Lafarge to pump in $1 bn for pan-India presence

In a move that could push Lafarge several steps up among the cement-makers in India, the French company is all set to pump in over $1 billion (Rs 4,300 crore) to take its overall capacity close to 20 million tonnes (MT) in the next five years.

After acquiring L&T Concrete and capturing over 25 per cent of the market share in ready-mix concrete space in the country, the cement major is set to establish a pan-India presence. The company has plans to set up at least three greenfield units with a capacity of 2.5 MT each. According to sources, the company has zeroed in on Rajasthan, Karnataka and Meghalaya for the facilities.

The fresh capacities will place Lafarge in close vicinity of UltraTech Cement and Ambuja Cements, which currently have capacities of 21 MT and 19 MT respectively. However, in comparison to its global competitor Holcim, Lafarge will still have a long way to go.

Holcim (through ACC and Ambuja) currently has a capacity of 41 MT, and the Swiss cement major plans to take it further to 55 MT in the next five years. Lafarge, which so far is known as a regional player with a capacity of mere 5.5 MT, is gearing up to have cement-making units in new regions. The company has already embarked on its projects in Chhattisgarh and Himachal Pradesh, which, once completed, will take its capacity to 12 MT.

With its Himachal plant, the company has got a foothold in the northern market, while its plants in Jharkhand and Chhattisgarh are expected to get it a substantial market share in the eastern region. The company's Rajasthan unit will take care of the western and central zones whereas its Karnataka plant will help it gain presence in the southern market.

Holcim does not have any units in the north-eastern part of the country. The region is deficient in cement production with an overall capacity of not even 1 mt (as per the Cement Manufacturers' Association statistics).

Barak Valley Cements, Meghalaya Cements and Mawmluh Cherra are among the small players having operations in the region. At a time when various cement-makers have put their fresh plans on hold, analysts said that Lafarge has a long-term plan and they are here to stay. "Cement is a lucrative business in India in the long run," an analyst said. Since the domestic cement industry with over 50 players is witnessing consolidation amid rising competition, Lafarge has kept its acquisition options open.