CHAPTER 4 PROFILE OF MAJOR MARKET PLAYERS

Transcription

1 CHAPTER 4 PROFILE OF MAJOR MARKET PLAYERS 4.1 Ultratech cement 4.2 Ambuja cement 4.3 Jaypee cement 4.4 Binani cement 4.5 J.K. lakshmi cement 4.6 Gujarat sidhee 4.7 Saurashtra cement 4.8 Sanghi cement 4.9 Cement plants in India 99

2 CHAPTER 4 PROFILE OF MAJOR MARKET PLAYERS 4.1 ULTRATECH CEMENT Top 10 Cement companies in the World After the merger of Samruddhi Cement with UltraTech Cement, the latter's capacity has increased to million tonnes, the market share to about 18 per cent, captive power capacity to 504 MW and annual turnover to Rs 13,210 crores, which has made the company India's single largest cement company. In addition, UltraTech has acquired Dubai based ETA Star Cement with its five plants having an aggregate capacity of 3 million tonnes. Consequent to these developments, UltraTech's capacity stands augmented to 52 million tonnes, placing it among the top 10 cement companies in the world. In July 2010, the Mumbai based $35 billion Aditya Birla Group merged its Samruddhi Cement Limited (demerged Cement Division of Grasim Industries Ltd) with Ultra Tech Cement Limited. With this, UltraTech's annual cement capacity has increased to million tonnes, making it the single largest cement company in India with a market share of about 18 per cent. UltraTech is also the country's largest exporter of cement clinker and its export markets span countries around the Indian Ocean, Africa and the Middle East. Further, the year of 2010 also witnessed UltraTech's entry into foreign markets. The company's wholly owned subsidiary- UltraTech Cement Middle East Investments Limited acquired the management control of Dubai-based ETA Star Cement together with its operations in the UAE, Bahrain and Bangladesh. At the time of acquisition, the ETA Star Cement had five cement plants one clinkerisation unit and four grinding units with a combined capacity of 3 million tonnes. 100

3 Today, Ultra Tech has an aggregate annual capacity of about 52 million tonnes, comprising domestic capacity of million tonnes and overseas capacity of 3 million tonnes. This capacity is contributed by 22 cement plants in India, 11 each of integrated plants and grinding units; five plants abroad comprising of one clinkerisation plant in UAE, two grinding units in UAE, one grinding unit each in Bahrain and Bangladesh. UltraTech's integrated cement plants are well equipped with captive thermal power plants with an aggregate capacity of 504 MW. The company meets around 78 per cent of its power requirement through captive power generation. In addition, the company has one white cement plant of 0.6 million tonne capacity in Rajasthan; 92 ready mix concrete (RMC) plants across the country with an aggregate capacity of 9.5 million cubic metres; five bulk packing terminals - four in India and one in Sri Lanka; and four subsidiary companies, namely: Dakshin Cements Limited, Harish Cements Limited, Ultratech Ceylinco (P) Limited and UltraTech Cement Middle East Investments Limited Grasim to UltraTech Grasim Industries Limited, a flagship company of the Aditya Birla Group, ranks among India s largest private sector companies. Starting as a textiles manufacturer in 1948, six years later Grasim pioneered the production of viscose staple fibre (VSF), a man-made biodegradable fibre with characteristics akin to cotton. Today, Grasim is the country s largest producer of VSF and the largest manufacturer of caustic soda, which is used in the production VSF. In mid 1980s, with the opening up of the cement industry, Grasim diversified into cement. In 1998, Grasim acquired from its group company Indian Rayon & Industries Ltd., a cement capacity of 3.2 million tonnes. In 1999, it acquired Shree Digvijay Cement Company Ltd. (SDCCL) from the Kolkata based Bangurs. SDCCL had a cement plant of 1.1 million tonnes 101

4 capacity at Sikka in Gujarat. In March 2008, Grasim sold off SDCCL to cimpor of Portugal. Over the year, Grasim s cement business had become the major contributor of Grasim s revenues, ranging between 70 to 75 per cent. In early 80s, the Mumbai based engineering giant L & T had diversified into cement and in the next two decades, it built up a capacity of 17 million tonnes with a market share of over 11 per cent in India. On November 18, 2001, Grasim acquired 10 per cent of Reliance's stake in L&T for Rs crores. By June 2002, Grasim raised its stake in L&T to 14.5 per cent. In 2003, L&T de-merged its cement business into a separate company- UltraTech CemCo Ltd in a composite scheme of arrangement with Grasim Industries, resulting in Grasim acquiring control of Ultra Tech. Narmada Cement Company Ltd. (NCCL), which was an ailing subsidiary of L&T, automatically became the subsidiary of Ultra Tech. In fact, L&T had acquired NCCL on April 24, 1999, from Chowgule group. NCCL had three port based cement plants with a capacity of 1.5 million tonnes, comprising one integrated plant at Jafrabad in Gujarat and two grinding units - one each at Magdalla in Gujarat and Ratnagiri in Maharashtra. UltraTech merged NCCL with itself, effective May 1, L&T divested its remaining stake in UltraTech in a phased manner and by September 2009, it had completely quit the company withdrawing its two directors on the board. By fully taking over Ultra Tech, Grasim had not only gained a toe hold in the cement industry but it had also effectively shut out MNCs from walking away with a huge chunk of cement capacity in India. In fact, three cement MNCs - Cemex, Holcim and Lafarge were in the running to pick up 37.5 per cent stake in L&T's de-merged cement entity. Grasim, after getting the full control of Ultra Tech, on October 6, 2009, decided to demerge its cement business into a wholly-owned subsidiary company - Samruddhi Cement Limited in a cashless transaction. Accordingly, in May 2010, the Grasim's cement division was demerged and vested in 102

