Mumbai: Warning signs are showing up on the country’s cement industry, as it struggles with escalating input costs and a forced inability to pass on the costs to their customers.
Two of the top four cement manufacturers in the country have seen their profits slide in the quarter ended June, while the other two witnessed their slowest growth in eight quarters.
Cost pressures: Grasim Industries chairman Kumar Mangalam Birla
On Friday, Ambuja Cements Ltd said its net profit for the quarter fell 33% to Rs577.02 crore, year-on-year, while Grasim Industries Ltd reported a marginal 0.4% rise.
Ambuja Cements’ quarterly net sales rose 8% to Rs1,569.77 crore and its domestic despatches were up 5%, but exports fell 70% reflecting the export ban initiated by the government, which impacted six weeks in the quarter. “Cost pressures continue to be unrelenting,” Ambuja Cements said in a statement. “Fuel and power costs in our plants are significantly higher year on year (34%), in particular cost of imported coal which has tracked global oil developments and shown no signs of abatement in the near future.”
Ambuja Cements also had a gain of Rs303 crore net of tax on the sale of its remaining stake in Ambuja Cements Pvt. Ltd to Holderin Investments Ltd, the investment subsidiary of Swiss cement major Holcim Ltd.
Grasim Industries, part of the Aditya Birla Group, said net profit for the quarter came in at Rs672 crore, while revenue grew to Rs4,430 crore from Rs4,060 crore.
Production increased by 3% at 3.99 million tonnes, while ready mix concrete volumes grew by 61% due to the commissioning of new plants.
Last week, UltraTech Cement Ltdhad said its profit for the first quarter rose 2% whileACC Ltd, the country’s largest cement maker, on Thursday reported a near 27% drop in its second quarter net profit, hurt by a surge in fuel and input costs.
(Ashwin Ramarathinam contributed to the story.)
Google-backed Erasmic merges with Accel Partners
Mumbai: Bangalore-based seed fund Erasmic Venture Fund is merging with Accel Partners, the Palo Alto, California-based early stage venture capital firm.
The new entity, Accel India Venture Fund, will be a dedicated India fund managed by the four partners of Erasmic.
The only Indian precedent to a venture fund merger of this sort was in 2006, when Bangalore-based Westbridge Capital Partners was acquired by Sequoia Capital.
The new entity will raise a fresh fund of $60 million (Rs253.2 crore), titled Accel India Venture Fund II, by the end of the current quarter, with some of Accel’s limited partners, or institutions that invest in private equity funds, coming on board.
“Accel India Venture Fund’s LPs will be specific to this fund and...will come from existing groups of Accel and Erasmic LPs,” said Peter Wagner, partner, Accel Partners.
The firm, which has $4 billion under management, has invested in over 200 companies in the US, UK and China, including media company Real Networks Inc. and social networking site Facebook Inc.
Erasmic, backed by Google Inc. among others, typically invests $100,000-500,000 in a pre-series A round of venture financing .
So far, it has invested in about 14 companies out of a dedicated corpus of $10 million, including fastfood chain Kaati Zone, design store Dovetail Furniture Pvt. Ltd and voice SMS company Kirusa Inc.
The India-focused fund will invest in sectors such as Internet, mobile, media, life sciences, technology and enabled services and consumer-focused companies. While the new fund will be six times larger than its first, “we will continue to provide seed capital for companies in very early stages,” said Prashanth Prakash, former managing director, Erasmic and now partner, Accel Partners.
While there is no financial investment in the Accel-Erasmic deal, Prakash, along with his India partners Subrata Mitra, Mahendran Balachandran and Gagan Kumar, will share the fund management fee with Accel.
JSW Infra plans to build deep sea port in Orissa
Kolkata: JSW Infrastructure and Logistics Ltd, part of JSW Group, is planning to build a deep sea port in Orissa, some 250km from its upcoming steel plant in West Bengal, and estimated to cost Rs1,500-2,000 crore, group vice-chairman and managing director Sajjan Jindal said.
“We’ll be using it to import coal and export steel from our Bengal and Jharkhand plants,” Jindal said here on Friday. Staff Writer
Four Seasons plans to offer equity to farmers
Mumbai: Four Seasons Wines Ltd, the wine-making arm of UB Group, said Friday it is planning a preferential allotment of equity to its grape suppliers in and around Baramati district, Maharashtra. The first equity participation of its kind in the Indian wine sector will ensure the firm a regular supply of wine grade grapes, replacing the existing contract-farming model.
The company, which has around 600 acres of vineyard through contract farming, will offer 500 shares of Rs10 each per acre of cultivation, said Abhay Kewadkar, chief wine-maker and a director of Four Seasons. The size of equity dilution in Four Seasons towards this scheme “will be significant,” though United Spirits Ltd, the spirits company of UB Group, will hold controlling stake in the wine company, Kewadkar said. C.H. Unnikrishnan
PR Srinivasan is new head of CVCI India
Mumbai:P.R. Srinivasan has taken over as head of Citigroup’s private equity arm Citigroup Venture Capital International India, or CVCI, from Ajay Relan. Srinivasan, previously managing director, CVCI India, will report to Dipak Rastogi, chief executive officer, CVCI.
Srinivasan will lead a team of senior investment professionals at CVCI India including Vivek Chhachhi, Vinayak Shenvi, Ajay Tandon and Rahul Yadav, a Citi release said. Before joining CVCI, Srinivasan was chief representative in HSBC Private Equity. Relan, instrumental in setting up CVCI’s India operations, will set up his own venture, industry sources said. However, this could not be confirmed. Namitha Jagadeesh