Holcim to be No 2 cement maker in India

Consolidation in the Indian cement industry, which started with French major Lafarge buying out Tata Steel's cement business, is gaining momentum.

Demand for cement is expected to grow exponentially in the next 12-18 months because of higher capital expenditure by the government in infrastructure, whereas no fresh capacities are coming up. Cement prices are set to remain firm on the back of rising capacity utilisation.

ACC, the target of today's deal, has been an attractive candidate for merger and acquisition activity, as it is ideally positioned to benefit from the modernisation of its plants, capacity expansion and improved operational efficiencies.

ACC has 1.6 million tonnes of additional capacity coming on stream by the end of 2004-05. It is in the process of modernising its Chaibasa plant, and simultaneously setting up a captive power plant at Chaibasa that will reduce power costs. 
 

The top league now
Capacity in million tonnes pa
Grasim Industries	30.01
ACC	18.93
Guj Ambuja Group	12.90
India Cements	8.81
JK Group	6.41
Madras Cements	5.47
Lafarge	5.00
Birla Corporation	4.78
Century Textiles	4.70
Zuari Cement	3.40

An entry into ACC gives Holcim an immediate leg-up in the league rankings. Holcim Cements India, part of the world's second-largest cement manufacturer, the Holcim Group, will be the second-largest cement player in India, with a capacity of 20.93 million tonnes after the deal is finalised.

Grasim, the AV Birla group flagship company, remains at the number one position in the capacity ranking, with consolidated cement capacity of over 30 million tonnes per annum.

Holcim Cement currently has an interest in the two-million tonnes capacity of Gujarat Ambuja Eastern through Ambuja Cement India. But if Holcim succeeds in controlling 50 per cent of ACC after the open offer, it will have an interest in about 20.93 million tonnes per annum.

Grasim is currently sitting on a 30 million tonnes per annum capacity after having acquired the 16.5 million tonnes cement division of Larsen & Toubro. The standalone Grasim has a cement capacity of 13.51 million tonnes.

India Cement, the largest cement company in the South, is the third largest cement manufacturer in the country, with a capacity of 8.81 million tonnes per annum.

The J K Group, controlled by Hari Shankar Singhania, ranks fourth in the league tables, with an annual capacity of 6.41 millon tonnes, followed by Madras Cement at number five, with a capacity of 5.47 million tonnes.

Lafarge, the first foreign company to enter the domestic cement industry when it bought out Tata Steels's cement plant, the Indian cement industry has been in consolidation mode.

LaFarge has however remained inactive, with a capacity of five million tonnes, while Grasim took over over Shree Digvijay Cement, and Dharni Cement in its fold. With taking over of cement division of Larsen & Toubro, Grasim is now the largest cement player.