5 Samruddhi Cement, which was later in July 2010, fully merged with UltraTech Cement Limited Cement Plants At the time of merger in July 2010, Grasim had 11 cement plants, comprising six integrated cement plants and five grinding units with a total capacity of million tonnes. Similarly, Ultra Tech too had 11 cement plants, comprising five integrated cement plants and six grinding units with a total capacity of million tonnes. After merger, as on March 31, 2010, UltraTech's number of cement plants has increased to 22 and the aggregate capacity to million tonnes. Table-8 Pre and Post Merger Financial Status of Grasim and UltraTech *Financials of H1 FY 2010 April 2009 to Particulars September 2009 Unit Grasim UltraTech Combined Net Sales Rs. Crs EBIDTA Rs. Crs EBIDTA Margin % Depreciation Rs. Crs EBIT Rs. Crs Net Worth Rs. Crs Capital Employed Rs. Crs Debt. (Net of Surplus Rs. Crs. Funds) ROCE (PBIT / CE) % Source : Labour and Industrial Chronical, Survey of Cement Industry & Directory 2012 :3 rd Edition 103

6 Table - 9 UltraTech s cement plants at a glance alphabetically listed Capacity Capacity Sr. Cement Plants District State MTPA MTPA No. Jan 2010 Jan 2012 Year 1. Aditya Cement Works Chittorgarh Rajasthan Aligarh Cement Aligarh UP Works (G) 3. Andhra Pradesh Anantpur AP Cement Works 4. Arakkonam Cement Vellor Tamilnadu Works (G) 5. Awarpur Cement Chandrapur Maharashtra Works 6. Bhatinda Cement Koppal Karnataka Works (G) 7. Gujarat Cement Amreli Gujarat Works 8. Hirmi Cement Works Raipur Chhattisgarh Hotgi Cement Works (G) Solapur Maharashtra Jafrabad Cement Amreli Gujarat Works 11. Jharsugada Cement Jharsuguda Orissa Works (G) 12. Jafrabad Cement Amreli Gujarat Works 13. Jharsuguda Cement Jharsuguda Orissa Works (G) 14. Kotputli Cement Jaipur Rajasthan Works 15. Magdalla Cement Surat Gujarat Works (G) 104

7 16. Panipat Cement Panipat Haryana Works (G) 17. Rajashree Cement Gulbarga Karnataka Works 18. Ratnagiri Cement Ratnagiri Maharashtra Works 19. Rawan Cement Raipur Chhattisgarh Works 20. Reddipalayam Cement Works Ariyalur Tamilnadu Vikram Cement Neemuch MP Works 22. WB Cement Works Burdwan West Bengal (G) Total Source: Labour and Industrial Chronical, Survey of Cement Industry & Directory 2012 :3 rd Edition Bulk Cement Terminals UltraTech has five bulk cement terminals, four in India and one in Sri Lanka. The four domestic terminals are located at Doddaballpur and Mangalore in Karnataka, Navi Mumbai in Maharashtra and Shankarpally in Andhra Pradesh. The Mangalore and Navi Mumbai bulk packaging units are port -based and they were commissioned in September 1998 and in October 1998, respectively. The port based terminals source cement from the company's port based Gujarat Cement Works through special chartered ships. The Sri Lanka terminal was set up through UltraTech Lanka (Pvt) Ltd, a subsidiary of UltraTech. Located at Colombo, this terminal is in operation since January

8 Table - 10 UltraTech s operational performance at a glance Particulars Unit Reported Recasted Reported Cement Capacity Mn Tons Cement Production Mn Tons Effective Capacity Per Cent Utilisation* Sales Volume - Mn Tons Domestic Sales Volume- Mn Tons Exports Tota1 Sales Volume Mn Tons Average Sales Realisation Rs Per Ton Effective capacity utilization: cement production + Clinker sold, based on period of new capacity in operation Captive Power Plants Pre merger, Grasim had a total thermal captive power capacity of 268 MW and UltraTech 236 MW Post merger; the combined captive power capacity became 504 MW Waste as Fuel UltraTech was the first cement company to set up a Municipal Solid Waste (MSW) plant at Jaipur to process municipal waste and use it as a substitute for conventional fuels at its Vikram Cement plant in Madhya Pradesh. 106

9 Table-11 UltraTech s consolidated financial performance for first two years Particulars Unit Reported Recasted Reported Turnover Rs Crs Domestic Rs Crs Exports Rs Crs Other Income Rs Crs Total Expenditure Rs Crs Operating Profit Rs Crs (PBIDT) Operating Margin Rs Crs Depreciation Rs Crs Profit Before Rs Crs Interest and Tax (PBIT) Interest Rs Crs * 118 Profit Before Tax Rs Crs * 1588 Tax Expenses Rs Crs * 495 Net Profit after Tax Rs Crs * 1093 *Recasted figures not available Rajasthan, lead zinc slag, which is a low effect waste of pyrometallurgical operations of Hindustan Zinc Smelter, is used as an alternate raw material (additive) in raw mix CDM Footprint UltraTech's CDM project was the world's first to receive CERs amongst the cement companies, worth Rs 3.5 crores, for the year This was the culmination of the journey after successfully substituting conventional fuel by agro-based alternative fuels and waste tyres and the subsequent venture to claim for carbon credit. 107

10 Operations In the financial year of , UltraTech produced million tonnes of cement as against 32.11, million tonnes in previous year. The effective capacity utilisation was 81 per cent as against 86 per cent in previous year on an expanded capacity. The aggregate sales volume of million tonnes was at par with the previous year sales volume of million tonnes. The previous year figures have been recasted by the company so as to include Samruddhi's figures for the period 1st July, 2009 to 31st March, Financial Performance In the financial year of , the company's net turnover stood at Rs 13,210 crores as against Rs 13,442 crores (recasted) achieved in the previous year. Profit before interest and tax stood at Rs 2063 crores as against Rs 3319 crores (recasted). The share of Ready Mix Concrete (RMC), White Cement and other related products in the company's turnover was 9 per cent and 6 per cent, respectively. Both RMC and White Cement have recorded a splendid performance with turnover for RMC reflecting a growth of 26 per cent and that of White Cement 16 per cent. White Cement business growth is linked with the higher sale of Wall Care Putty and other White Cement based products Capex Plans In the year of , the company incurred a capital expenditure of around Rs 1242 crores towards capacity expansion at Rawan Cement Works and Rajashree Cement Works, setting up of captive power plants at Awarpur Cement Works, Andhra Pradesh Cement Works, jetty expansion at Gujarat Cement Works bulk packaging terminals and normal modernisation projects. To accelerate the pace of growth over the next three years, the company has earmarked a capital outlay of Rs 11,000 crores. Adds the company's Chairman - Kumar Magalam Birla: "We are investing in the setting 108

