India cement industry posts growth in September

India cement industry posts growth in September
Published: 06 October 2008

Majors Ambuja Cements, Aditya Birla Group and Dalmia Cement see production and dispatches grow in the month.

Cement sector stakeholders now have a reason to smile. After a long time, the industry’s production and dispatch figures showed positive growth in September.

In the figures released for the month, cement players such as ACC, Ambuja Cements, Aditya Birla Group and Dalmia Cement have all posted growth in their production and dispatch. This is in sharp contrast to the dismal performance the sector showed in the month of August.

In September, the Aditya Birla Group, which owns cement majors Grasim Industries and UltraTech Cement, reported a growth of 4.1% in its cement sales year-on-year to 2.39Mt. In August, this figure had fallen to 2.19Mt.

However, the robust figures might have come from Grasim Industries as UltraTech’s operations were hit due to floods in the east and Gujarat, which affected its sales, an analyst said.

The sales of Ambuja Cements, India’s third-largest cement producer, grew 6.2% to 1.37Mt from 1.28Mt last year. Its production capacity increased to 1.38Mt from 1.27Mt last year, a growth of 8.4%.

Dalmia Cement (Bharat) Ltd, the north-based cement producer that sells mainly in the southern market, has seen its sales grow by 17.4% at 0.3Mt and its production increase by 4.1% to 0.29Mt.

Cement major, ACC sales grew to 1.67Mt from 1.55Mt last year, a growth of 7.7% year-on-year. Its cement production also grew by 7.7% for the period.

There was some good news in the exports segments too. "Cement plus clinker export volumes registered positive growth (45% YoY) in August 2008 after a gap of 19 months," said a September 30 report by India Infoline analyst J Radhakrishnan.

Another analyst said, "Cement sales are coming mainly from exports to Middle East countries such as Dubai, Kuwait and Qatar where the demand is very high."

The analyst added that exports from the Gujarat jetty were closed for June and July and exports for those months may have gone in August and September. This might be why figures for these two months were higher, he said.

However, analysts warn that the exports party will be over in the second half of 2009 as the Middle East is now increasing its cement capacity. In the later part of the year, this supply will enter the market.

Some more bad news is around the corner. In the first quarter, cement companies saw their operating margins squeezed by 10-45%. This led to a decline in their net sales. Operating margins for the second quarter of this fiscal will be squeezed again, believe analysts.

This is despite the government allowing cement companies to raise prices.

The west, east and southern markets in India saw a price hike of Rs 2-6 per bag across the board but in the north and central markets prices either stabilised or fallen further.

Siam Cement Group to pay 5.35 per cent per annum for its new debentures worth Bt20bn

Siam Cement Group (SCG) will offer 5.35 per cent per annum for its new debentures worth Bt20 billion, which are open for subscription for existing bondholders during October 6-10 and for other individual investors during October 16-29, The Nation reports.

"Siam Cement is one of Thailand’s first private companies who raise capitals from domestic investors through debentures," said Roongrote Rangsiyopash, vice President and CFO of SCG. Since the first issue in 1999, the company has issued 25 series of debentures totaling Bt233.5bn, of which Bt138.5 billion has already been redeemed, and has paid interest worth more than Bt47bn. Currently, there are about 6,700 bondholders.

The underwriters of this new debentures are Siam Commercial Bank, Kasikorn Bank, Bangkok Bank, Bank of Ayudhya and Krung Thai Bank.

The new 4-year debentures will be redeeemed in 2012. The coupon will be payable quarterly. Half of it would be offered to holders of SCC08NA series, which is due for redemption in November.