Cement cos vie for L&T’s ready-mix concrete business

Cement cos vie for L&T’s ready-mix concrete business
Published: 17 April 2008

Leading cement manufacturers, including Holcim, AVB Group and Lafarge, are in the race to buy engineering major Larsen and Toubro’s ready-mix concrete (RMC) business, L&T Concrete, according to local press reports.  L&T had, in December 2007, decided to hive off its ready-mix concrete business into a separate entity called L&T Concrete.
 
Although L&T sold its cement business to the AVB Group in 2001, it retained the RMC unit. L&T Concrete is the market leader in the segment with a share of 25%. Revenue from the RMC business stands at Rs 1,000 crore. "Various companies have shown interest. We are in talks with them. I cannot comment anymore on this," L&T director KV Rangaswami said.
 
L&T has been unable to manage this business as it is spread across the country through small units. "It is difficult to manage these units. Our construction business is growing and we are bidding for projects with a turnover of at least Rs 200 crore," said an executive. L&T may retain a small stake in the RMC unit. The AVB Group’s cement firms, Grasim and UltraTech, are active in the RMC business while Holcim group company ACC also has a strong presence in this segment. Multinational cement firm Lafarge also has an RMC unit.
 
UltraTech joint president and deputy CFO Sanjeev Bafna said: "Both Grasim and UltraTech have a strong presence in the RMC market. Both are expanding operations. However, I cannot comment on our acquisition activities." Grasim and UltraTech are in the process to commission their RMC units by 2008 end. While Grasim is setting up 14 units, UltraTech is building 16 in cities close to its existing manufacturing facilities in the south and west. The companies had earmarked a capex of Rs 620 crore for the venture, which is expected to diversify the product mix. An ACC spokesperson also declined to comment on the deal.