11 up of additional clinkerisation plants at Chhattisgarh and Karnataka together with grinding units, bulk packaging terminals and ready mix concrete plants across the country. These expansions are expected to be operational in FY14 and will augment our cement capacity by 9.2 million tonnes. 4.2 AMBUJA CEMENT Founded by Narotam Sekhsaria and Suresh Neotia, Ambuja Cements - formerly Gujarat Ambuja is today the top third cement company in India. Holcim acquired the company's management control in 2006 and now it holds per cent equity in Ambuja. Beginning operations in 1986, in the last 25 years, Ambuja Cements has increased its capacity from a mere 0.7 million tonne to 27 million tonnes; the number of cement plants from 01 to 13; and expanded operations from a single State to nine States. It has also added captive power capacity of about 420 MW. The Mumbai based Ambuja Cements Limited is today one of the leading, most profitable and innovative cement companies in India. Incorporated in 1981 as Gujarat Ambuja Cements Ltd (GACL), the company was promoted by Narotam Sekhsaria, Suresh Neotia and their associates as a joint venture with the State owned Gujarat Industrial Investment Corporation (GIIC). Two years later, in 1983, it was converted into a public limited company and in November 1985, it went for its first IPO. During the years , GIIC sold its 26 per cent equity stake to Sekhsaria and his associates. Sekhsaria's business acumen and leadership skills led the company on a fast track to growth and under his leadership; the company has set several new benchmarks for cement industry in India. In the last 25 years, the company added integrated green-field plants, grinding units, acquired two major cement companies - Modi Cements and DLF Cement, formed two subsidiaries - Ambuja Cement Eastern Ltd (ACEL) and Ambuja Cement Rajasthan Ltd. (ACRL) for managing the acquired companies, merged ACEL and ACRL with itself, launched an investment 109

12 company - Ambuja Cement India Ltd. (ACIL), bought stake in ACC Ltd, got acquired by Holcim a cement multinational of Switzerland, promoters sold their equity to Holcim, financial year changed from April- March to calendar year of January to December, and the company quit the membership of Cement Manufacturers' Association (CMA). Under the management of Holcim, the company enhanced its cement capacity to 27 million tonnes, increased the captive power capacity to about 420 MW, entered the renewable energy sector beginning with wind energy and made a few strategic acquisitions. It bought substantial stakes in Alcon, Dang Cement and Dirk India. Further, with Alcon, it has formed a joint venture - Counto Microfine Products Private Limited Early Acquisitions Ambuja Cements acquired two major cement companies - Modi Cements and DLF Cement, which enabled the company to expand its capacity and markets in new areas. The Modi Cements, which had a 1.8 million tonnes integrated cement plant at Bhatapara in Chhattisgarh, was a BIFR case with accumulated losses of Rs 300 crores. In June 1997, Ambuja acquired Modi Cements from BIFR for Rs 191 crores and injected about Rs 166 crores as equity, which increased its stake to per cent. The plant was restarted in December Modi Cements was renamed as Ambuja Cement Eastern Ltd (ACEL) and Harshavardan Neotia was appointed its Managing Director. In September 2001 ACEL's capacity was reduced from 1.8 million tonnes to one million tonne and in the same year, ACEL set up a grinding unit with a capacity of one million tonne at Sankrail in West Bengal involving an investment of Rs. 122 crores. Finally, in January 2006, ACEL was merged with the parent company - Ambuja Cements. In March 2000, Ambuja Cements took over the management control of the Delhi based DLF Cement Ltd for Rs crores and rechristened it as Ambuja Cement Rajasthan Ltd (ACRL). Ambuja Cements, which held a

13 per cent of share holdings in ACRL, merged it with itself, effective from June 1, At the time of its acquisition, ACRL had a cement plant of 1.5 million tonnes capacity at Rabriyawas in Rajasthan and a captive power plant of 21 MW Formation of ACIL In 2000, Ambuja Cement India Limited (ACIL) was promoted as a joint venture of Ambuja Cements and two foreign investors-american International Groups (AIG) and Government of Singapore Investment Corporation (GIC). Ambuja Cements held major stake of 60 per cent in ACIL, while AIG and GIC had the remaining 40 per cent. In 2001 ACIL raised Rs 461 crores by issuing 'foreign currency convertible bonds and Warburg Pincus, a private equity player, alone contributed Rs 360 crores Stake in ACC The year 2000 also witnessed a historical event at Ambuja Cements as it acquired a major stake in ACC from the Tatas through its investment subsidiary - Ambuja Cement 'India Limited (ACIL). Initially, ACIL had purchased 11.4 per cent equity of ACC at Rs 732 crores from Tatas and a year later, it acquired the remaining three per cent of equity for Rs 196 crores, held by Tata companies. These two transactions raised ACIL's total stake in ACC to 14.4 per cent and investment to Rs 925 crores. At the time of acquiring the major stake, ACC had a capacity of 16.1 million tonnes, the largest cement company in the country Holcim's Entry In January 2005, Holcim acquired Ambuja Cements' entire 40 per cent shareholding in ACIL for Rs 897 crores, which was held by two foreign private equity investors, namely: AIG and GIC. It also subscribed to the share capital of ACIL by investing Rs 1834 crores by way of equity shares and Rs 810 crores by way of preference shares aggregating to an investment of Rs 3541 crores, making it one of the largest Foreign Direct Investment (FDI) in India. Post capital infusion, Holcim's total share holding in ACIL increased to 67 percent, whereas Ambuja Cements' share got diluted to 33 percent from the 111

