Lafarge, the world’s biggest cement company, is looking to gradually scale up its presence in India. Low per capita cement consumption, larger government spending on infrastructure and growth of housing units, it believes, would provide the company ample expansion opportunities in the country. Bruno Lafont, Chairman and Chief Executive Officer of the company, talks to Ajay Modi about the company’s outlook on India.
What kind of growth prospects you expect from India?
Today, we have 2 per cent of our cement sales coming from India. Ideally, it should have been 6-7 per cent. We believe this figure to pick up in future. In the coming years, large part of the global construction activity will happen in India and we want to be a part of this growth process.
Given the fact that valuations of cement companies are significantly low, are you looking forward to expand your presence through acquisitions?
We are open to an acquisition if there is an opportunity at a right price. However, it is not a priority for us at this moment. We already have four ongoing greenfield projects.
There are some uncertainties in India so far as the raw material security is concerned. Moreover, we have land acquisition issues. Do you consider it a healthy situation for your expansion plans?
There is no country without such bottlenecks. We need to work patiently and find the best solution to these issues.
In recent times, we saw increased government intervention in the cement industry with an aim to bring down prices. Do you view this as a congenial atmosphere for growth?
The fact that the government here wants to have a say in pricing is not shocking because the government is representative of a variety of stakeholders, including the common man. However, pragmatism should be observed in such a kind of situation.
Do u believe that there was an abnormal increase in cement prices?
No. The price increase was necessary due to cost increase on the input side. To me, the price hike has been reasonable.
Last year, you acquired the ready mix concrete (RMC) business of L&T. Do you plan to raise its capacity?
Currently, the RMC business has a capacity of four million cubic metres. However, we plan to take it up to double digits since there will be an increasing demand for RMC with the rise in construction activity.