URUGUAY: ANCAP busca consolidar perfil como exportador de clínker en la región

El presidente de ANCAP, José Coya, dijo ayer que la producción y colocación de clínker (el principal componente del pórtland) en Brasil, Argentina, Paraguay, Bolivia y Venezuela podría consolidar al organismo como un productor relevante de ese material en América del Sur. En el caso de Venezuela, la petrolera uruguaya tiene un convenio vigente que prevé el intercambio de coque (carbón de petróleo) por clínker, lo que resulta beneficioso para ambas partes aunque todavía no ha sido implementado. El país caribeño tiene un déficit importante de cemento.

“ANCAP continúa invirtiendo en el área del clínker para consolidar la producción y capitalizarla con negocios en la región”, afirmó el presidente del organismo, José Coya, en diálogo con la Secretaría de Comunicación de Presidencia.

“En el sur de Brasil, norte argentino, Paraguay y Bolivia podría haber una apertura interesante para el negocio del clínker que puede consolidarnos con resultados que nos posicionen en la región de manera concreta”, afirmó el jerarca. Recordó que recientemente en Paraguay dialogó con directivos de la estatal Industria Nacional del Cemento (INC). “Ellos (por INC) nos informaron que están realizando licitaciones para la adquisición de clínker”, informó el jerarca.

“El clínker es un producto elaborado principalmente en la planta de Minas y a partir de los primeros meses del año que viene vamos a tener capacidad para presentarnos en esas licitaciones y así participar en ese mercado”, adelantó. Asimismo, el presidente de ANCAP informó que el ente inició negociaciones en Bolivia para poder colocar clínker en el país del altiplano.

“Además de la comercialización en la región más cercana también tenemos previsto con (la estatal venezolana) PDVSA un acuerdo de intercambio para recibir coque y devolver los barcos con capacidad de 30.000 toneladas con el equivalente en clínker. Esto constituiría un negocio interesante para ambas empresas”, recordó. En relación a la posibilidad de exportar cemento, Coya comentó que ANCAP aún no cuenta con la capacidad suficiente para hacerlo porque las inversiones en las cementeras de Minas y Paysandú para ampliar la producción están en ejecución. “Cuando esto suceda, vamos a tener la capacidad de producir para el exterior”, culminó Coya.

ESPAÑA: La demanda española de cemento crecerá en 2015

El sector cementero sigue bajo una tormenta, pero cada vez llueve menos. Incluso comienzan a verse claros. La patronal Oficemen espera para el próximo ejercicio el primer incremento en la demanda doméstica desde que arrancó la crisis. El colectivo empresarial ha calculado un escenario medio con un alza del 5%, que vendría motivado por un pequeño repunte de la obra civil, al que debe el 58% de las ventas, y la construcción de viviendas.

El otro dato alentador es que las exportaciones de clínker y cemento ofrecen un óptimo comportamiento, alcanzando las 9,4 millones de toneladas y convirtiendo a España en el primer vendedor de la UE fuera del marco comunitario. El cemento español llega a 59 países, como Francia, Reino Unido, Italia, todo el Norte de África, Estados Unidos, Brasil o Argentina. La crisis interna ha tirado del esfuerzo exportador, algo en lo que los fabricantes españoles tuvieron experiencia en el pasado, cuando en los ochenta eran líderes mundiales con algo más de 13 millones de toneladas de cemento anuales colocadas fuera de las fronteras locales.

Pese a todo, la industria huye del triunfalismo y coloca todas estas cifras en su justo contexto. El ejercicio 2014 va a concluir con una demanda local ligeramente inferior a los 11 millones de toneladas. El comportamiento respecto a 2013 es plano, gracias al pequeño repunte en pedidos del segundo semestre, según ha explicado el presidente de Oficemen, Isidoro Miranda.

