Sonadih (Chhattisgarh), Jan. 10: French cement giant Lafarge is planning more facilities and keen on acquisitions in India as part of its growth strategy.
Lafarge group chairman Bruno Lafont said the company was ready for the big leap in India. Lafarge is the No.1 cement firm in the world.
In India, Lafarge manufactures cement, ready mix concrete and gypsum. It entered India more than a decade ago by buying Tata Steel’s cement unit.
Lafarge has so far invested 800 million euros in India. “We should at least double our commitment in the medium term,” Lafont said after inaugurating the expanded Sonadih plant in Chhattisgarh last week. While greenfield ventures would be the growth drivers, Lafont did not rule out acquisitions.
“Consolidation should happen in India. If we are well prepared, we can take part in it,” he said.
Lafarge produces 6.5 million tonnes of cement, with two grinding units in Bengal (Mejia) and Jharkhand (Jamshedpur) and two clinker plants in Chhattisgarh (Sonadih and Bilaspur).
It is trying to set up four more facilities in Meghalaya, Himachal Pradesh, Rajasthan and Karnataka.
These plants, once operational, will turn Lafarge into a pan-Indian company. So far, only the ACC-Ambuja combine and UltraTech have operations across the country.
Cement is a local business since transportation cost is high. Lafarge has so far been confined to the east after entering the country in 1999. It could not build on the first mover advantage the way Swedish cement maker Holcim did by snapping up ACC and erstwhile Gujarat Ambuja.
On Lafarge’s growth strategy, Lafont said the target was not to be the largest but the best.
The company has consolidated its position in value added products. In ready-mix concrete, it acquired L&T’s business, which has 78 plants nationally. It is, thus, well positioned to tap the construction market. Lafarge has also entered the plaster board (gypsum) business. Plaster board is a new product in India. It is lighter and easy to install. It offers more insulation and is more aesthetic. Lafarge started gypsum production at a plant near Delhi.
Lafont is confident about the prospects of the cement business in India.
“The country has a huge potential because it will grow more than the rest of the world. In a fast growing market such as India, there will always be an imbalance. We should avoid structural over capacity. But if the country witnesses continuous growth, it will be corrected on time,” Lafont said.
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