ICCM compiles the most popular news of a dynamic year marked by the sale of Binani Cement and an imminent nationwide ban on the use of petcoke as fuel
This article originally appeared in ICCM 45. Click here or on the image to read the full article
2018 was a challenging year for the Indian cement industry. In the first issue of ICCM of 2019, we look back on a period that was mainly marked by an impending national ban on petcoke and by the much anticipated, discussed and lengthy sale of Binani Cement.
The previous year may have been full of surprises, hardly of the good kind, but cement makers remain optimistic towards the future. Here is a selection of the most read stories regarding the Indian cement industry published on our CemWeek platform.
Construction sector in India seeks focus on project execution
A construction equipment maker based in India, Hitachi, wants the budget of the next fiscal year to focus on the execution of road projects.
According to Sandeep Singh, MD of Tata Hitachi Construction Machinery Company, while the Center has been allotting new projects, such as the recently announced Bharatmaka project, the execution is still suffering due to banks NPAs and the inadequate flow of funds; as contractors were over-leveraged, this led to stressed assets with banks.
The Modi administration has paved the way for the exit of leveraged contractors, but the problem is yet to be solved. Some hope that the new law, which should come into effect on April 1, will help resolve part of the problem.
According to Singh, the greatest concern for the industry is the firming up of crude prices, the resulting inflation, and expansion of interest rates in some European economies. If there are any similar increases in India, said Singh, it will impact infrastructure growth adversely.
The company’s sales are expected to grow by thirteen to fifteen percent in the 2017-2018 fiscal, with capacity utilization reaching an average of 70 percent.
UltraTech, Dalmia Bharat leading Binani Cement auction
UltraTech Cement and Dalmia Bharat emerge as leading bidders for Binani Cement.
According to a source with inside information, the two cement manufacturers have offered INR 6,000 crore in cash for Binani Cement on top of paying the INR 4,000 crore owned by the latter to a consortium of lenders.
The big differences between the two bids are on the way they treat the INR 2,500 crore owed by Binani to unsecured creditors and on the size of the equity stake offered to the creditors.
Other companies and individuals making a final offer for Binani Cement include JSW Group, HeidelbergCement, Ramco Cements in consortium with private equity True North, and businesspersons Rakesh Jhunjhunwala and Radhakishan Damani.
In this contest, Dalmia Bharat has been backed by the India Resurgence Fund, which in turn is backed by Bain Capital Credit and Piramal Enterprises.
Indian cement makers fight for market share
Cement makers in India focus on market share in detriment of prices.
Usually, the first quarter is a period of high activity in the construction market. Even so, pan-Indian cement prices have declined in March by an average of INR 9 per 50-kilogram bag and are now selling for INR 322 per unit.
Indian cement manufacturers seem to be pursuing an increase in their market share in detriment of prices. In the last years, the major players in the market have ramped up their production capacity through new plants and acquisitions, contributing to an increase in competition.
The strongest decline was seen in the southern region, where cement prices sank INR 17 per bag. In the north, west, and central India, cement prices declined by around INR 5 and INR 9 per bag. Meanwhile, in eastern India, prices were relatively stable (...)
Read the full article in ICCM 45