14 original 60 percent. Consequent to this, ACIL had ceased to be a subsidiary of Ambuja Cements. Further, in February 2007, Ambuja Cements divested 11 percent equity in ACIL for a consideration of Rs crores, which further stepped up Holcim's share to 78 per cent. Later Holcim along with ACIL made an open offer to acquire ACC's equity shares at Rs 370 per share and shares of Ambuja Cement Eastern Ltd. (ACEL) at Rs 70 per share. Both the open offers received a good response. Consequently, ACIL's holdings in ACC increased from 13.8 percent to 34.7 percent and in ACEL from 94.1 percent to 96.9 percent. Consequently, ACEL was merged with Ambuja Cements. In May 2006, Holcim Group got the management control of Ambuja Cements and it reconstituted the company's board. Holcim inducted its three representatives as additional directors. In November 2006, Holcim bought another 3.67 per cent of the equity from the founding promoters and others. With this and post merger of ACEL, the aggregate shareholding of Holcim in Ambuja Cements increased to percent in December To further increase its stake, Holcim Group made a second open offer in December 2007 to acquire up to 20 percent stake at Rs 154 per share. This enabled Holcim to enhance its holdings in Ambuja Cements to percent. By January 2012, Holcim's stake in the company was further enhanced to percent. Effective from April 5, 2007 the company's original name was also changed to Ambuja Cements Limited (ACL) from Gujarat Ambuja Cements Ltd (GACL) to present a pan India image of the company Strategic Acquisitions In the last two years of 2010 and 2011, the company made three strategic acquisitions. It bought substantial stakes in Alcon, Nepal's Dang Cement Industries Pvt Ltd and Dirk India Pvt Ltd. 112

15 Ambuja Cements has formed a joint venture with Alcon Cement Company Pvt. Ltd., known as Counto Microfine Products Private Limited to introduce market innovation and offer a solution to large buyers. In fact, Alcon, which has a clinker grinding and cement packing unit in Goa, is already having a technical and marketing collaboration with ACC. Ambuja Cements has expanded its presence to South Asia region by acquiring about 90 percent stake in Nepal's Dang Cement Industries Private Limited by investing over Rs 20 crores. With this, Dang Cement has become a subsidiary of Ambuja Cements. Dang holds limestone mining lease in Nepal. Dirk India, a Dirk Group of UK Company, came to India in 2000 and has a unit in Nashik to produce Pozzocrete from fly ash to replace cement in concrete. In 2001, the company obtained 30 years contract for the exclusive recycling of all pulverized fuel ash (PFA) from Nashik Thermal Power Station, belonging to Maharashtra State Electricity Board (MSEB) Cement Plants Starting with a single cement plant in 1986 at Ambujanagar in Gujarat, over the years, Ambuja Cements has increased the strength of its plants to 13, comprising five integrated plants and eight grinding units. Similarly, its installed capacity has risen from a mere 0.7 million tonne per annum to 27 million tonnes, registering about 40 fold growth. Now, the company has cement manufacturing operations in nine States, namely: Chhattisgarh, Gujarat, Himachal Pradesh, Maharashtra, Punjab, Rajasthan, Uttrakhand, Uttar Pradesh and West Bengal. Of the company's five integrated plants, the three were set up by the company itself and the other two were added through the acquisitions and mergers of two companies Modi Cements and DLF Cement. The integrated plants are Ambuja Nagar - Gajambuja plant, Bhatapara plant, Darlaghat plant, Chandrapur plant and Rabriyawas plant. 113

16 Gajambuja Plant Ambuja Cements' first integrated cement plant was set up at Ambuja Nagar, adjacent to Vadnagar village, Kodinar taluka in Junagadh district of Gujarat. It was commissioned in October 1986 with a capacity of 0.7 million tonne. A decade later, in 2006, its capacity was increased to 1.5 million tonnes. The company's second integrated cement plant, known as Gajambujam, is also located on the same premises of Ambuja Nagar. Gajambujam plant was commissioned in March 1993 with a capacity of one million tonnes and since then its capacity has been increased to four million tonnes. Thus, the company's Ambuja Nagar complex has a combined capacity of 5. 5 million tonnes, which makes it the country's one of the largest capacity plants and second biggest in Gujarat, the first being UltraTech's Gujarat Cement Works, which has a capacity of 5.8 million tonnes. The Ambuja Nagar complex is well equipped with captive power plants having capacity of 90 MW. Initially, a 60 MW captive power plant was installed and in 2010, an additional capacity of 30 MW was added Bhatapara Plant Originally, the Bhatapara Cement plant was set up in 1987 by Modi Cements and in 1997; the Ambuja Cements acquired the same and renamed it as Ambuja Cement Eastern Ltd (ACEL), which was ultimately merged with Ambuja Cements in January The Bhatapara plant was restarted in December 1997 and was also expanded. Its present cement capacity is 2.9 million tonnes. In 2010, a 33 MW captive power unit was commissioned at Bhatapara Chandrapur Plant Located at Chandrapur in Maharashtra, the Chandrapur plant is Ambujas' fourth integrated cement plant with a cement production capacity of 2 million tonnes along with a 40 MW captive thermal power plant. The unit commenced production on June 1, 2002 and the total cost of the project was over Rs

17 crores including the power plant. At present, Chandrapur plant has a capacity of 4.5 million tonnes Darlaghat Plant Located in Solan district of Himachal Pradesh, the Darlaghat plant was commissioned in September 1995 with an initial capacity of 0.5 million tonne and three years later, its capacity was increased to 1.16 million tonnes. At present, Darlaghat plant has a capacity of 1.6 million tonnes and also a captive power plant of 24 MW Rabriyawas Plant Commissioned in 1996, originally Rabriyawas plant was set up by DLF Cement Ltd. In March 2000, Ambuja Cements acquired DLF's management control and renamed the company as Ambuja Cement Rajasthan Ltd (ACRL), making it an associate company. At the time of its acquisition, ACRL had a capacity of 1.5 million tonnes and a captive power plant of 21 MW. As ACRL was a loss making company, it was merged with the parent company Ambuja Cement, effective from June 1, Located in Pali district of Rajasthan, Rabriyawas' present capacity is 1.8 million tonnes. 115

