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Demonetisation impacts cement industry

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With majority of cement bags sold at the retail level in cash, new purchases would be hit, analysts say.
Cement sector may witness 15-20 per cent drop in demand after the currency demonetisation and subdued 3 per cent growth in the fourth quarter of this fiscal, a Deutsche Bank Markets Research report said. According to the report, up turn is expected only in FY20 as compared to FY19 earlier. ?We see some infra sector demand offsetting weakness in demand from the housing segment. We may also see a gradual reduction in mortgage rates, which could bring back some genuine demand,? said Chockalingam Narayanan, Research Analyst. He added, ?Looking at the demand-supply model, we expect the regional balance to first shift in favour in Northern and Central India. Eastern India is likely to see the largest reduction in utilisation over the next 12-18 months? The cement sector is hopeful that infrastructure projects to offset weakness in realty sector. With the government?s balance sheet likely to be in a much better fiscal position, the industry expects a sharp pick-up in infra demand – in line with the government?s vision to push public spending. Currently, only road and railway sector spending is primarily driven by Central Government agencies. State government finances, on the other hand, may come under some pressure, as a good 5-10 per cent of their revenue receipts come from the property sector. To that extent, their infrastructure sector spend on rural roads, urban development projects (metro/mono rail), affordable housing, irrigation, etc may see a dent. ?This is likely to be mitigated if the Central Government passes on a higher proportion of its improved finances to the states,? the report said. The sector was expecting 55-65 per cent of demand from housing (35-40 per cent rural and 20-25 per cent urban); 17-20 per cent from infra and 25 per cent from institutions and commercial realty. In urban housing, the already subdued levels over the last 3-4 years may be prolonged, but may not necessarily deteriorate, the report said. Commenting on cement prices, Narayanan said,?Following demand volatility, we anticipate a correction in cement prices in the near term. Looking at our cost curve analysis, however, we don?t expect a very sharp drop in cement prices on a sustained basis. Currently, a good 30 per cent of players are not breaking even on a cash cost basis. If this were to take into account, the recent spike in fuel costs of both pet coke and imported coal, at current prices over 43 per cent of the industry would not be at break even. To that extent the room for prices to correct on a sustained basis looks low, he said.

Speaking on demonetisation, Sanjay Ladiwala, Chairman, Cement Stockists & Dealers Association of Bombay, commented, ?November will see a drop of 10 per cent in sales volume. It may continue in December too in case the current cash withdrawal limits don?t change.? Real estate sector will witness pain due to demonetisation for a longer time than other sectors, said Ladiwala adding that correction in land prices too are expected. However, infrastructure segment is unlikely to be affected, he said. For the cement sector, he said although the sales may not grow at the rate of 5-5.5 per cent as envisaged earlier, it will definitely be higher than last year. However, the demand will be lower till the end of next year, he added.

N. Srinivasan, Vice-Chairman and Managing Director, The India Cements Ltd, commenting on demonetisation, said, ?So far, in the last 15 days, we have not seen fall in sales. It is business as usual for our company. Recently, I went to some markets in Chennai. I met dealers and stockists. As it is their bread and butter business, they are somehow managing the situation. They are also said to be using cheques apart from swipe machines for card payments,? he pointed out. Asserting that cement consumption won?t go away, he said that cement demand would not be abandoned.?It will get slightly postponed by a few months. Once the liquidity is restored in the system and more new currency notes come into circulation, it will ease the situation in the market and help the trade do business without any hardship,? he said.

Real estate is generally seen as an industry where cash works and cement as an ingredient in construction is not insulated. With majority of cement bags sold at the retail level in cash, new purchases would be hit, analysts said.

?Cement is an organised sector and there is no problem between suppliers and wholesalers. The problem is at the retail level where customers deal in cash,? said HM Bangur, Chairman and Managing Director, Shree Cement. According to him, unorganised parts of the construction industry like bricks and sand would be under pressure due to demonetisation.

(Courtesy: The Hindu, Moneycontrol.com)

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Economy & Market

Hindalco Buys US Speciality Alumina Firm for $125 Million

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This strategic acquisition marks a significant investment in speciality alumina, a key step by Aditya Birla Group’s metals flagship towards becoming future-ready by scaling its high-value, technology-led materials portfolio.

