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News updates from India

World Cement,


A round-up of news from the second biggest cement industry in the world…

Import duty on coal
The cement industry has asked for the removal of import duty on coal, gypsum and petcoke. Short supplies of these raw materials mean that the Indian cement industry is reliant on imports that carry an import duty of 5%. Meanwhile, imported cement does not attract any import duty, making the domestic product uncompetitive.

With the trend towards establishing captive power plants to power cement production, coal’s importance is only increasing. Estimates put coal demand at 58 million tpa in 2011/2012, up from 35 million t in 2007/08.

Holcim in India
Holcim has announced that it will spend US$1.1 billion on capacity expansion projects in India. The Group currently controls around 20% of the Indian market with group companies ACC and Ambuja Cements, which will have a combined capacity of around 50 million t by the end of this year. The massive investment proposed by the company will aim to add a further 10 million t to that figure. Paul Hugentobler, a member of Holcim’s executive committee, told press that the Group has no plans to merge the two companies.

December dispatches
The industry has witnessed an impressive return to form in line with the peak consumption season. Dispatches hit 17.74 million t in December, an increase of 10.8% y/y and 12.78% m/m. Demand actually exceeded production, which fell short by 230 000 t. Most companies recorded growth in December, although some (notably the Holcim group companies) could not participate to their full extent due to ‘capacity constraints and shortage of railway wagons’, according to a Business Standard report. Further growth is expected this month.

In preparation for growth, capacity expansions are still going strong. Last year saw added capacity in the realms of 37 million t, and a further 30 million t is to be added this year. While manufacturers are optimistic about the prospects for demand growth, capacity utilization is likely to average around 82% this year with prices reflecting producers’ needs to earn back the money spent on expansion projects.

Ultratech
Ultratech has reported its Q3 results, which indicate the harmful effect of increased capacities and decreased demand in the southern region. The company’s net sales rose 2% y/y to Rs.1669.3 crore and dispatches rose 11.9% y/y to 4.34 million t. Profits after tax fell 17.8% y/y, and realisations were also down at Rs.3846/t – a drop of 8.8% y/y. However, the company is optimistic that the situation will improve, with some reports suggesting the company expects 10% growth in demand.

Power trading
In a report on Moneylife, analysts state that those companies that have established captive power plants will be better placed to weather the cycles of cement demand. Amit Srivastava, a research analyst at Karvy Stock Broking Ltd., says: ‘…whoever has excess power is trading it…With the power segment they will be able to manage their margins better than other companies which are not trading in power.’ Shree Cement, JK Lakshmi Cement and Dalmia Cement are all enjoying the benefits of trading excess power. R. Gurumoorthy of Dalmia Cement Ltd said that the company will continue to trade power and make a profit. He added that 5% of the captive power produced is always available for sale. Meanwhile, JK Lakshmi is adding to its captive power capacity.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/19012010/news_updates_from_india/


 

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