18 Table-12 Ambuja Cements plants at a glance alphabetically listed Capacity Capacity Sr. Cement District State MTPA MTPA No. Plants Jan 2010 Jan 2012 Year 1 Ambujanagar Junagadh Gujarat Cement Plant 2 Bhatapara Raipur Chhattisgarh Cement Plant 3 Bhatinda Bhatinda Punjab Grinding Plant 4 Chandrapur Chandrapur Maharashtra Cement Plant 5 Dadri GB Nagar Uttar Pradesh Grinding Plant 6 Darlaghat Solan Himachal Cement Plant 7 Farakka Murshidabad West Bengal Grinding Plant 8 Magdalla Surat Gujarat Grinding Plant 9 Nalagarh Solan Himachal Grinding Plant 10 Rabriyawas Pali Uttarkhand Cement Plant 11 Roorkee Grinding Plant Haridwar

19 12 Ropar Ropar Punjab Grinding Plant 13 Sankrail Howrah West Bengal Grinding Plant Total Source: Labour and Industrial Chronical, Survey of Cement Industry & Directory 2012:3 rd Edition MTPA Million Tonnes per Annum, Grinding Units Besides setting up integrated cement plants, the company opted for grinding units to make an entry into new States, beginning with Punjab in 1995 and since then, it has set up a total of eight grinding units. Of these, two are in Punjab at Bhatinda and Ropar, two in West Bengal at Farakka and Sankrail; one each in Gujarat at Magdalla; in Himachal at Nalagarh; in Uttrakhand at Roorkee and in Uttar Pradesh at Dadri. The Ropar and Bhatinda grinding units in Punjab are located in the vicinity of thermal power plants, mainly for manufacture of fly ash based cement. The first grinding unit at Ropar was commissioned in In the year , its capacity was expanded from 1.34 million tonnes to 2.5 million tonnes. It also has a 12.5 MW dedicated power line from the adjacent Ropar Thermal Plant. It was the first grinding unit in the country to use fly ash in large quantities for cement manufacturing. The second grinding unit at Bhatinda was commissioned in 2001 with a capacity of 0.5 million tonne. In West Bengal, the Sankrail grinding unit has a capacity of 1.5 million tonnes, while the Farakka grinding unit's capacity is one million tonne. They were set up by the company's erstwhile subsidiary Ambuja Cement Eastern Ltd in 2001 and 2007, respectively. 117

20 4.2.8 Captive Power Plants (CPP) Over 40 percent of the production cost of cement is power, so gradually the company is reducing its dependence on grid power by installing captive power plants at its various cement plants (CPP). In 2010, the company's captive power capacity has increased to about 420 Mw. Further, it sources a cheaper and higher quality coal from South Africa and better furnace oil from the Middle East. The cumulative result of this strategy is that today the company is in a position to sell its excess power to the local State governments. ACL has also pioneered the development of the multiple bio-mass co-fired technology for generating greener power in its captive plants. Recently, the company has opted for renewable energy sources and has made its first investment in a wind power project at Gujarat. 118

21 Table-13 Ambuja s Captive power plants Sr. MW Jan Captive Power Plants No Ambujanagar-Gajambuja Bhatapara Cement Plant Bhatinda Grinding Unit Chandrapur Cement Plant Dadri Grinding Unit Darlaghat Cement Plant Farakka Grinding Unit Magdalla Grinding Unit Nalagarh Grinding Unit Rabriyawas Cement Plant Ropar Griinding Unit Roorkee Grinding Unit Sanskrail Grinding Unit Total Source: Labour and Industrial Chronical, Survey of Cement Industry & Directory 2012:3 rd Edition Market Developments Cement is a commodity, which is sold largely on price but Ambuja Cements was the first company to create a brand out of cement and command a premium. The company has a nationwide reach with strong footprints in the West, North and East India. Its cement plants cover strategic locations in all these regions. The company maintains a strong position of about 16.5 percent market share in its primary markets and around 10 percent on an all-india basis. In the last 25 years, it has built a large network of over 7500 dealers and 20,000 retailers across 18 States in the country. Its wide network of dealers and retailers nurtured on empowered partnership enables the company to reach even the tiniest village. 119

22 Bulk Cement Transportation Almost all the cement companies in India transport 90 percent of their cement in bags by rail or road but Ambuja Cements has earned the distinction of being the country's first cement company to move bulk cement by sea. This capability has brought many coastal markets within the company's easy reach. This has also enabled the company to become the country's largest cement exporter. In 1993, the company built up a dedicated all weather captive port at Muldwarka with three terminals along the country's western coastline to facilitate timely, cost effective and environmentally cleaner shipments of bulk cement to its customers. The Muldwarka port is just 8 kms from the company's Ambuja Nagar plant and is capable of berthing 40,000 DWT vessels. For serving the coastal markets, the company today has four bulk cement terminals at Surat, Panvel, Kochi and Galle (Sri Lanka) with unloading, storage and packaging facilities. Galle terminal is managed by the company's subsidiary - Ceylon Ambuja Cement (Private) Ltd. In fact, the company had launched its marketing in Sri Lanka initially with bagged cement during the year In the year 2010, the company's fleet of ships increased from seven to nine for ferrying the bulk cement to the terminals. One more ship is under construction and the same will be added soon. 120

