Holcim, Birla in race for market leadership

Holcim, Birla in race for market leadership
Published: 25 May 2007

Aditya Birla Group and Holcim are rapidly increasing capacity in a bid to become the largest player in India’s cement industry.  
The country is moving towards overcapacity in three years and the largest player will be able to dictate crucial terms including prices.  
Switzerland-based Holcim, the world’s second largest cement maker, which operates in India through the two companies it controls, ACC and Gujarat Ambuja, said in March that its capacity will go up from "15 million tonne a year to well over 50Mt" by 2010.  
This followed an announcement of increase in capacity by UltraTech and Grasim, the two cement companies in the Aditya Birla fold, from 13Mta a year to 44Mt in three years.  
If these targets are met, Holcim will emerge as the largest player in the cement market. However, industry observers point out that B K Birla’s Century Textiles, which is increasing its cement capacity from 6.7Mt to 8Mt this year, will eventually become a part of the Aditya Birla Group. This could again tilt the scales in the Indian group’s favour.  
Octogenarian B K Birla, the chairman of Century, maintains that his grandson and Aditya Birla Group Chairman Kumar Mangalam Birla will take control of his group, whenever he finds the time.  
The demand for cement in the country is projected to go up to 200Mt a year by 2010 from 149Mt at present, by which time the capacity will have risen to 240Mt a year from the current 165.  
"Considering that the average capacity utilisation in the industry stands at 88 per cent, we will have effective production of 210 million tonne a year in 2010, which will be more than the demand. This may create pressure on prices. The big players will be able to sustain the price pressure while the small ones will take a hit," said a cement analyst with a foreign brokerage.