Lafarge has reason to cheer, finally

After a long wait of almost a year and a half, French cement giant Lafarge now has reasons for cheer.

The Supreme Court had, yesterday, approved of the company’s plans for limestone mining operations in Meghalaya. The order brings much-needed relief to the company, which has a capacity of merely seven million tonnes, which is concentrated in the eastern region. Lafarge, through its Indian subsidiary, Lafarge India, has four cement plants in the states of West Bengal, Jharkhand and Chhattisgarh.

An industry analyst at a foreign brokerage firm said the apex court’s verdict would be of immense benefit to Lafarge, as Meghalaya offers substantial subsidy on freight rates and other concessions on sales tax and excise duties.

Lafarge’s plans to increase its capacity from the current seven million tonnes to around 12 million tonnes had taken a beating last year. The company was scheduled to commission a three million-tonne plant in Himachal Pradesh. However, the project failed to take off, owing to environmental concerns.

Lafarge had outlined plans to increase its presence across India. According to company officials, in 2008, the cement maker had planned to increase its capacity to 20 million tonnes by 2013, with an investment of $1 billion.

The company had planned three new units, with a capacity of 2.5 million tonnes each, in Karnataka, Meghalaya and Rajasthan. However, so far, no updates are available on these projects. When contacted, a Lafarge spokeswoman said, “Lafarge India is pursuing expansion plans in India. We would keep you posted on further developments.”

Industry analysts say the relief for Lafarge has no bearing on other players. ACC, Ambuja and UltraTech account for quite a few mining licences and command a substantial market share in the 300 million-tonne cement market.

Lafarge's peers in the Indian market also do not see it as a threat. Swiss cement major Holcim, which entered India much later than Lafarge, and Aditya Birla group's UltraTech command eight times more cement making capacity than the French cement maker.