Process

UltraTech buys JaypeeÂ´s cement plants for Rs.15,900 crore

Published

10 years ago

July 4, 2016

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Both the parties have mutually agreed to exclude the Shahabad plant in Karnataka from the transaction. The total enterprise value is Rs 15,900 crore.
Debt-ridden Jaiprakash Associates has sold off part of its cement business to the Kumar Mangalam Birla-led UltraTech for Rs 15,900 crore, marking the biggest consolidation in the cement sector by end of March 2016.

The size of the deal has been reduced from Rs 16,500 crore as Jaiprakash Associates Ltd (JAL) decided not to sell its cement plant in Karnataka with a capacity of 1.2 million tonnes per annum (mtpa).

The cement business comprises plants with an aggregate capacity of 17.2 mtpa spread over the states of Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, besides a grinding unit of 4 mtpa capacity, which is currently under implementation in UP.

Both the parties have mutually agreed to exclude the Shahabad plant in Karnataka from the transaction.

?The total enterprise value is Rs 15,900 crore and additional amount of Rs 470 crore shall be paid by UTCL for completion of the grinding unit under implementation,?a communication said.

The deal will help JP Associates reduce its debt, which runs into thousands of crores of rupees.

The transaction is subject to various regulatory approvals including stock exchanges, Competition Commission of India, shareholders and creditors as well as sanction of scheme of arrangement by the High Courts of Bombay and Allahabad.

?The consummation of the transaction is expected to take 9-12 months,? JAL said in the filing.

Post the deal, JAL will retain 10.6 mtpa cement capacity spread over the states of Madhya Pradesh, Uttar Pradesh, Andhra Pradesh and Karnataka.

These sales have helped bring down debt to some extent. ICICI Bank has actively worked with the management of Jaypee to sell its entire cement business and this business is now being sold to the Aditya Birla group, JAL added.

In a separate filing, UltraTech Cements Ltd (UCTL) said: ?Upon consummation, UltraTech?s cement capacity will stand augmented to 91.1 mtpa including its overseas operations.?

It however said that the acquisition is expected to take around 12-14 months to consummate and is subject to receipt of applicable statutory/regulatory approvals.

Blackstone, JSW and Ramco submit bid for LafargeHolcim?s cement assets Private equity giant Blackstone and the Sajjan Jindal-led JSW Cement are among the bidders for LafargeHolcim?s Indian cement assets worth Rs 10,000 crore. ?JSW Cement, Blackstone and Ramco Cements have submitted bids to acquire LafargeHolcim?s 11 mtpa cement capacity, which is worth around Rs 10,000 crore.

The bidders are looking for partners to acquire the cement assets,?sources said. Ireland-based building material group CRH Plc has also shown ?strong interest? in acquiring LafargeHolcim?s Indian assets, they said, but did not elaborate whether the group has submitted a bid for it. In February, Swiss cement giant LafargeHolcim said it has got fair trade regulator CCI?s approval for a new divestment plan for its India business. LafargeHolcim is selling its three cement plants and two grinding stations with a capacity of 11 mtpa. It comprises an integrated cement unit at Sonadih (Chhattisgarh) and a cement grinding unit at Jojobera (Jharkhand). Earlier Birla Corp was to acquire Lafarge?s cement business along with Concreto and PSC brands.

COMPAT stops sale of LafargeHolcim?s sale of assets in India
The Competition Appellate Tribunal (COMPAT), in an appeal preferred by Dalmia Cement (Bharat) Limited (Dalmia) has stayed the sale of Franco-Swiss cement maker LafargeHolcim?s 11-million tonne (mnt) cement capacity in India held under Lafarge India Pvt Limited.

The sale of Lafarge India?s shareholding was made in pursuance of an order passed on 2 February 2016 by the competition regulator, Competition Commission of India (CCI). COMPAT passed an interim order staying the operation of the order dated 2 February 2016.

COMPAT also pointed out that the CCI had no jurisdiction to entertain an alternative proposal submitted by the parties or pass the order dated 2 February 2016.

The CCI had earlier by a final order dated 30 March 2015, directed that the merger between Holcim Limited and Lafage S.A. would have an appreciable adverse effect on the market for grey cement in eastern India (comprising the states of Chhattisgarh, Odisha, Jharkhand, Bihar and West Bengal) and as such directed the parties to divest two plants owned by Lafarge viz., the Sonadih plant and the Jojobera plant. The CCI further directed that the third party acquiring the two plants should not have installed capacity exceeding 5 per cent of the total installed capacity in the eastern region. The approval to the merger was subject to successful divestment by the parties.

