya Birla Group’s flagship company, has announced plans to raise up to Rs 3,000 crore through the private placement of non-convertible debentures (NCDs) in one or more tranches. The move aims to strengthen the company’s financial position amid increasing competition in the cement sector.

UltraTech’s finance committee has approved the issuance of rupee-denominated, unsecured, redeemable, and listed NCDs. The company has experienced strong stock performance, with its share price rising 22% over the past year, boosting its market capitalization to approximately Rs 3.1 lakh crore.

For Q2 FY2025, UltraTech reported a 36% year-on-year (YoY) decline in net profit, dropping to Rs 825 crore, below analyst expectations. Revenue for the quarter also fell 2% YoY to Rs 15,635 crore, and EBITDA margins contracted by 300 basis points. Despite this, the company saw a 3% increase in domestic sales volume, supported by lower energy costs.

In a strategic move, UltraTech invested Rs 3,954 crore for a 32.7% equity stake in India Cements, further solidifying its position in South India. UltraTech holds an 11% market share in the region, while competitor Adani holds 6%. UltraTech also secured $500 million through a sustainability-linked loan, underscoring its focus on sustainable growth driven by infrastructure and housing demand.