Con la demanda tocando suelo, el consumo de cemento per cápita en España es de 231 kilogramos anuales, lo que recuerda a estadísticas de 1962. Miranda ha declarado esta mañana ante un grupo de periodistas que la demanda para un país como España debería estabilizarse en los 25 millones de toneladas, pero cree que esa cota no será alcanzada hasta 2022. En los años del boom inmobiliario las ventas de cemento conquistaron la cima histórica de las 57 millones de toneladas anuales.

En este contexto, la patronal reclama costes eléctricos competitivos para seguir incrementando las ventas el exterior: “Los productores argelinos tienen un tercio de los costes energéticos que soportan los españoles, y en Francia la industria paga hasta un 15% menos por la energía”, explica el presidente de Oficemen. El sector debe a la luz una tercera parte de sus costes variables y un 20% de los totales, según el colectivo empresarial.

Pero además de un abaratamiento de esta factura, se reclama la posibilidad de contratar la luz a largo plazo. “Los precios que soporta la industria deberían ser predecibles porque nuestras empresas se están comprometiendo a precios a largo plazo en sus exportaciones”, cita el director general de la patronal, Aniceto Zaragoza. En busca del abaratamiento energético, Oficemen aplaude la repesca o segunda subasta de interrumpibilidad anunciada esta mañana por Industria. “El resultado para el cemento fue muy malo en la primera subasta, quedándose en el 50% de lo que le correspondió el año anterior”, ha recordado el presidente de las cementeras, “el Gobierno cumple ahora con su palabra de lanzar la segunda subasta”.

El director general de Oficemen también señala como estratégico para el país y para el negocio del cemento la conquista de mayores cuotas de valorización. Un 26% del combustible que queman los hornos cementeros lo constituyen residuos, creciendo desde el 6% de antes de la crisis, pero en países como Alemania, Bélgica u Holanda los porcentajes superan el 60%.

Otra petición al Gobierno, renovada esta mañana, se dirige a los Ministerios de Fomento y Medio Ambiente, a los que se demanda un tirón en la ejecución de obra pública: “Tenemos en el turismo uno de los motores de la economía y este depende en buena parte de la calidad de las infraestructuras”, dice Miranda. “Debemos desterrar la creencia de que todo está hecho en España en materia de infraestructuras. Esa idea va contra el futuro del país”, sentencia Zaragoza.

Dura adaptación

A lo largo de la crisis el sector cementero ha cerrado plantas y parado hornos hasta dejar la capacidad de producción instalada en 35 millones de toneladas. Este funcionamiento al ralentí se ha traducido en un recorte del 40% en el empleo, hasta los 4.400 empleos directos.

El negocio vive un momento de concentración, con el proyecto de integración de los gigantes Lafarge y Holcim, y el intento parado a última hora entre esta última y Cemex para distintos mercados, entre ellos el español.

ESPAÑA: Cosmos incrementó un 6% su producción de clínker en 2014

La cementera Cosmos ha hecho público el balance anual tras el cierre del ejercicio 2014. Un ejercicio en el que ha conseguido mantener operativo su horno durante nueve meses del año, lo que se ha traducido en un incremento en la fabricación de clínker —producto intermedio en la fabricación de cemento— de un 6% con respecto al ejercicio anterior.

La producción de clínker en la cementera de Toral de los Vados alcanzó este año las 667.000 toneladas, de las que en torno al 28% —185.000 toneladas—tuvieron como destino final el mercado exterior. Haití, Ghana y Brasil, como ya adelantó Diario de León, han sido los países receptores de este producto. Asimismo, desde el puerto de La Coruña también se han remitido vía marítima 52.700 toneladas de clínker para abastecer el mercado canario de clínker.

Junto a estas exportaciones, que se han convertido en una ‘balsa salvavidas’ para la cementera berciana del grupo brasileño Votorantim, la factoría de Toral de los Vados ha exportado por primera vez en su historia cemento a granel. En concreto, desde el Bierzo, y vía puerto de Marín (Pontevedra), se han enviado 35.300 toneladas de cemento con destino a la isla portuguesa de Madeira.

La previsión que maneja la dirección de la cementera de Toral de los Vados es que la producción de la cementera se retome el próximo 15 de enero.