Hindalco Industries, the world’s largest aluminium company by revenue and the metals flagship of the $28 billion Aditya Birla Group, has announced the acquisition of a 100 per cent equity stake in US-based AluChem Companies—a prominent manufacturer of speciality alumina—for an enterprise value of $125 million. The transaction will be executed through Aditya Holdings, a wholly owned subsidiary.

This acquisition represents a pivotal investment in speciality alumina and advances Hindalco’s strategy to expand its high-value, technology-led materials portfolio.

Hindalco’s speciality alumina business, a key pillar of its value-added strategy, has delivered consistent double-digit growth in recent years. It has emerged as a high-growth, high-margin vertical within the company’s portfolio. As speciality alumina finds expanding applications across electric mobility, semiconductors, and precision ceramics, the deal positions Hindalco further up the innovation curve, enabling next-generation alumina solutions and value-accretive growth.

Kumar Mangalam Birla, Chairman of Aditya Birla Group, called the acquisition an important step in their global strategy to build a leadership position in value-added, high-tech materials.

“Our strategic foray into the speciality alumina space will not only accelerate the development of future-ready, sustainable solutions but also open new pathways to pursue high-impact growth opportunities. By integrating advanced technologies into our value chain, we are reinforcing our commitment to self-reliance, import substitution, and building scale in innovation-led businesses.”

Ronald P Zapletal, Founder, AluChem Companies, said the partnership with Hindalco would provide AluChem the ability and capital to scale up faster and build scale in North America.

“AluChem will benefit from their world-class sustainability and safety standards and practices, access to integrated operations and a consistent, reliable raw material supply chain. Their ability to leverage R&D capabilities and a talented workforce adds tremendous value to our innovation pipeline, helping drive market expansion beyond North America.”

An Eye on the Future

The global speciality alumina market is projected to grow significantly, with rising demand for tailored solutions in sectors such as ceramics, electronics, aerospace, and medical applications. Hindalco currently operates 500,000 tonnes of speciality alumina capacity and aims to scale this up to 1 million tonnes by FY2030.

Commenting on the development, Satish Pai, Managing Director, Hindalco Industries, said the deal reinforced their commitment to innovation and global expansion.

“As alumina gains increasing relevance in critical and clean-tech sectors, AluChem’s advanced chemistry capabilities will significantly enhance our ability to serve these fast-evolving markets. Importantly, it deepens our high-value-added portfolio with differentiated products that drive profitability and strengthen our global competitiveness.”

AluChem adds a strong North American presence to Hindalco’s portfolio, with an annual capacity of 60,000 tonnes across three advanced manufacturing facilities in Ohio and Arkansas. The company is a long-standing supplier of ultra-low soda calcined and tabular alumina, materials prized for their thermal and mechanical stability and widely used in precision engineering and high-performance refractories.

Saurabh Khedekar, CEO of the Alumina Business at Hindalco Industries, said the acquisition unlocked immediate synergies, including market access and portfolio diversification.

“Hindalco plans to work with AluChem’s high performance technology solutions and scale up production of ultra-low soda alumina products to drive a larger global market share.”

The transaction is expected to close in the upcoming quarter, subject to customary closing conditions and regulatory approvals.

 

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Concrete

Shree Cement reports 2025 financial year results

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Shree Cement posted revenue of US$2.38 billion for FY2025, marking a 5.5 per cent decline year-on-year. Operating costs rose 2.9 per cent to US$2.17 billion, resulting in an EBITDA of US$528 million—down 12 per cent from the previous year. Net profit fell 50 per cent to US$141 million. The company reported cement sales of 9.84Mt in Q4 FY2025, a 3.3 per cent increase from 9.53Mt in Q4 FY2024, with premium products making up 16 per cent of total sales.

Image source:https://newsmantra.in/

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Concrete

Rekha Onteddu to become director at Sagar Cements

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Sagar Cements has announced the appointment of Rekha Onteddu as a non-executive independent director, effective 30 June 2025. According to People in Business News, Rekha Onteddu is currently serving in a similar capacity at Andhra Cements, the parent company of Sagar Cements.

Image source:https://sagarcements.in/

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