It appears that the parties were unable to implement the above stated direction of divestiture and instead offered to sell the entire of Lafarge?s India business. The CCI by its order dated 2 February 2016 approved this new proposal. Dalmia filed an appeal before the COMPAT on 5 April 2016 challenging the validity of the order dated 2 February 2016 on the ground that CCI has no jurisdiction to approve a new approval after a final order approving a combination subject to modifications has been passed under Section 31 of the Act. It also challenged the extension of the 5 per cent restriction in the initial order applicable to the sale of the two plants to the sale of entire India business ? which has barred many existing players from bidding for Lafarge India Pvt Ltd?s shareholding.

The COMPAT agreed with Dalmia that the CCI had no jurisdiction to pass the order and the parties do not have the power to move any application for suggesting changes to a modification approved by a final order under Section 31 of the Act. The COMPAT has granted interim relief staying the operation of the order dated 2 February 2016, thereby staying the sale of the shareholding of Lafarge India Pvt. Ltd.

Ajay Piramal invests Rs 256 cr in Sanghi Cement
Piramal Enterprises has invested Rs 256 crore in Sanghi Industries, a Kutch-based cement company with production capacity of 4.1 million tonnes a year (mtpa). The investment made through non-convertible debentures would enable Sanghi to repay some of its debts ahead of schedule and save on interest outgo. Earlier, Ajay Piramal had shown interest in bidding for the 11 mtpa cement asset put on the block by Lafarge. Ever since Piramal sold his flagship pharma business for a whopping $3.8 billion some six years ago, he has been scouting for investment opportunities and now seems bullish on the cement sector on the back of the governmentGC?s enhanced spending in infrastructure.

Sanghi Industries? production capacity accounts for about 16 per cent of Gujarat?s production capacity. It also plans to add another 4 mtpa on the surplus land at its existing plant. The capacity addition would be made at a competitive cost of less than $50 a tonne, said Sanghi Industries in a statement.

Mining Act amended, to boost M&A
The Rajya Sabha has amended the Mining Act to allow transfer (versus auction previously) of captive mining leases (which were granted prior to auction). This action was already approved by the Lok Sabha. The draft change to the MMDR (Mining) Act 2015 as introduced in the Lok Sabha in March 2016 is:
?Provided that where a mining lease has been granted otherwise than through auction and where mineral from such mining lease is being used for captive purpose, such mining lease may be permitted to be transferred subject to compliance of such terms and conditions and payment of such amount or transfer charges as may be prescribed.? The passage of this amendment would facilitate M&A in the broader cement/metals/mining/steel sectors. This could now facilitate pending deals, including the $2.5 bn acquisition of cement assets announced by UltraTech in February 2016. Seven major M&A deals have been announced/completed in the last three years in the cement sector with a total capacity of 41 million tonne (10 per cent of total capacity) and a value of $4.3 bn.

Concrete

Steel: Shielded or Strengthened?

CW explores the impact of pro-steel policies on construction and infrastructure and identifies gaps that need to be addressed.

Published

3 weeks ago

January 31, 2026

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Going forward, domestic steel mills are targeting capacity expansion
of nearly 40 per cent through till FY31, adding 80-85 mt, translating
into an investment pipeline of $ 45-50 billion. So, Jhunjhunwala points
out that continuing the safeguard duty will be vital to prevent a surge
in imports and protect domestic prices from external shocks. While in
FY26, the industry operating profit per tonne is expected to hold at
around $ 108, similar to last year, the industry’s earnings must
meaningfully improve from hereon to sustain large-scale investments.
Else, domestic mills could experience a significant spike in industry
leverage levels over the medium term, increasing their vulnerability to
external macroeconomic shocks.(~$ 60/tonne) over the past one month,
compressing the import parity discount to ~$ 23-25/tonne from previous
highs of ~$ 70-90/tonne, adds Jhunjhunwala. With this, he says, “the
industry can expect high resistance to further steel price increases.”

Domestic HRC prices have increased by ~Rs 5,000/tonne
“Aggressive
capacity additions (~15 mt commissioned in FY25, with 5 mt more by
FY26) have created a supply overhang, temporarily outpacing demand
growth of ~11-12 mt,” he says…

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Process

Price hikes, drop in input costs help cement industry to post positive margins: Care Ratings

Published

4 years ago

October 21, 2021

admin

Region-wise,the southern region comprises 35% of the total cement capacity, followed by thenorthern, eastern, western and central region comprising 20%, 18%, 14% and 13%of the capacity, respectively.

The cement industry is expected to post positive margins on decent price hikes over the months, falling raw material prices and marked drop in overall production costs, said an analysis of Care Ratings.

Wholesale and retail prices of cement have increased 11.9% and 12.4%, respectively, in the current financial year. As whole prices have remained elevated in most of the markets in the months of FY20, against the corresponding period of the previous year.

Similarly, electricity and fuel cost have declined 11.9% during 9M FY20 due to drop in crude oil prices. Logistics costs, the biggest cost for cement industry, has also dropped 7.7% (selling and distribution) as the Railways extended the benefit of exemption from busy season surcharge. Moreover, the cost of raw materials, too, declined 5.1% given the price of limestone had fallen 11.3% in the same aforementioned period, the analysis said.