En ese momento, según los plazos que maneja la cementera, habrán concluido los trabajos de mejora de sus instalaciones —que todos los años suelen desarrollarse en el mes de diciembre— y que este año tienen ‘bajo los focos’ al horno de la factoría. En él, Votorantim ha autorizado una inversión de 2,4 millones de euros para lograr una mejora en la eficiencia del mismo. Entre los trabajos que se están acometiendo destaca el proceso de sustitución de 14 metros del horno por piezas.

SOUTH AFRICA: New cement giant in the making

The merger of South Africa’s two biggest cement producers, PPC and AfriSam, could be approved by the competition authorities if assets were sold, according to ex-PPC chief executive Ketso Gordhan.

PPC yesterday confirmed its board had received a conditional, non-binding proposal from AfriSam Group that proposed, among other things, a merger between the two cement producers.

The company said its board was considering the proposal and would make a further announcement in due course once it had concluded its consideration of the proposal.

News of the proposal lifted PPC’s shares off the three-year low of R23.47 reached on Tuesday. PPC climbed as much as 6.46 percent to R25.55 but closed up 2.25 percent at R24.54.

Not hostile

Shares in the company have slumped following an acrimonious battle between PPC’s board and Gordhan, who was attempting to get himself reinstated as chief executive after resigning.

“It just seems opportune for AfriSam, striking while the iron is hot,” Sasha Naryshkine, a fund manager at Vestact, said.

Gordhan said he did not see AfriSam’s proposal as hostile and at the right relative valuation could be a good deal for PPC. However, he said the challenge would be to get approval from the competition authorities, because the combined market share of the merged companies would be about 50 percent.

Gordhan said the merger was possible if AfriSam sold parts of its business separately.

He said AfriSam’s Kimberley plant and its business in Tanzania, which would be fantastic for PPC’s African expansion, made perfect sense in terms of the proposed merger.

But Gordhan suspected AfriSam’s Mafikeng plant would have to be sold to reduce the combined market share of the merged business to below 40 percent.

This would make the proposed merger “do-able” with five players in the cement market, he said.

Gordhan agreed the timing of AfriSam’s merger proposal could be linked to the slump in PPC’s share price and the imminent intensification of competition in the South African cement market, with Sephaku Cement getting up to full production next year and Mamba Cement entering the market.

Gordhan, who owns 1.4 million PPC shares to make him one of the largest individual shareholders in the company, said he would support the merger subject to the relative valuation of the companies.

“PPC is at a historic low value. PPC’s market capitalisation when the proposed merger was announced was R14.5bn. When I left PPC it was R20bn.

“It depends on the price at which they value the business. As two equals, no. When PPC’s value is correctly taken into account, yes,” he said.

Offshore debt

AfriSam, previously known as Holcim South Africa, was taken over by the Government Employees Pension Fund (GEPF) in December 2011.

The Public Investment Corporation (PIC), the managers of the GEPF, obtained a 20 percent stake in AfriSam in June 2008 when AfriSam shifted its senior offshore debt of about R10 billion to the local market to reduce its exposure to exchange rate risk.

Fidelis Madavo, the PIC’s acting chief investment officer, yesterday confirmed the corporation currently held 12.57 percent of PPC and 66 percent of AfriSam. He said the PIC believed AfriSam was now a well-run and a significant South African cement producer.

“We think a potential merger between PPC and AfriSam would create a formidable cement player on the continent that will contribute meaningfully to South Africa and the continent’s developmental plans.

“We also think there could be significant synergies and value-unlock to be realised from a transaction of this nature,” he said.

PAKISTAN: With fall in input costs, cement prices come down

With a reduction in input costs especially petroleum and coal prices, the cement industry has started passing on the relief to the consumers by cutting prices in the range of Rs5 to Rs23.

Bestway Cement has reduced the price from Rs502 to Rs492 per bag, Dewan Cement has cut the rate from Rs510 to Rs490, Cherat Cement has brought the rate down from Rs500 to Rs495 and Lucky Cement has cut the price from Rs520 to Rs497.

