New capacity ’key to Lafarge India plans’

New capacity ’key to Lafarge India plans’
Published: 14 July 2009

Lafarge is planning to nearly double the revenue contribution of its Indian subsidiary to 8% over the next three-five years, said a senior executive of Lafarge India Ltd. The Indian outfit will acquire other firms and build new plants to meet the target.

 “The growth in India will be a combination of fresh capacities and acquisitions, and we will follow a multi-product strategy to get closer to the customer,” said Uday Khanna, managing director and chief executive of Lafarge India.

The firm’s expansion plans come at a time when the Union government has announced it will invest about $500 billion (Rs24.7 trillion) to build the country’s infrastructure over the next five years.

The focus on India, China, West Asia and the Mediterranean region is part of Lafarge SA’s strategy to generate 65% of profits from emerging markets by 2010.

In the first quarter ended March, Lafarge SA’s sales from Western Europe fell 26%, North America 19%, Central and Eastern Europe 45% and Latin America 11%, while West Asia sales grew 58%, Africa 13% and Asia 19%.

“Organic expansion by definition is slow. It takes an average 18 months to get approvals before we can build a plant and sometimes it is difficult to estimate this time,” Khanna said. His acquisition plan for capacity addition also has a rider—“the presence of willing sellers”.

The immediate plan, Khanna said, is for Lafarge India to raise its cement capacity to at least 20Mt. By 2012, Lafarge will have 12Mt capacity, through fresh capacities and possible acquisitions, from the current level of 5.5Mt. At this, Lafarge India’s market share is about 2.75%.

Source: www.livemint.com