India’s cement companies suffer difficult first quarter

Ambuja/ACC update

Reports suggest that one of Ambuja Cements’ shareholders is not happy with the proposed acquisition of a majority stake in fellow Holcim-owned company, ACC. Life Insurance Corp., Ambuja’s largest institutional shareholder, has allegedly voiced concerns over the beneficial effects of that transaction to minority shareholders, as analysts suggest that the deal will shave Rs.11 from each share of Ambuja Cements. Advisory firms are reportedly urging minority shareholders to vote against the restructuring. Amit Tandon, founder and managing director of Institutional Investor Advisory Services (IIAS) told reporters: “Our initial observation is that the deal is unfair to the minority shareholders of Ambuja Cements.”

Quarter losses

Also in India, HeidelbergCement’s CEO and Managing Director, Ashish Guha, has been speaking to CNBC-TV18 regarding the June quarter loss. He attributed the fall in net profit to higher power and fuel costs and reduced demand and pointed out the impact of the earlier monsoon, which has been particularly heavy this year. He added, “There is no infrastructure pick-up at all, despite all the noises that have been made everywhere...No implementation of all the announcement that have been made in terms of infrastructure. Housing is suffering because of high interest rates. These are the two major factors which are dragging us down.”

Meanwhile, Jaiprakash Associates Ltd has released its 1Q results, which show net profit for the group has doubled y/y. However, income from the company’s Cement and Cement Products segment stood at Rs.1539.34 crore compared with Rs.1562.94 crore in 1Q13 (the previous financial year), a ~1.5% decrease. JK Lakshmi Cement and Madras Cement likewise reported a decrease in first quarter profits, all blaming lacklustre demand.

Edited from various sources by Katherine Guenioui.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/29072013/monsoon_affects_1q_results_in_india_74/