According to market players, the new prices have been printed on cement bags of these companies while others who have huge stocks in the market have started giving discounts on their products.

In Khyber-Pakhtunkhwa too, the retail and wholesale prices of cement have come down from Rs485 to Rs472 per bag. In Rawalpindi, cement is being sold at Rs480 to Rs485 in the wholesale market.

According to industry players, the manufacturers must print the maximum retail price on cement bags, but it is creating problems in making a reduction immediately as stocks already supplied to the market have old prices printed on them.

However, the industry has appreciated the government for its efforts to reduce prices of different inputs especially the petroleum products which have a significant impact.

In line with the cement makers, if other industries make a similar reduction in prices, it will help the construction industry ease the burden of high material cost on the consumers.

CANADA: Holcim to power cement production with discarded K-cup packs

It’s become popular to grab a K-cup pack, throw it in the Keurig, make a cup of coffee and then throw it away.

However, one company now intends to use recovered K-cup packs as an alternative fuel for a cement plant.

Holcim Canada and Van Houtte Coffee Services Inc., a subsidiary of Keurig Canada Inc, recently introduced a new service to recover the energy content of used K-Cup packs from institutional and commercial clients of Van Houtte, states a release.

Once collected the packs are sent to the Holcim Canada Joliette cement plant where they are processed and reused as alternative fuel.

"Using alternative fuels is an important and effective tool to reduce our dependence on fossil fuels and improve our CO2 profile. Reclaiming used K-Cup packs helps us to meet the ambitious objectives we've set," said Robert Houde, general manager of Geocycle, the Holcim Canada division responsible for alternative fuels, in a statement.

Holcim Canada manufactures cement, aggregates and ready-mix concrete and provides construction services.

NIGERIA: Buyers kick as Dangote cement sells for N1,745

Distributors and developers have accused the management of Dangote Cement Plc of silently increasing the price of its product to N1,745 per a 50kg bag instead of the N1,000 that it announced early last month.

Although the firm did not formally announce any increase in price, our correspondent gathered that it sent out text messages to its distributors on Monday, December 15, 2014, informing them of the new price.

The official spokesperson of the Dangote Group, Mr. Tony Chiejina, said he could not comment on the issue because he was indisposed, our correspondent gathered from other officials of the company that some variables in the economy had made it impossible to sell the product at the previously announced prices.

According to the officials, the recent devaluation of the naira by the Central Bank of Nigeria and the company’s inability to get gas to fire its plants have raised the cost of producing cement, adding that there was no way the company would bear the excess cost alone.

They explained that the announcement made by the firm some months back that it was shifting to coal as an alternative energy source had not fully materialised, hence the anticipated price reduction had not happened.

However, an angry distributor, who spoke with our correspondent on the condition of anonymity, said though the firm had previously announced the crash of the 32.5 cement grade to N1,000 per bag, and the higher 42.5 grade to N1,150 from N1,700 irrespective of the grade, the distributors never got it at the announced prices.

The distributor called on the firm to also announce the latest increase, adding that the former announcement of a crash in price was “highly counter-productive to the marketers.”

The distributor said, “When the company reduced the price to N1,000, they were very quick to go to the press to announce it even though they were not even selling at N1,000 to we the distributors. They were selling it at N1,150. But as of yesterday (Monday), they had increased it to N1,745 for the distributors.

“Why can’t they go back to the press to announce the increase? They have already saturated the market with the announcement that the price of cement is N1,000. People now quarrel with us that the price is now N1,000 and this is highly counter-productive to marketers and has affected our businesses negatively.”

A text message allegedly sent by the company to the distributors, which was forwarded to our correspondent, reads, “Dear customer, kindly note these changes in price: Ibese (delivered) – N1,745. Ibese (self-collected) – N1,645 (five trucks and above); N1,655 (below five trucks). Isolo – N1,700 (five trucks and above); N1,710 (below five trucks). The changes are effective today, December 15, 2014. Thanks for your patronage.”

