Concrete

Voting for Change

Published

5 months ago

June 13, 2024

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Lok Sabha elections are done. The results are out. Those who have won are celebrating and those who have lost are recouping. But the political tug-of-war has just begun. We witnessed the immediate repercussions of the Lok Sabha election results with BSE Sensex ending 4,390 points down and Nifty plunging 5.93 per cent. Market volatility is synonymous with political turbulence. Dalmia Bharat, India Cements, Ramco Cements, HCC and Reliance Infrastructure were amongst the nearly 300 stocks that hit a 52-week low following the election results. In the wake of the election results, analysts and traders alike are keeping their eyes trained on the alliances and collaborations unfolding at the Centre, as these are likely to have a deep impact on the stock market.
Amidst all the volatility comes a positive forecast from the Investment Information and Credit Rating Agency (ICRA). In a report on the consolidation trend in the cement Sector, ICRA has highlighted how the market share of the top five cement companies increased from 45 per cent in 2015 to 54 per cent in 2023 and is anticipated to reach 55 per cent by 2025. This consolidation is driven by strong demand prospects, leading companies to expand through mergers and acquisitions.
Consolidation also facilitates synergies that enhance cost reduction and operational efficiency, while acquisitions grant access to additional capacities and resources, resulting in significant savings on capital expenditures. In terms of outlook for the cement sector, the revenue growth is projected at 9-10 per cent, with operating margins expected to improve by 80-100 basis points. While debt levels are expected to rise in FY25 due to capital expenditures, debt protection metrics are predicted to remain favourable.
This report throws an optimistic light on the cement industry. This sector’s resilience and strategic expansions suggest a stable outlook amid broader market uncertainties, making the India cement saga a story worth narrating to the world.

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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

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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

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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

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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.