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Rediff.com  » Business » MNCs to corner 25% India's cement mart

MNCs to corner 25% India's cement mart

January 30, 2006 17:44 IST
With the acquisition of 14.8 per cent stake in Gujarat Ambuja Cements Ltd, by Swiss cement major Holcim, foreign players, including Lafarge, would be controlling nearly 25 per cent of total production in the country.

Industry analysts said that with India's total cement production pegged at 127 million tonnes for the year 2004-05, the two foreign companies would have a dominating market share in the country.

With an installed capacity of 153.59 million tonnes, the total cement production for 2004-05 was 127.57 million tonnes, with demand rising nearly 10 per cent each year.

Holcim, which already controls 34 per cent of stakeholding in Associated Cement Company through Gujarat Ambuja holding firm Ambuja Cement India Ltd, has also offered to buy out 20 per cent additional shareholding in GACL at a price of Rs 90 per share.

The Swiss company on Monday acquired 14.8 per cent equity in GACL at a price of Rs 105 per share.  Both ACC and GACL would allow Holcim to command 33 million tonnes of cement production in India.

In addition, French cement major Lafarge India, which has acquired plants of Tata Steel and Raymond, has a production capacity of five million tonnes. According to analysts, the combined production capacity of the two foreign majors would be 38 million tonnes.

With India having nearly 54 cement companies having large capacities, analysts were of the view that the Holcim-Lafarge combine may actually become a price giver, while the others having relatively small capacities would act as price takers.

They were also of the view that with more capacity additions coming up in the coming years, there could be possible shakeout in the cement industry in India.

Unlike Holcim, which has taken control of almost 33 million tonnes of cement production, Lafarge had been less aggressive on this front. The French company has plans to set up its first greenfield plant in the country in West Bengal.

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