The text was allegedly sent by one “Bukky, Dangote Cement.”

On November 3, 2014, it was widely reported that Dangote had slashed the price of cement by 41 per cent.

The Group Managing Director, Dangote Cement, Mr. Devakumar Edwin, had announced the price cut in a statement issued by the firm.

ANGOLA: Bans cement imports in 2015

The government of Angola has banned the import of cement in 2015 but set a quota of 150,000 tons for each of the outlying provinces of Cabinda, Cunene and Kuando Kubango, the minister for construction said Monday in Luanda.

Minister Waldemar Alexandre Pires said, after the meeting of the Economic Commission of the Council of Ministers, the decision was based on the fact that supply in demand of cement in Angola is the opposite of what it was in the past.

“Due to the investments made by various companies, the installed capacity of cement production in Angola is 8 million tons and demand is around 6.5 million tons,” said the minister, who noted the quota for those provinces was “an exception.”

The Proposed Joint Executive Decree approving cement import quotas for 2015 follows work by the Cement Sector Commission, coordinated by the Ministry of Construction, and also includes the Ministries of Trade, Industry and the Economy.

INDIA: Rajasthan retakes limestone mine from UltraTech Cement

In a set back to leading cement maker UltraTech Cement, the Mines Department of Rajasthan Government on Tuesday retook the possession of 10 square kilometres of limestone mining area in Nagaur district from the Aditya Vikram Birla Group company which had allegedly “illegally” bought it from a private firm.

Reports from Jaipur said that UltraTech had bought the mine at Gotan in Nagaur district from Gotan Limestone Khanij Udyog Pvt Ltd, owned by a Chauhan family.

On August 9 this year, the Anti-Corruption Bureau of Rajasthan had filed an FIR against four directors of the family-run firm and three directors of UltraTech, namely Kailash Chandra Birla, Rahul Mohnot and Mukesh Babu Aggarwal and the then Director of Mines and Geology, Udaipur, besides others. A case had been registered against them under Section 13 (1-D), 13 (2), Prevention of Corruption Act, 1998, and Sections 420 and 120B of the Indian Penal Code, according to sources.

Interestingly, in 1997, the Chauhan brothers’ erstwhile company Gotan Limestone Khanij Udyog Ltd, had sold 2 sq km out of the same 10 sq km mine area to JK Cement. While this part transfer application was still pending with the Mines Department for approval, they sold the entire 10 sq km to UltraTech Cement in 2012.

On July 23, 2012, they inducted the three new directors from UltraTech Cement in their newly formed company Gotan Limestone Khanij Udyog Pvt Ltd (GKUPL). The same day, the Chauhan brothers resigned from the directorship of their own company by selling 100 per cent shareholding to the AV Birla Group firm for Rs. 160 crore.

The same day (July 23, 2012), again, UltraTech Cement informed the Bombay Stock Exchange (BSE) that it had acquired 100 per cent equity shares of GKUPL. The market value of these limestone mines was estimated to be about Rs. 1,000 crore.

EGYPT: Government studies allow new cement factories to be established: Prime Minister

During its meeting held Monday, a government Economic Group recommended that the possibility of allowing new cement factories to be constructed be studied, with investors providing the facilities’ energy requirements.

A proposal to provide facilities for building the factories is currently being considered, according to Prime Minister Ibrahim Mehleb.

Cabinet Spokesman Hossam Al-Qawesh said that the economic group meeting concluded that there was an urgent need to expand cement production and increase production capacity to meet future needs.

Egypt has suffered from an energy crisis since 2011, which has put a brake on the local and global financial and business communities’ efforts to expand on the Egyptian market.

Al-Qawesh confirmed the government is taking steps and completing programmes to fulfil power needs in the near future. This covers supplying power stations with their fuel needs and providing the funding necessary to implement emergency plans.

