No dearth of demand ... for good company
Experts predict that cement prices are likely to continue being volatile, with demand up only by 3.5 per cent as against last year. Under the circumstances most cement companies will not be able to show strong earnings in Q2 of FY 12. Blame it on the monsoon, stalled
infrastructure projects and a very fickle real estate sector on one side and on another higher inputs prices and falling demand. However, while cement demand may be dull the same cannot be said of the companies themselves.
JSW Cement is in the final stages of commissioning its state-of-the-art integrated cement plant in Nandyal, AP, with a capacity of 4.4 mtpa built at a cost of Rs 1,400 crore. ACC has reported stabilisation of the (world's largest kiln) Wadi plant with a capacity of 12,500 tonne a day. ACC has made a total investment of Rs 1,634 crore. Holcim is set to invest Rs 4,700 crore on three new factories. It is aggressively looking at acquiring companies in the central and southern belts. A few years ago Vicat SA had bought 6.67 per cent in Sagar Cements paying US$ 14.35 million. Dalmia Cement (Bharat) has also revealed that it has raised Rs 750 crore in private equity firm Kohlberg Kravis Roberts & Co LP for its wholly owned cement subsidiary, which was formed after demerger of the holding company last month. The Rs 750 crore is for part-funding of the 10-MTPA Greenfield cement capacity programme, which has an envisaged outlay of Rs 4,500 crore. The project will be funded with Rs 3,250 crore debt and the remaining Rs 1,250 crore as equity. Recently Ambuja Cements acquired Dirk India Pvt Ltd for Rs 16.5 crore. This kind of hectic activity on the financial front shows that the industry is quite active and despite everything, the future is being consolidated.
Our cover story highlights various funding options for cement companies with an interview with
PK Ghosh, Chairman, Ercom Engineers
, spotlight on ACC and a case study on dispatching technology, apart from all our regular features.