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The consolidated operations may form India’s largest cement group player (by capacity), pushing UltraTech Cement Limited (53.9mtpa, latest annual report) to the second position, the report points out.
According to the report, there are chances that the newly combined entity may have to divest some assets from its Indian operations to comply with regulations. If the regulator requires a divestment of certain assets from the combined entity, it is most likely to be assets from the eastern region, where the entity will have the largest market share. However, even after the asset sale, the combined entity would remain the largest Indian cement player.
Collectively, Holcim's two Indian firms - ACC and Ambuja have a cement manufacturing capacity of 57 million tonnes per annum. Lafarge India has about 8 million tonnes, mainly in the eastern part of the country.
The report expects the merger to further accelerate consolidation in Indian cement industry, where the current top two players may become aggressive to maintain their market share. After the consolidation of Lafarge India and Holcim India, the top five players are likely to hold around 50% of the market share of the cement industry after considering incremental capex.
The consolidation of cement industry in the hands of several well established industry leaders may unleash competitive pressure in the cement industry, thereby keeping a check on prices, adds the report.