23 Table-14 Capacity Production and Profitability of Ambuja Cement Particulars Unit Total Capacity Mn Tons Cement Production Mn Tons ** Total Sales, Volume Mn Tons Cement Sales, Value Rs. Crs Total Income Rs. Crs Net Profit Rs. Crs Net Worth Rs. Crs EPS Rs Profit After Tax Rs. Crs Dividend Per Cent Source: Labour and Industrial Chronical, Survey of Cement Industry & Directory 2012 :3 rd Edition Performance In the last four years, the company's total installed cement capacity has increased from million tonnes in 2008 to 27 million tonnes in Similarly, the company has recorded an impressive growth in its sales from Rs 6235 crores to Rs 8515 crores Subsidiary Companies At present, Ambuja Cements has three subsidiary companies, namely: Chemical Limes Mundwa Pvt Ltd; Kakinada Cements Ltd; and MGT Cements Pvt Ltd. As on December 31, 2010, the company held 100 per cent equity in all the three subsidiaries. However, none of them is in operation. Besides the three subsidiaries, the company also has two joint ventures, namely: Wardha Vaalley Coal Fields Pvt Ltd and Counto Microfine Products Pvt Ltd. In Wardha Valley Coal Fields, the company has equity of per cent, while Count Microfine is the latest joint venture with Goa's Alcon Group. 121

24 Future Cement Project In October 2010, the company signed an agreement with the Rajasthan State Industrial Development and Investment Corporation for setting up a 2.2 million tonne clinkerisation unit in Nagaur district. The preproject planning is at an advanced stage and construction is expected to start. This project will support the company's objective of maintaining long term market share at around 10 per cent Knowledge Initiative In 2009, the company launched its knowledge initiative Ambuja Knowledge Center, to enable industry professionals get a first-hand feel of the world of cement and concrete. During the year, three centers became operational in the cities of Ahmedabad, Jaipur, and Kolkata. 4.3 JAYPEE CEMENT Jaypee Cement is part of Noida based Rs.18, 000 crores JP group. In the last eight years, the Jaypee Groups flagship company Jayprakash Associates Limited (JAL) has increased its cement capacity from a mere 4.8 million tonnes to about million tonnes, registering a five fold growth. This makes JAL the country s 4 th largest standalone cement producer. It also has 278 MW of thermal captive power capacity. JAL has two joint venture companies Bhilai Jaypee Cement Ltd (BJCL) and Bokaro Jaypee Cement Ltd (BoJCL) with combined capacity of 4.30 millon tonnes. With these two JVs, JP Groups capacity goes upto million tonnes. Further, the Group is poised to have a cement capacity of million tonnes with 22 cement plants and 700 MW captive power capacity by the end of JAL is a flagship company of Jaypee Group with four business segments, namely engineering, cement, star hotels and real estate. Today, JAL is the fastest growing cement company in the country with a capacity of million tonnes, contributed by 14 cement plants, comprising six integrated plants and eight grinding units. This makes JAL the country s fourth 122

25 largest cement producer, the three others being UltraTech Cement million tonnes; ACC million tonnes and Ambuja Cements million tonnes. JAL s promoters were never deterred by the slow growth in cement industry, while expanding their cement capacities. In 2004, while spaking on the company s cement expansion plans, the then Chairman Jaiprakash Gaur observed: It is a cyclical business but the demand is ongoing and we will definitely go ahead with our expansion plans JAL along with its subsidiaries and joint venture companies is continuing to add capacities to take Jaypee Group s tally further to over 38 million tonnes by the year By doing so, JAL is scripting the fastest organic growth, which has not been achieved by any other Indian company in such a short period of less than a decade. JAL is also positioning itself amongst the world s top 15 cement manufacturers. The Jaypee cement is a leading brand in the markets of Bihar, Delhi, Gujarat, Haryan, Himachal, Madhypradesh, Utarpradesh and Uttarakhand. It has been the largest consistent exporter of cement to Nepal for several years now. Jaypee Group is driven by the vision of its founder Chariman Jaiprakash Gaur, 82, a government employee turned most successful enterprneur. He entered into business in 1958 starting as a civil contractor and in the last five decades, has build up a multi product Jaypee Group. Now his sons Manoj Gaur, Executive Chairman and Sunny Gaur, Managing Director Cement Divison, alongwith a team of dedicated senior managers are steering the Group to newer heights Cement Business in retrospect After being highly successful in the construction business, JAL diversified into cement manufacturing in Initially, it created a cement division under Jaiprakash Industries Limited (JIL), which later in 2003, merged with Jaiprakash Associates Limited (JAL). JAL s first cement plant of one million 123

26 tone capacity was set up at Jaypee Nagar; 14 km form Rewa City in Madhya Pradesh. Commissioned on Decemeber 2, 1986, the Jaypee Rewa Cement Plant was the most modern plant with dry process single rotary kiln and 4 stage pre-heater and calciner. In Januuary 1992, Unit II of 1.5 million tonnes was added at Rewa Plant, which increased to its capacity to 2.5 million tonnes. Now Rewa Plant has capacity of 3.2 million tonnes. In October 1996, JAL commissioned its second cement plant Jaypee Bela at Jaypeepuram with capacity of 1.7 million tonnes. Jaypee Bela, an ultra modern plant of international starndards, is situated within the vicinity of 5 km from Jaypee Rewa Plant and now its capacity is 2.2 million tonnes. Further to achieve better economies of scale and to take advantage ot the market opportunities, JAL sett up its third plant Jayppe Cement Blending Unit ( JCBU) at Sadwa Khurd village on the Allahabad Rewa Road, about 28 kms from Allahabad city. Commissioned in December 2002, this plant has a capacity of 0.6 million tonne. With a view to use locally available fly ash from TPC Tanda, the company commissioned its first grinding unit Jaypee Ayodya Grinding Unit (JAGO) in August 2004, Located at Tanda in Uttar Pradesh, JAGO has a capacity of one million tonne and it receives clinker from Jaypee Rewa and Jaypee Bela plants. 124