Al-Qawesh said that Minister of Industry and Foreign Trade Mounir Fakhry Abdel Nour recently visited China. Abdel Nour found there is a strong will within China to sign a number of agreements with Egypt in the fields of business, civil aviation, and infrastructure projects for roads, transportation, and electricity. China is currently participating in the implementation of the high-speed electrical train project in Egypt.

He went on to say that the Prime Minister requested a meeting be held with the Ministers of Industry and Petroleum and direct-reduced iron (DRI) producers in Egypt to study modifying the price of natural gas for the industry. Natural gas represents a key element of chemical reactions necessary to produce DRI or “sponge iron” and does not just serve as an energy source for the process. The study must be thorough, Mehleb said, and take production costs into account for those factories.

The meeting also included a discussion of decreasing global oil and gas prices and their anticipated impact on the Egyptian economy, as well as the positive and negative aspects of these decisions. Those present also touched on taking steps to maximise the positive aspects of the phenomenon and working to decrease the negatives.

According to the press release, Petroleum Minister Sherif Ismail said during the meeting that debt owed to foreign partners has been reduced and agreements are underway to pay a portion of remaining dues in dollars and another portion in Egyptian pounds.

Mehleb stressed the need to take the measures necessary to increase the efficiency of the Holding Co. for Water & Wastewater and pay attention to maintaining water and sanitation networks as well as treatment plants. Mehleb also said that a study should be undertaken on a draft resolution to return the company’s assets in new cities to the executive bodies that manage the cities.

NIGERIA: Dangote Cement, subsidiaries get SON certification

The Standards Organisation of Nigeria (SON) has approved the quality, environmental and safety measures put in place by the Dangote Cement and some business units of the Dangote Group having certified them accordingly.

The business units were certified for quality management, occupational, health and safety as well as environmental management system.

A statement signed by the Group Managing Director of Dangote Cement Plc, Devakumar Edwin, indicated that Dangote Cement plants in Gboko, Ibese and Obajana have all been certified for ISO 9001, quality management system, ISO 14001, environmental management system and BS OHSAS 18001, occupational health and safety management system.

Edwin gave the names of other units, which have been certified by SON as Agrosacks Nigeria Limited, Dangote Sugar Refinery Plc, Dangote Salt (NASCON), Dangote Flour Mills Plc and Dangote Pasta Limited.

The Dangote Cement boss explained that the group’s subsidiaries have always been compliant to all regulations as law abiding corporate citizens and take the issue of environment very seriously.

He stated that the management of the Dangote Group and its subsidiaries would continue to put in place policies that will enhance its compliance with regulatory issues as leaders in their respective industry.

According to him, the ISO certification touched on quality, health and safety and environmental management, pointing out that management does not compromise on for quality products, and safety of the environment within where it operates as well as the well being of its employees.

Meanwhile, the Dangote Cement Plc has embarked on aggressive campaign to sensitise members of the public on the liberalisation of its distributorship so that every eligible Nigerian could have access to be a distributor.

The company has also embarked on the expansion of distribution network through commissioning of more depots across the country with the aim of bringing the product closer to the consumers

The Dangote Cement GMD then assured the consumers and other customers that the era of cement scarcity has gone for good given the volume being produced nationwide and the ongoing capacity expansion drive across Africa.

Edwin said Dangote Cement had led the way in the backward integration in the cement industry and that availability of cement today, even at a reasonable cost, was due to Dangote Cement management’s willingness to assist the government in the onerous task of provision of affordable housing by making cement readily available.

WORLD: EU Approves Holcim, Lafarge Cement Merger

Cement companies Holcim Ltd. and Lafarge SA cleared a major hurdle toward their planned $43 billion merger after antitrust authorities in Europe said the deal could go ahead, subject to significant asset sales across the region.

The deal, if approved by other global competition regulators, would reshape the global cement industry, spawning a construction-materials juggernaut. It had been expected to face significant hurdles from antitrust authorities, particularly in Europe, given the scale of the two companies’ operations in the region.

Margrethe Vestager, the European Union’s top antitrust official, announced the decision on Twitter late Monday. “Acquisition of Lafarge by Holcim is subject to conditions. The merger can proceed,” Ms. Vestager tweeted, adding that it would be “good for growth.”

