Lafarge India is planning a cluster approach to venture into the South India market, Business Standard reports. That market has been consistently profitable and has a number of clusters in different state, with small units that are finding it difficult to survive at a time when big players are increasing their presence.
Lafarge has 5.5Mt capacity plants in Jharkhand and Chhattisgarh and is now aiming for a pan-India presence. It is already embarked on projects in Chhattisgarh and Himachal Pradesh which, once completed, will take its annual capacity to 12 mt. The company has plans to invest US$1bn(Rs 4,800 crore) in the next five years, to take its overall capacity to over 20M. This includes a 2.5 mt plant each in Karnataka, Rajasthan and Meghalaya.
“The acquisition of small capacity units close to its own proposed plant in South India will help it own a cluster to strengthen its position,” said an investment banker familiar with the development. According to the Cement Manufacturers Association, there is a cluster in Gulbarga in Karnataka with over eight plants, with a total capacity of 14Mt. “With an increasing number of large players, small plants are finding it difficult to make their business viable,” said the banker.
“Lafarge would look at a combination of organic growth and value-adding acquisitions, wherever appropriate,” said a company spokesperson. “We would not like to comment on any speculation about our future plans.”