27 Table 15: JAL s cement plants in operation at a glance- alphabetically listed Sr No Cement Plants District State Capacity MTPA Jan 2010 Capacity MTPA Jan 2012 Year 1 Chunar Cement Mirzapur UP Factory 2 Dalla Cement Sonebhadra UP Factory 3 Jaypee Ayodhya Grinding Operations Ambedkar Ngr UP Jaypee Bela Rewa MP Cement Plant 5 Jaypee Gujarat Kutch Gujarat Cement Plant 6 Jaypee Himachal Solan HP Cement Plant 7 Jaypee Himachal Cement G&B unit Solan HP Jaypee Panipat Panipat Haryana Cement Grinding Unit 9 Jaypee Rewa Rewa MP Cement Plant 10 Jaypee Roorkee Cement Grinding unit Haridwar UK Jaypee Sadwa Allahabad UP Cement Blending unit 12 Jaypee Sidhi Sidhi MP Cement Plant 13 Jaypee Bulandshahar UP Sikandrabad Cement Grinding Unit 14 Jaypee Kheda Gujarat

28 Wanakbori Cement Grinding unit JAL TOTAL Source: Labour and Industrial Chronical, Survey of Cement Industry & Directory 2012:3 rd Edition MTPA- Millon Tonnes Per Annum, Year - Year of first commissioning, G - Grinding Unit Acquisitions & Mergers JAL has accomplished a massive growth in its cement business during the period of through acquisitions and mergers of cement companies, brown-field expansions, green- field projects, joint ventures and special purpose vehicles (SPVs). No other Indian cement company has adopted such a multi- faceted approach so far for the kind of growth achieved by JAL. JAL s first acquisition was the state owned Uttar Pradesh cement Corporation Ltd (UPCC), which was a BIFR case. It was on October 11, 2006, that the Allahabad High Court confirmed the sale of assets of the closed UPCC in favour of Jaiprakash Associates as it had quoted the highest price of Rs 459 crores against the reserved proce of Rs 271 crores. There were three other leading companies as bidders, viz., Dalmia Cement, Grasim Industries (now UltraTech) and Lafarge India, but all of them had quoted the same set proce of Rs 271 crores. UPCC was incorporated in early 50s by the Government of Uttar Pradesh for manufacture of cement and it had set up three plants in Mirzapur district at Churk, Chunar and Dalla. Churk was the first cement plant in public sector to go on stream in 1954 with 0.48 million tonne cement. The Chunar plant had a distinction of being the biggest and the first split location planbt with its kiln at Dalla (at a distance of 116 Kms from Chunar). Owning to various reasons, UPCC became sick and remained closed for about 15 years till the intervention of the Court. 126

29 JAL has already revived the Chunar and Dalla units by infusing fresh capital, morddenizing old machinery and adding new equipments. First, Chunar Cement Factory was re-commissioned in February 2008 with a capacity of 2.5 million tonnes, followed by Dalla Cement Factory with a new kiln and now it has a capacity of 2 million tonnes. The Dalla plant is also equipped with a 38 MW captive power plant. In 2006, JAL acquired a second company Gujarat Anjan Cement Ltd., which was implementing a 1.2 million tonnes plant at Kutch in Gujarat. The Gujarat Anjan was promoted by the Ahmedabad based Sumeru Group and its acquisition enabled JAL to have a foothold in the western India markets, particularly in Gujarat. Later in April 2008, Gujarat Anjan Cement Ltd was merged with JAL. Table 16: JAL s cement plants under implementation (including subsidiaries) Sr No Cement Plants District State Capacity Planned MTPA To be Commissioned in 1 Andhra Cement- Guntur AP Nadikude 2 Andhra Cement GU Vizag AP Jaypee Balaji Cement Krishna AP Plant 4 Jaypee Sidhi- II, Sidhi MP Expansion 5 Jaypee Super Cement Sonebhadra UP Plant 6 JCCL- Shahabad Gulbarga KAR TOTAL Source: Labour and Industrial Chronical, Survey of Cement Industry & Directory 2012:3 rd Edition MTPA- Millon Tonnes Per Annum, G - Grinding Unit 127

30 4.3.3 New plants added Between the years of 2008 to 2010, JAL has commissioned seven green-field cement plants, comprising three integrated plants and four grinding units. The three integrated plants include: JAypee Sidhi in Madhya Pradesh, September 2008; Jaypee Gujarat at Bhuj in Gujarat, March 2009; and Jaypee Himachal at Baga in Himachal, January The four grinding units are: Jaypee Panipat in Haryana, March 2008; Jaypee Wanakbori in Gujarat, November 2009; Jaypee Roorkee in Uttrakhand, December- 2009; and Jaypee Bagheri in Himachal, January JAL has set up green-field cement plants in Chattisgarh, Jharkhand, and Madhya Pradesh through an innovative approach of joint ventures with prestigious Central owned public sector undertaking like SAIL, retaining the management and operational control with itself. It has successfully launched two such joint venture companies, namely: Bhilai Jaypee Cement Limited (BJCL) and Bokaro JAypee Cement Limited (BoJCL), which are now already in commercial operations. Incorporated on April 11, 2007 in Chhatisgarh, Bhilai Jaypee Cement Limited (BJCL) is the first joint venture of JAL with Steel Authority of India Ltd. (SAIL). JAL holds a stake of 74 percent in BJCL, while the remaining 26 percent is held by SAIL. SAIL has given the required land on a long term lease at its Bhilai Steel Plant site. It also provides slag for the grinding unit at Bhilai. BJCL has set up two slag cement plants, one is a million tonnes clinkerisation plant at Babupur in Satna district of Madhya Pradesh and other is a split location grinding unit of 2.20 million tonnes capacity at Bhilai in Chhattisgarh. The clinkerisation unit was successfully commissioned in December 2009, while the grinding unit commenced commercial operations from June