The EU’s approval is conditional on divestments by the two companies that Ms. Vestager described in a statement as “very substantial.”

Holcim will have to sell all of its businesses in the Czech Republic and Slovakia, two plants in Spain, and most of its activities in France relating to cement, ready-mixed concrete and aggregates, according to a statement from the European Commission, the bloc’s top antitrust regulator.

Lafarge will be required to sell all of its businesses in Germany and Romania, as well as U.K. businesses that are carried out through Lafarge Tarmac, a joint venture with Anglo American PLC, with the exception of a single cement plant.

The companies won’t be allowed to close the deal until the commission has approved the buyers of the assets, the regulator said.

“With the remedies, we have ensured that the creation of an increased global footprint of the group will not come at the expense of competition in the EU,” said Ms. Vestager.

In twin statements, Holcim and Lafarge said they were “actively pursu[ing] negotiations for the sale of these assets with potential buyers, who will have to be preapproved by the European Commission.” Lafarge said it still expected the merger to close in the first half of next year.

Holcim, of Jona, Switzerland, and Paris-based Lafarge have been working with regulators around the world to satisfy anticompetition fears.

The two companies are awaiting approvals from other parts of the world, including the U.S., Canada, Mexico and India for the deal to proceed. Authorities in some countries, such as Russia and South Africa, already have given the deal their blessing. Holcim and Lafarge had combined sales of $39.3 billion in 2013.

Analysts estimate the two companies could raise as much as 10.3 billion Swiss francs ($10.7 billion) from the sale of cement factories and other facilities.

Unveiling their merger plans in April, the companies had pledged to sell assets that generate roughly €5 billion, or $6.8 billion, in annual revenue to address competition concerns. Holcim finance chief Thomas Aebischer has said some 60 parties, a mixture of buyout firms and building-materials companies, had submitted bids for all or some of the assets.

Holcim has said it expects to agree to deals with potential purchasers by the end of this year or early 2015 as it moves ahead with its timetable to complete the merger during the first half of next year.

INDIA: MANGALAM CEMENT TO SEE GROWTH IN VOLUMES: NIRMAL BANG

Its cement and power plants are located at Rajasthan and it sells three products in cement - OPC grade 43, OPC grade 53 and PPC - under the brand name Birla Uttam Cement.

Currently, MCL sells 60% PPC and 40% OPC. The company sells 51% of the total output in the northern region and 49% in the central region. The major selling markets in both the regions are Rajasthan, Delhi, Haryana, Uttar Pradesh and Madhya Pradesh.

At present, Rajasthan constitutes 31% of the company’s cement volumes. It will increase to 50% on account of the sales tax benefit scheme announced by the state government on new capacity of 1.25 MTPA.

As per management calculation, the company will receive sales tax subsidy for 7 years starting from FY15. MCL will receive subsidy of around crore in FY15 (assuming the new capacity will operate for nine months.) Thereafter from FY16- 21), it will be around Rs.27 crore per year.

We expect EBITDA per tonne to improve to Rs 733 per tonne in FY16 from 241 per tonne in FY14 on the back of higher realization and recent cost initiatives undertaken by the company.

Under a strong government, the cement sector will benefit from a potentially faster recovery in the investment cycle, especially infrastructure.

While sector profitability could remain under pressure over the next 1-2 quarters, the long-pending infrastructure projects could be fast-tracked by the new government, resulting in demand recovery and higher profitability in the next two years.

The company has started commercial production of its additional cement capacity of 1.25MTPA from June ’14.

On the back of this expansion, we estimate cement volumes to grow at a CAGR of 18.4% during FY14-16E.

Realizations are also expected to improve at a rate of 14.5% CAGR during the same period, driven by a pick-up in demand. This, along with the benefit of operatingleverage would help in improving margins, going forward.

At the current market price, MCL is trading at 8.5x and 5.4x of its FY15E and FY16E EV/EBITDA, respectively.