Global Cement Majors Eye Acquisitions In India
Global cement major Blue Circle is scouting for acquisitions in India and has already initiated talks with several south-based cement companies. A core team from the UK-based company has set up a representative office in Bangalore.
According to a senior Blue Circle official, Vijay Agarwal, Talks have been held with several companies, but they are preliminary in nature and we are keeping all our options open. The Blue Circle Bangalore office is headed by expatriate Chris Blazdale.
Blue Circle executives declined to name the companys targets but sources claimed the company has Mysore Cement, Sanghi Cement, Raasi Cement and DLF Cement in its sights.
The domestic cement industry is in the midst of a severe recession and many small, unviable companies are suffering losses. A shakeout has already begun with big names like Gujarat Ambuja, Indian Rayon and India Cements initiating moves to gobble up smaller players.
Apart from Blue Circle, other global cement giants like Holder Bank and Scan Cement have also jumped into the fray. These companies have set up representative offices to seek joint venture partners in India. Greenfield projects will be set up later, sources said.
Blue Circles strategy for Indian cement companies will be to closely examine all opportunities available, focusing mainly on acquisitions of south-based companies, besides seeking joint ventures with larger players like ACC, Gujarat Ambuja and L&T Cement. Agarwal said the company is short-listing names for joint ventures or acquisition. A list of seven-eight companies will be prepared. After this, talks will be held, Agarwal said. Proposals for marketing tie-ups will also be looked into, he added.
We do not want to be a national player and will limit ourselves the central and the southern part of the country, added Agarwal, who expects cement demand to double within the next decade.
According to cement analysts, only a handful of companies control most of the cement business worldwide. However, the Indian market is fragmented with more than 60 companies producing nearly 80 million tonnes.
Interestingly, Blue Circle alone has a worldwide installed capacity of 75 million tonnes.
The company has however clarified that it is not interested in any hostile takeovers. We are more interested in forging joint venture and picking up equity stakes, said Agarwal.