Lafarge and Holcim to make portfolio decisions in India

Holcim Ltd and Lafarge SA may sell some assets in India to clear the competition hurdle and are considering units in Rajasthan and Chhattisgarh where the two companies have common presence.

Holcim operates in India through Ambuja Cements Ltd and ACC Ltd, and Lafarge through Lafarge India Pvt Ltd. Lafarge runs units in Chhattisgarh, Jharkhand, Rajasthan and West Bengal while ACC and Ambuja Cements own integrated plants in Rajasthan and Chhattisgarh, among other places.
  
"In states where both Holcim and Lafarge are present, they might sell units to meet geographic market definition of the Competition Commission of India approval," a source in the know told Cogencis. "Otherwise it may be difficult to prove to the panel how double presence in such markets can help build synergies".
   
The Swiss cement major and the French company are preparing a detailed response to impress upon Competition Commission of India the "benefits" of the LafargeHolcim merger to the Indian market.
  
They are likely to file Form II of the merger regulations of the Competition Act by the end of this month. The two companies are also mulling sales of some of the ready-mix concrete units to meet the relevant product market norms of the Competition Commission.
   
"Lafarge and ACC are both dominant players in ready-mix concrete market and the market is expected to grow substantially by 2017," the source said.
   
After the merger, Lafarge, Ambuja and ACC will have a combined capacity of 68.25Mta, overtaking current market leader UtraTech Cement, which has a capacity of 57Mta.
 
Lafarge, Ambuja and ACC together hold around 20 per cent share in the 347Mta India cement market.
  
Holcim and Lafarge are looking at rationalising their portfolio ahead of securing anti-monopoly clearances from regulators worldwide. This will be carried out through divestments, which could be 10-15 per cent of the global operating profit.