Lafarge, the French cement maker, on Wednesday announced its plan to build a 3 million tonne cement plant at Alsindi in Himachal Pradesh.
MUMBAI: Lafarge, the French cement maker, on Wednesday announced its plan to build a 3 million tonne cement plant at Alsindi in Himachal Pradesh as part of efforts to boost its presence in India’s northern and eastern regions.
“The plant, expected to be completed in 2010, will be designed to produce 3 million tonnes of cement a year, representing a total investment of approximately €160 million (Rs 933 crore),” a statement issued from the company’s global headquarters said.
Lafarge — the first global cement major to set foot in India through an acquisition in 1999 — is also the world’s biggest cement maker. It has been relatively quiet thus far after making a couple of acquisitions. On an all-India basis, it is still puny in size compared with its Indian peers such as the ACC, Gujarat Ambuja, Grasim and Ultratech. However, it is still ranked second after ACC (now controlled by its global rival Holcim) in terms of cement- making capacity in the eastern belt of India.
And why is the French cement major setting up its new plant in Himachal Pradesh, strategically located close to its northern and eastern markets? Cement analysts say it is a clear attempt to sustain its pricing power in the sectors.
Analysts aver that growing through acquisitions is becoming more expensive and setting up greenfield and brownfield projects is definitely more cost effective.
Lafarge entered the Indian market with a lot of fanfare in 1999. It acquired the cement business of Tata Steel and in 2001 followed it up with the purchase of the Raymond Cement facility in the same year.
With this greenfield plant, Lafarge hopes to significantly increase its cement capacity from 5.5 million to 8.5 million tonnes. Recently, Grasim acquired an incumbent player that had control over a limestone mine in Himachal Pradesh.
Interestingly, the Himachal Pradesh government recently awarded the Broh Shind cement plant in Chamba district to Jaypeee Associates, another leading player in the eastern region.
The new Jaypee plant is slated to have an annual capacity 2 million tonnes of cement in a year and would cost Rs 750 crore. This will be in addition to a plant at Solan.
There were many contenders, including Germany’s Heidelberg.
Analysts are, however, guarded whether Lafarge could make progress in acquiring land in the state, which has seen many companies stymied by local landowners.
Lafarge said the expansion demonstrates its “ongoing commitment to the Indian market, one of the world’s largest and most promising cement markets”.
Lafarge currently has three cement plants in India: two plants in Chhattisgarh and a grinding station in Jharkhand. Lafarge is also present in India through its roofing business, with a clay tile plant at Kozhikode in Kerala and a concrete tile plant in Bangalore in Karnataka.
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