Larsen & Toubro, the diversified conglomerate embroiled in a battle for control of its cement business with the Aditya Birla group, is scouting for cement companies in northern Rajasthan, Punjab and Uttar Pradesh.
The Aditya Birla group company, Grasim, has a strong presence in Rajasthan and most of Uttar Pradesh. It caters to the region with its plants in Rajasthan and Madhya Pradesh.
While Grasim's Aditya Cement in Rajasthan supplies to the state and parts of Himachal Pradesh and Punjab, its Vikram Cement at Jawad and Grasim Cement at Raipur in Madhya Pradesh feed the market in Uttar Pradesh.
The company has also set up a grinding unit at Bhatinda in Punjab to cater to the northern region.
"To reduce distribution costs we are looking for acquisitions in competing clusters where we do not operate. It is part of our growth plan. With the promising prospects of the cement business in India, we are open to investing in it," an executive at Larsen & Toubro pointed out.
Larsen & Toubro and Grasim had earlier set up a task force to exploit synergies and work together to get a hold in key markets. The former's decision to acquire companies in Grasim's stronghold suggests its readiness to end that effort. Their joint study has already been abandoned.
Larsen & Toubro's willingness to invest further in its cement business is a departure from its earlier position of not funding operations till the demerger and roping in of a strategic partner was through.
"We have mining rights in northern Rajasthan, Himachal Pradesh and Gulbarga. We are not in a position to set up a greenfield capacity, but are looking at units that will complement our existing ones," the executive explained.
"We will be investing close to Rs 75 crore (Rs 750 million) in the current financial year to upgrade the capacities of our cement units. For instance, we will deploy an optimising technology at our Awarpur Works to reduce energy consumption. We will also take measures to enhance the quantity of blended cement."
- L&T eyes acquisitions in competing clusters and in pockets where it is not present.
- Move aimed at reducing distribution costs.
- Grasim has a strong presence in Rajasthan and most of UP.