According to Care Ratings, though the overall sales revenue has increased only 1.3%, against 16% growth in the year-ago period, the overall expenditure has declined 3.2% which has benefited the industry largely given the moderation in sales.

Even though FY20 has been subdued in terms of production and demand, the fall in cost of production has still supported the cement industry by clocking in positive margins, the rating agency said.

Cement demand is closely linked to the overall economic growth, particularly the housing and infrastructure sector. The cement sector will be seeing a sharp growth in volumes mainly due to increasing demand from affordable housing and other government infrastructure projects like roads, metros, airports, irrigation.

The government’s newly introduced National Infrastructure Pipeline (NIP), with its target of becoming a $5-trillion economy by 2025, is a detailed road map focused on economic revival through infrastructure development.

The NIP covers a gamut of sectors; rural and urban infrastructure and entails investments of Rs.102 lakh crore to be undertaken by the central government, state governments and the private sector. Of the total projects of the NIP, 42% are under implementation while 19% are under development, 31% are at the conceptual stage and 8% are yet to be classified.

The sectors that will be of focus will be roads, railways, power (renewable and conventional), irrigation and urban infrastructure. These sectors together account for 79% of the proposed investments in six years to 2025. Given the government’s thrust on infrastructure creation, it is likely to benefit the cement industry going forward.

Similarly, the Pradhan Mantri Awaas Yojana, aimed at providing affordable housing, will be a strong driver to lift cement demand. Prices have started correcting Q4 FY20 onwards due to revival in demand of the commodity, the agency said in its analysis.

Industry’s sales revenue has grown at a CAGR of 7.3% during FY15-19 but has grown only 1.3% in the current financial year. Tepid demand throughout the country in the first half of the year has led to the contraction of sales revenue. Fall in the total expenditure of cement firms had aided in improving the operating profit and net profit margins of the industry (OPM was 15.2 during 9M FY19 and NPM was 3.1 during 9M FY19). Interest coverage ratio, too, has improved on an overall basis (ICR was 3.3 during 9M FY19).

According to Cement Manufacturers Association, India accounts for over 8% of the overall global installed capacity. Region-wise, the southern region comprises 35% of the total cement capacity, followed by the northern, eastern, western and central region comprising 20%, 18%, 14% and 13% of the capacity, respectively.

Installed capacity of domestic cement makers has increased at a CAGR of 4.9% during FY16-20. Manufacturers have been able to maintain a capacity utilisation rate above 65% in the past quinquennium. In the current financial year due to the prolonged rains in many parts of the country, the capacity utilisation rate has fallen from 70% during FY19 to 66% currently (YTD).

Source:moneycontrol.com

Process

Wonder Cement shows journey of cement with new campaign

Published

4 years ago

October 21, 2021

admin

The campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV…

ETBrandEquity

Cement manufacturing company Wonder Cement, has announced the launch of a digital campaign ‘Har Raah Mein Wonder Hai’. The campaign has been designed specifically to run on platforms such as Instagram, Facebook and YouTube.

#HarRaahMeinWonderHai is a one-minute video, designed and conceptualised by its digital media partner Triature Digital Marketing and Technologies Pvt Ltd. The entire journey of the cement brand from leaving the factory, going through various weather conditions and witnessing the beauty of nature and wonders through the way until it reaches the destination i.e., to the consumer is very intriguing and the brand has tried to showcase the same with the film.

Sanjay Joshi, executive director, Wonder Cement, said, "Cement as a product poses a unique marketing challenge. Most consumers will build their homes once and therefore buy cement once in a lifetime. It is critical for a cement company to connect with their consumers emotionally. As a part of our communication strategy, it is our endeavor to reach out to a large audience of this country through digital. Wonder Cement always a pioneer in digital, with the launch of our IGTV campaign #HarRahMeinWonderHai, is the first brand in the cement category to venture into this space. Through this campaign, we have captured the emotional journey of a cement bag through its own perspective and depicted what it takes to lay the foundation of one’s dreams and turn them into reality."

The story begins with a family performing the bhoomi poojan of their new plot. It is the place where they are investing their life-long earnings; and planning to build a dream house for the family and children. The family believes in the tradition of having a ‘perfect shuruaat’ (perfect beginning) for their future dream house. The video later highlights the process of construction and in sequence it is emphasising the value of ‘Perfect Shuruaat’ through the eyes of a cement bag.

Tarun Singh Chauhan, management advisor and brand consultant, Wonder Cement, said, "Our objective with this campaign was to show that the cement produced at the Wonder Cement plant speaks for itself, its quality, trust and most of all perfection. The only way this was possible was to take the perspective of a cement bag and showing its journey of perfection from beginning till the end."

According to the company, the campaign also marks Wonder Cement being the first ever cement brand to enter the world of IGTV. No other brand in this category has created content specific to the platform.