31 Bokaro Jaypee Cement Limited (BoJCL) is the second joint venture between JAL and SAIL with management control vested in the JAL. BoJCL has set up a 2.1 million tonnes slag based cement grinding unit at Bokaro in Jharkhand. Incorporated on March 13, 2008, it sources slag from SAIL Bokaro and clinker from JAL s cement plants. Bokaro Jaypee Grinding Unit commenced commercial production in May Table 17: BJCL and BoJCL cement plants at a glance Sr Cement Plants State Capacity Capacity Year No MTPA Jan 2010 MTPA Jan Bhilai Jaypee Cement Plant- MP Clinkerisation, JV 2 Bhilai Jaypee Grinding Unit, JV CHG Bokaro Jaypee Grinding Unit, JV JHK TOTAL Source: Labour and Industrial Chronical, Survey of Cement Industry & Directory 2012:3 rd Edition MTPA- Millon Tonnes Per Annum, Year - Year of first commissioning, JV Joint Venture under Implementation The Jaypee Group has two more companies, comprising one joint venture, namely: Gujarat Jaypee Cement & Infrastructure Limited (GJCIL) and one subsidiary Jaypee Cement Corporation Limited (JCCL). These two ventures are in the process of implementing their cement plants in the states of Gujarat, Andhra Pradesh and Karnataka. Gujarat Jaypee Cement & Infrastructure Limited (GJCIL) was incorporated on June 20, 2007, as a joint venture between Jaiprakash Associates Limited (JAL) and Gujarat Mineral Development Corporation Limited (GMDC) for setting up a 2.4 million tonnes capacity integrated cement 129

32 plant at Kutch in Gujarat. Originally, JAL had a 74 percent stake in GJCIL but later, the same was increased to 100 percent effective December 26, GJCIL will also have a lignite based captive power plant and captive jetty for cement exports and serving coastal districts. In February 2011, JAL acquired 100 percent stake in Zawar Cement Private Limited (ZCPL) and renamed it as Jaypee Cement Corporation Limited (JCCL), which is a wholly owned subsidiary of JAL. JCCL is setting up a 3 million tonnes integrated cement plant at Shahabad aling with a 35 MW captive power plant at a cost of Rs 1400 crores. The orders for main plant and machinery have already been placed and the project is scheduled to be commissioned during the financial year of In fact, the Zawar Cement had a cement plant at Bankur village in Chittapur tehsil of Gulbarga district of Karnataka.This plant was originally known as ACC-Shahabad Cement Works, which was first acquired by the Kolkatta based HMP Ltd in 1990 and later in 2006, HMP divested the plant to pune based Zawar Cement. Set up in 1926, Shahabad Cement was India s fourth cement plant. Further, JCCL is also getting the cement plants located in Andhra Pradesh and Gujarat into its fold. For this, on November 14, 2011, the JAL s board accepted the recommendations of the Committee of Directors to demerge the company s cement plants in Andhra Pradesh and Gujarat into JCCL. In Andhra Pradesh, JAL is setting up one 3.5 million tone integrated cement plant along with a 50 MW captive power plant. This plant, known as Jaypee Balaji Cement, is being set up at Budawada village in Jaggatapeta in Krishna district of Andhra Pradesh. According to a report in Times of India, in November 2011, JAL has acquired Andhra Cement Limited from GP Goenka Group in an all cash deal for Rs 235 crores. Andhra Cements incurred a loss of Rs crores on net sale of Rs crores last year while two of its units have been non 130

33 operational since June Andhra Cements had accumulated losses of over Rs 200 crores in the past two years. Andhra Cements is a 73 years old cement company and before becoming non operational in the year 2010, the company had a cement capacity of 1.42 million tonnes per annum. Andhra Cements was also in the process of augmenting its cement production Capacity to 3.5 million tonnes by 2010, but owing to several problems, the expansion has not yet been completed. The Nadikude integrated plant s capacity is being increased from 0.86 million tonnes to 2 million tonnes and Visakhapatanam ginding unit s from 0.56 million tonnes to 1.50 million tonnes. In Gujarat, JAL already has two cement plants in operation since 2009 with an aggregate capacity of 4.8 million tonnes. In addition, JAL s JV Company Gujarat Jaypee Cement & Infra Ltd (GJCIL) is setting up a cement unit with a capacity of 2.4 million tonnes. With this, JAL s total cement capacity in Gujarat will be increased to 7.2 million tonnes, making it the largest cement producers in the Gujarat State, the other two comparable producers being ultra Tech Cement 7 million tonnes and the Ambuja Cement 6.7 million tonnes Captive Power Plants Power is the lifeline for cement manufacturing and its uninterrupted availability at economical cost is a critical success factor for a cement company. JAL has strategically set up its own thermal captive power plants (CPP) to support cement production. JAL s first CPP- a 22.5 MW thermal plant, was set up at Jaypee Rewa plant in November The second one, commissioned in November 2004 at Jaypee Vela, was also a 22.5 MW power plant. In August 2006, the company added the third CPP at Rewa complex with a capacity of 38.5 MW, 131

34 raising the CPP s capacity to about 83.5 MW. This made the Rewa complex self reliant in meeting its entire power requirements at reduced energy cost. By January 2010, JAL s total CPP capacity was increased to MW and by January 2012, to 278 MW. Further, the Group is poised to increase its captive power capacity to over 700 MW. This will make Jaypee to have the largest thermal captive power facility among the Indian cement companies. Table 18: Captive Power Plants (CPPs) at a glance- alphabetically listed Sr Power Plants at Capacity Capacity Year No MW Jan 2010 MW Jan Jaypee Rewa Cement Plant Jaypee Bela Cement Plant Jaypee Chunar Grinding Unit Jaypee Dalla Cement Plant Jaypee Sidhi Cement Plant Jaypee Gujarat Cement Plant Jaypee Wanakbori GU TOTAL Source: Labour and Industrial Chronical, Survey of Cement Industry & Directory 2012:3 rd Edition Year - Year of first commissioning Operational Performance JAL s cement division has emerged as the second largest revenue earner for the company after the construction division, which was its first business segment. The company s cement production has increased to million tonnes in from 6.78 million tonnes in Cement dispatches including 132