Ultratech loses ground to rivals

Ultratech loses ground to rivals
Published: 10 January 2005

Grasim’s acquisition of L&T’s cement division was supposed to make the combined entity India’s largest cement group. In the market place however, Grasim and Ultratech is losing ground to ACC and Gujarat Ambuja combine.  It’s nine months since Grasim formally took over the control of Larsen & Toubro’s cement division and rechristened it Ultratech but the combined entity continues to lag behind ACC & Gujarat Ambuja combine in market share. Gujarat Ambuja has a 14 per cent stake in ACC.  What’s more, the gap between the two is increasing every month. During December ’04, the domestic cement despatches of Grasim grew by a paltry three per cent, while Ultratech’s domestic despatch advanced by 4.73 per cent, reports The Economic Times, India

Associated Cement Companies (ACC) and Gujarat Ambuja on the other hand, grew by 14 per cent and 11 per cent respectively. In the past 12 months, Grasim and Ultratrech’s cumulative despatches grew by 5.5% while the latter’s combined despatches grew in double digits.  Industry analysts attribute this to Grasim’s focus on acquiring and then consolidating the newly acquired Ultratech operations. 

"The top management of Grasim is presently busy in consolidating latter’s cement operations in the group’s overall cement business. Once that is completed, the two will once again begin to outgrow the market," says a senior official with a leading cement company. 

In the last three years, ACC and Gujarat Ambuja have increased their marketshare from little over 22 per cent to close to 25 per cent now, while the Aditya Birla group continues to lose market share.  In the same period, the combined marketshare of Grasim and Ultratech cement has fallen to little over 21 per cent to about 22 per cent.  Some put the blame on the Aditya Birla group and L&T’s failure to enhance the production capacity of their units to meet the projected increase in demand. 

"Due to Grasim’s overstretched financial and managerial resources in past few years, its capacity has stagnated 12-13Mt while L&T’s management lost interest in cement and didn’t expand beyond 16Mta. In the same period both ACC and Ambuja expanded through both brownfield and greenfield expansion," says an industry executives.