Lafarge sees larger pie from India

Lafarge sees larger pie from India
Published: 12 January 2009

Lafarge has said that the contribution of emerging markets such as India to its bottomline may be bigger in two years than previously estimated.

"The share of growing markets such as India, China, Africa and Brazil in our overall earnings and sales will go up. The share of India, which currently accounts for 2% of our global revenues, will definitely grow more than other countries’ in the next two years," Bruno Lafont, chairman and CEO, Lafarge, told ET.

The company had previously estimated that emerging markets would account for 50% of its sales and 65% of its global profits by 2010. "We will focus on organic growth in India. Acquisition is not our priority," Mr Lafont said. However, he didn’t rule out the possibility of taking smaller stakes in cement companies whenever opportunities arose.

The company was aiming for leadership positions in smaller regions - with a 200km radius - within India, unlike its global rival Swiss major Holcim. Lafarge entered India almost a decade ago through the acquisition of Tata’s cement plant in Jharkhand. Holcim was a late entrant, but raced past Lafarge by acquiring the country’s two largest cement makers ACC and Ambuja Cement. These together have a capacity of 40 mtpa, which is nearly 20% of India’s total installed capacity. "We went slow in India deliberately. We wanted to learn about the market. Now that we have a fair idea of India, we will grow much faster," Mr Lafont said.

Lafarge has a cement capacity of around 6.5Mta in India and plans to grow it to 15-30Mta in the next 10 years. The manufacturing capacity was concentrated in East India thus far, but the company is spreading its wings to the north and south. It is setting up four greenfield projects in Rajasthan, Himachal Pradesh, north-east and south India, with a combined capacity of around 5Mt, according to Mr Lafont.